Bitcoin News — Fraud
Posted by Jeffrey Gogo on
The Central Bank of The Bahamas (CBOB) has released a discussion paper proposing how it intends to regulate digital assets. This includes initial coin offerings as part of efforts to eliminate the alleged threat of tax evasion, fraud and money laundering. However, when regulation eventually comes, it is likely that only a state-issued cryptocurrency will […]
The post Bahamas Releases Discussion Paper on Crypto-Asset Regulation appeared first on Bitcoin News.
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- Tags: bahamas, Bitcoin, cryptoassets, Cryptocurrency, Discussion paper, Fraud, ICOs, Money Laundering, N-Economy, Peter Turnquest, Regulation, tax evasion, The Central Bank of The Bahamas
Posted by Helen Partz on
The Ministry of Education of Malaysia is setting up a NEM blockchain-based university consortium to combat degree fraud.
According to the ministry’s tweet, the system is designed to issue and verify the authenticity of university-issued degrees. The new government-backed consortium will initially be comprised of six public universities and their diploma-verifying system is set to operate using the NEM (XEM) blockchain. According to the ministry, the new system was developed by a team led by a professor from the International Islamic University Malaysia (IIUM).
According to a local media report, the idea of the consortium was proposed by the MoE in order to preserve the reputation and the integrity of Malaysian universities, to protect the rights of students, as well as to promote distributed ledger technology (DLT).
The MoE commented to the media that the main purpose behind the establishment of the consortium is to “spread skills training,” as well as to develop and adopt the technology by students and academics. In the long term, the ministry stated it is also eyeing the development of what it referred to as “industry-standard” blockchain solutions that could potentially generate revenue for Consortium member universities.
Recently, a Russian state-backed university announced it would store diploma data on blockchain, claiming that the institution has already recorded the information of “all diplomas issued over the past ten years” using DLT.
In October last year, the Massachusetts Institute of Technology (MIT) reportedly became the world’s first university to issue digital diplomas by implementing blockchain technology.
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- Tags: Adoption, Blockchain, Cryptocurrencies, Education, Fraud, Government, Malaysia, NEM, Universities
Posted by Yogita Khatri on
Posted by Kevin Helms on
The Texas State Securities Board has issued an emergency cease and desist order to an Australia-based cryptocurrency mining company and its affiliates. According to the order, the company represents that investments in its mining contracts are “guaranteed to 200% profit.” Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space Cease and Desist Order The Texas State […]
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- Tags: aws mining, Bitcoin, BTC, Cease and Desist, Cloud Mining, crypto, Cryptocurrency, Digital Currency, Fraud, N-Economy, order, Regulation, regulator, Securities, securities board, Texas, Virtual Currency
Posted by Stephen O'Neal on
The Winklevii claim Charlie Shrem owes them 5,000 BTC.
On November 2, details of a crypto lawsuit featuring major industry players: Bitcoin Foundation founder Charlie Shrem on one side, and the Winklevoss twins on the other, were made public. The case alleges that Shrem “stole” around 5,000 Bitcoin (BTC) from Tyler and Cameron Winklevoss in 2012.
Brief introduction to both sides of the conflict
Charlie Shrem is an American entrepreneur and renowned Bitcoin advocate. He started investing in Bitcoin in 2011, when he was a college senior. Later the same year, he co-founded the now-defunct BitInstant, one of the first crypto exchanges. The service turned out to be profitable “almost from day one,” as per an article in the Verge.
Through 2011-2012, BitInstant received a couple of major investments, including a $1.5 million stake from a group of investors led by Winklevoss Capital Management. Meanwhile, Shrem became a founding board member of Bitcoin Foundation, the trade association that promotes cryptocurrency.
In July 2013, BitInstant was hit with a class-action lawsuit for “false representation of service.” The company reportedly filed a motion to dismiss it, but several days later, the exchange was closed. According to a blog post (which is no longer available but is cached here), it went offline "to improve the code based on trends [the company] noticed."
On Jan. 26, 2014, Shrem was arrested at JFK Airport in New York. He was then found guilty of conspiring to launder $1 million worth of BTC, to help users of the Silk Road marketplace anonymously make illegal purchases, namely drugs. On April 10, 2014 he was indicted on accusations of "operating an unlicensed money transmitting business, money laundering conspiracy, and willfully failing to file suspicious activity reports with banking authorities." On Sep. 4, 2014, he pleaded guilty to a reduced charge of aiding unlicensed money transmission, was ordered to pay $950,000, and sentenced to two years in prison. He was released from federal prison in Pennsylvania around June 2016.
Since his release, Shrem has been involved with a number of crypto-related projects, including, among others, a Dash-branded and Dash-accepting debit card, a multi-coin, multi-platform cryptocurrency wallet, and an advisory firm that helps clients trade in digital assets.
The Winklevoss twins
Tyler and Cameron Winklevoss, in turn, are American internet entrepreneurs, most famous for co-founding HarvardConnection (currently known as ConnectU) and suing Mark Zuckerberg, for allegedly stealing their idea to create a Facebook-like social network site. This case ultimately landed them $65 million, and the brothers invested $11 million of their payout into BTC in 2013, allegedly amassing one percent of the entire currency’s dollar value equivalent at the time.
Most notable crypto projects led by the Winklevoss include Winkdex — a financial index that tracks the price of Bitcoin launched in 2014 — and Gemini — a crypto exchange that received regulatory approval from the New York State Department of Financial Services in October 2015.
In December 2017, the Winklevoss brothers became Bitcoin billionaires due to the large investments into the cryptocurrency made in the past.
Details of the case: two Maseratis, a $2 million house in Florida, and two unhappy business partners
The details of the lawsuit, which were reported by the NYT on November 2, suggest that Shrem “helped get the brothers interested in Bitcoin in 2012 and became their first adviser in the young industry.”
More specifically, the Winklevoss twins allegedly gave Shrem $750,000 to buy BTC for them “from other deep-pocketed investors.”
“A few months into this partnership,” the brothers claim, they realized that Shrem had not given them back all the Bitcoin they were owed. Thus, while Winklevoss gave Shrem $250,000 in September 2012, he delivered back only around $189,000 worth of BTC at the going price, which was around $12.50, according to court documents. The brothers were missing $61,000 worth of BTC — roughly 5,000 coins, as per the price at the time — and have not been repaid since, they claim.
After asking Shrem “numerous times” for an accounting of the BTC he had purchased for them, the Winklevii eventually turned to an accountant who documented the missing funds, the lawsuit details suggest. Specifically, the enclosed court documents feature an email Cameron Winklevoss purportedly wrote to Shrem in 2013:
“I have been patient, and at this point it’s getting a bit absurd [...] I don’t take this lightly.”
In a post-prison interview with WNYC Studios, Shrem claimed he had little funds left after release. Specifically, he said he worked as a dishwasher and owned just a few BTC, which he didn’t hold because “he can’t speculate with [his] rent”. Nevertheless, the lawsuit mentions some flamboyant purchases, which turned out to be the last straw for the Winklevoss twins. Cameron Winklevoss told the NYT:
“When he purchased $4 million in real estate, two Maseratis and two powerboats, we decided it was time to get to the bottom of it.”
The news outlet additionally states that Shrem’s acquisitions include “a $2 million house in Florida.”
The brothers hired a private investigator, who reportedly traced the stolen funds on the blockchain. He allegedly discovered that 5,000 BTC were transferred in 2013, through addresses “associated with Mr. Shrem” and onto Xapo and Coinbase wallet services.
“Either Shrem has been incredibly lucky and successful since leaving prison, or — more likely — he ‘acquired’ his six properties, two Maseratis, two powerboats and other holdings with the appreciated value of the 5,000 Bitcoin he stole from” the twins during their business agreement in 2012, the case brought to court claims.
Judge has already accommodated some of Winklevoss’ demands, Shrem “plans to quickly clear his name”
Interestingly, the same judge who imposed Shrem’s sentence in 2014 — Jed S. Rakoff, a judge in the Federal District Court for the Southern District of New York — was appointed to the fresh case.
According to the NYT article, Judge Rakoff has already approved the Winklevoss brothers’ application to freeze any funds that Shrem holds with Xapo and Coinbase, as he supposedly held the assets on those wallet services. Moreover, Judge Rakoff wrote in his order that Shrem had “evidenced an intent to frustrate the collection efforts of his creditors.”
For now the court fight seems to be in favor of the Winklevoss twins, who seem determined to see Shrem prosecuted again.
Meanwhile, Shrem’s lawyer, Brian Klein, believes that claims made by the Winklevoss twins are unfounded. He said in a statement quoted by the NYT:
“The lawsuit erroneously alleges that about six years ago Charlie essentially misappropriated thousands of Bitcoins [...] Nothing could be further from the truth. Charlie plans to vigorously defend himself and quickly clear his name.”
Cointelegraph has reached out to Charlie Shrem and his lawyer for further comment, but both have not replied to date.