Monetary Authority of Singapore and World Bank Publish Blockchain Payments Reports
By Veronica Reynolds
The fifth and final phase of Project Ubin, a blockchain project spearheaded by the Monetary Authority of Singapore, concluded this week. It was marked by the publication of a report that summarizes the blockchain-based multicurrency payments network developed during the final phase of the project. The report emphasizes that the prototype was built to be “production ready,” with the goal of modeling better connectivity and integration among cross-border payments participants. The report examines the integration of the prototype with more than 40 companies, finding that a real-world implementation of the prototype could facilitate faster and cheaper cross-border payments than are currently possible with existing technologies. The report concludes by offering design ideas and concepts for payment processes that could be applied to current payment architectures.
Another report released this week by the World Bank takes a close look at smart contracts. The report begins by explaining smart contracts, proceeds with an overview of policy considerations related to the deployment of the technology, and concludes with an analysis of the technology’s potential in the retail and finance industries. The report notes that while in 2019 a survey of more than 1,000 senior executives from 12 countries found that 80% of those surveyed believed blockchain has compelling applications in industry, the percentage of survey participants engaged in implementing blockchain-based projects decreased from 34% in 2018 to 23% in 2019.
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U.S. Coffee Brand and Foreign Shipping Ports Initiate Blockchain Solutions
By Robert A. Musiala Jr.
This week, a major U.S. food manufacturer announced that one of its popular coffee brands has joined the Food Trust, a blockchain-based platform for tracking the food product supply chain. The Food Trust is hosted by a major U.S. technology firm and runs on the Hyperledger Fabric blockchain protocol. According to a press release, the initiative will enable consumers to use an app that allows coffee drinkers to scan a QR code on their bag of coffee and “trace their coffee back to its country of origin and learn about efforts to help farmers in coffee-growing regions.” The technology will reportedly use blockchain “to record data about supply chain events in the coffee’s journey; including which beans were used, when they were roasted, ports they were shipped to and beyond.”
In a recent development involving the same U.S. technology firm and the world’s largest container shipping company, a shipping container terminal in Sri Lanka has joined TradeLens, a blockchain platform designed to improve data management in the shipping industry. Like the Food Trust, TradeLens also operates on the Hyperledger Fabric blockchain protocol.
In another shipping industry development, the Port of Rotterdam Authority has announced that it “has unveiled a new pilot blockchain-based project to make container handling safer and more efficient by removing the need to use a pin code.” According to a press release, during the pilot, “the pick-up rights for the import of containers will be converted from a PIN code into a digital token with the aid of a blockchain-based application, a process the Port of Rotterdam Authority compares to passing the baton in a relay race.”
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SEC/CFTC Charge Blockchain App, DOJ Charges Allege Crypto Fraud Related to PPP
By Teresa Goody Guillén
According to a press release and order published this week, the Securities and Exchange Commission (SEC) charged Plutus Financial, Inc. d/b/a Abra of California (Abra) and a related firm, Plutus Technologies Philippines Corp. (Plutus), for offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a registered national exchange. Without admitting or denying the allegations, Abra and Plutus agreed to a cease-and-desist order and to pay a combined penalty of $150,000. The SEC’s order finds, among other things, that Abra developed and owns an app that enabled users to bet on price movements of U.S.-listed equity securities through blockchain-based financial transactions with Abra or Plutus. According to the order, those contracts were security-based swaps subject to U.S. securities laws, and Abra and Plutus violated federal securities laws by engaging in unregistered offers and sales of these security-based swaps.
In a parallel action, the Commodity Futures Trading Commission (CFTC) announced a settlement with Abra and Plutus arising from similar conduct in which the respondents agreed to pay a $150,000 civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act (CEA). Among other things, the CFTC order found that the respondents entered into thousands of digital asset and foreign currency-based contracts that constituted swaps, in violation of Section 2(e) of the CEA, which requires swaps to be entered into on “a board of trade designated contract market.” The CFTC order also found that the respondents illegally operated as an unregistered futures commission merchant.
Also this week, the U.S. Attorney’s Office for the Southern District of Texas charged a 29-year-old Texas man for wire fraud, bank fraud, making false statements and unlawful money transactions for allegedly fraudulently obtaining $1.1 million through the Paycheck Protection Program (PPP) and using the PPP money to fund a cryptocurrency account. The Small Business Administration (SBA) launched the PPP program in April to offer relief to small businesses impacted by COVID-19.
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Hackers Use Bitcoin in Social Media Fraud, Research Highlights Crypto Threats
By Jordan R. Silversmith
On the evening of July 16, a massive and apparently coordinated attack on prominent social media accounts paralyzed a popular social network for several hours. Hackers logged into the accounts of high-profile users and industry-leading cryptocurrency exchanges. The hackers then tweeted out requests for bitcoin from the account followers. As the hack continued, the social media platform eventually prevented all verified users from tweeting until resolution of the hack. The hackers reportedly defrauded users of more than $100,000 in bitcoin.
In other news, researchers recently discovered websites distributing a malicious crypto-trading application targeted at a popular brand of personal computer devices. The Trojan-style malware steals information such as browser cookies and cryptocurrency wallets and uploads it to a secure website where hackers can access the information. Nigerian scammers used a similar means to steal funds from unsuspecting users, a recent FBI criminal complaint alleges. Using a business email compromise scheme, the hackers gained access to legitimate business email accounts and defrauded employees into transferring company funds to the criminals’ bank account. The complaint alleges that the schemers defrauded American companies of tens of millions of dollars and then converted $6.5 million into bitcoin via a major U.S. bitcoin exchange.
Blockchain analytics firm Crystal recently published a report analyzing the use of bitcoin by darknet entities. According to a press release, “the report analyzes darknet interactions with exchanges and other entities throughout the first quarter of 2020 and compares it to historical darknet activity from the past three years.” Among other things, the report found that while “the amount of bitcoin (measured in BTC) transferred between darknet entities and other entity types declined in Q1 2020 compared to the same period one year ago … the value of the amount of bitcoin transferred (measured in USD) grew by 65%.”
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