Blockchain Developments in Food Supply Chain, Shipping Data and Project Best Practices
By: Jordan R. Silversmith
According to a recent report, GrainChain, a Texas-based startup that uses blockchain to track grain shipments, has used its blockchain data to show how a sharp decline in purchases of Texas grain may be linked to the devaluation of the Mexican peso. According to the report, an analysis based on data from GrainChain’s blockchain platform “is one of the first opportunities to see how a shared ledger of transactions can result in valuable, real-time data that might otherwise take months to gather.” In another development related to the food supply chain, a major food company has announced that it has expanded its use of the Food Trust blockchain technology platform to one of its coffee brands. According to a press release, consumers can scan the QR code on the packaging to follow the beans’ journey from various growing locations to factories where the beans are roasted and packed, as well as to get information about farmers, time of harvest and more. The company is also involved in blockchain pilots related to its milk and palm oil products.
A software company recently announced a pilot project in collaboration with a car manufacturer, the operator of all public terminals in the Port of Shanghai and a cargo shipping company for a new application aiming to change the cargo release process through blockchain. The project uses blockchain to conduct real-time exchanges of shipment data between ocean carriers and terminal operators and is designed to minimize verification steps in order to speed up the release of sea waybills, which will help truckers pick up their cargo at the terminal faster and help shippers meet delivery windows. According to reports, the application will be further developed for participants of the Global Shipping Business Network (GSBN), a consortium of ocean carriers serving the trans-Pacific market.
At the recent Hyperledger Global Forum in Phoenix, a blockchain platform architect spoke about 10 critical issues, based on his experience with numerous enterprise blockchain implementation projects. As described in a recent blog post, the 10 issues are using SQL for rich queries in smart contracts; data backup and recovery; ledger checkpoint and pruning/archiving; Byzantine Fault Tolerant consensus; governance; performance; privacy and confidentiality protection; inter-network support; pluggable cryptocurrency implementations; and auditing capability.
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M&A Crypto Report Published, Blockchain Trading Platforms Make Announcements
By: Marc D. Powers
A Big Four accounting firm recently issued its Global M&A Crypto Report for 2019. Among other findings, it reported that in the past year, fundraising went to more later-stage companies than in 2018. Also, the number of merger and acquisition (M&A) deals and deal size dropped substantially. The report concludes with the top 10 M&A deals of the year and the top investors in crypto companies.
In a recent filing with the Securities and Exchange Commission (SEC), a major online retailer disclosed plans for an air drop on May 19 of 4.37 million security tokens that will trade on the tZERO blockchain trading platform. According to the filing, one Digital Voting Preferred Stock will be dropped for every 10 shares of common stock owned by each shareholder.
The exchange Poloniex recently reported it is releasing a token platform, called LaunchBase. According to a press release, the new platform will seek to seed and promote the adoption of quality cryptocurrencies worldwide, “including via the sale of tokens to eligible participants on the Poloniex platform.” The first project is a TRON-based stablecoin lending platform called JUST, and its associated token is the JST.
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New Crypto Legal Actions Brought by Federal, State, Private and Foreign Actors
By: Robert A. Musiala Jr.
Late last week, the SEC brought charges against two individuals and their companies related to an alleged fraud scheme involving the sale of a TeshuaCoin, a blockchain token that the defendants falsely claimed was backed by bottled alkaline water, and investments in a nonexistent bitcoin mining operation. In an action by state regulators this week, the Texas State Securities Board and the Alabama Securities Commission issued an emergency cease-and-desist order against Ultra BTC Mining LLC. The order alleges Ultra BTC Mining LLC is involved in a fraudulent investment scheme that offers investments in computing power to mine cryptocurrencies. According to a press release, the alleged scheme “is promising to double investors’ money in one year while also claiming to contribute money to UNICEF to ‘fight COVID-19.’”
Last Friday, 11 class action lawsuits were filed in the Southern District of New York against four foreign-based cryptocurrency exchanges and seven mostly foreign-based issuers of blockchain tokens. The lawsuits allege the tokens that were issued and sold by the defendants were unregistered securities.
According to reports, two new laws regulating cryptocurrencies are set to take effect in Japan on May 1. The laws amend Japan’s Payment Services Act and Financial Instruments and Exchange Act to introduce defined terms and other concepts related to cryptocurrencies, initial coin offerings and other blockchain industry concepts. And in Spain, according to reports, the Spanish tax authority recently began sending warning letters to 66,000 cryptocurrency holders to remind them of their tax obligations.
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Reports Highlight Crypto Threats to National Security, Banks, Malware and Hacks
By: Joanna F. Wasick
Last week, two notable articles on fintech policy issues written by Yaya J. Fanusie, a former CIA analyst and an aAdjunct Senior Fellow at the Center for a New American Security, were published. One article draws on the March 2020 indictment of two Chinese nationals for allegedly laundering cryptocurrency on behalf of North Korea, and it goes on to describe how cryptocurrency obfuscation tools and techniques are a growing threat to U.S. national security. The article highlights how lax global anti-money laundering (AML) measures, access to unhosted cryptocurrency wallets and the existence of numerous cryptocurrency exchanges all work together to enable cryptocurrency laundering, thereby dampening the impact of U.S. economic sanctions and fostering terrorism financing. The other article posits that many banks are simply unaware of their exposure to risks associated with the cryptocurrency industry. The article advocates against banning crypto-asset clients and instead urges that banks accept such businesses, provided the banks implement advanced technologies to (1) assess how any illegal cryptocurrency financing might touch its clients’ businesses and (2) implement due diligence tailored to the cryptocurrency environment.
Malicious “cryptojacking” malware attacks focusing on container environments have reportedly been increasing. These attacks utilize Kinsing malicious malware to target misconfigured open Docker Daemon API ports to run a bitcoin miner. Once in the initial container, the malware spreads the miner to other containers and hosts.
This week, Bisq, a decentralized cryptocurrency exchange, disabled trading after a hacker exploited a software flaw to steal more than $250,000 in bitcoin and monero from users. The attacker posed as a seller and set the other users’ default fallback addresses (the destination where cryptocurrency is sent if a trade fails) to addresses controlled by the attacker. Among other things, the attack highlights certain vulnerabilities within decentralized exchanges, i.e., those that are carried out by smart contracts.
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