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The Long Arm of Justice: How Far Can the DoJ Really Go in Prosecuting Foreign Actors?

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In early October, the U.S. Department of Justice revealed its Cryptocurrency Enforcement Framework, a report laying bare the government’s vision for emerging threats and enforcement strategies in the cryptocurrency space. The document is an important source of insight into how the laws governing digital finance will be soon implemented on the ground.

One of the fundamental principles that the government asserts in the document is its broad extraterritorial jurisdiction over foreign-based actors who use virtual assets in ways that harm U.S. residents or businesses. The guidance sets an extremely low bar for perpetrators of cross-border crime to clear before they face prosecution.

According to the framework, it can be enough for a crypto transaction to “touch financial, data storage, or other computer systems within the United States” to provoke enforcement action. Is the stringency of this approach unprecedented across other domains of financial crimes enforcement? What actual tools does the U.S. government have to counter criminals acting from overseas?

Business as usual

The idea that U.S. law enforcement is justified in prosecuting criminal actors beyond the nation’s borders if their activity has adversely affected individuals, companies, or infrastructure at home is nothing new, especially when it comes to cyber and financial crimes.

Arlo Devlin-Brown, a partner in the white-collar practice of law firm Covington & Burling, commented to Cointelegraph:

“The DOJ has consistently taken the position that U.S. criminal jurisdiction extends to activity with minimal ties to the U.S., and U.S. courts have in many cases embraced the DOJ’s expansive interpretation of its authority. Cryptocurrency businesses that operate outside the U.S. but have any ties to this country — bank accounts, customers, marketing activity — are at risk of enforcement action.”

Dan Newcomb, attorney at law firm Shearman & Sterling, said that there is nothing particularly extraordinary about the extraterritorial approach enshrined in the Cryptocurrency Enforcement Guidelines, as the DoJ has previously used a “wide variety of tools to hold foreign-based actors responsible for crimes punishable under U.S. law.”

The authors of the report note that the U.S. has used anti-money laundering measures against foreign actors dealing in fiat currencies for decades. Asserting similar jurisdiction over those who use digital currencies appears to be a defensible extension of the principle already at work.

Not new for crypto, either

The U.S. government has, on many occasions, gone after foreign persons and entities implicated in cryptocurrency-related crimes. Gail Fuller, a vice president at K2 Intelligence Financial Integrity Network, said that she considers the extensive extraterritorial jurisdiction asserted in the DoJ framework as “broadly consistent with the overall U.S. financial crimes compliance regime,” which is designed to protect the integrity of the U.S. financial system. Fuller commented:

“We’ve seen U.S. enforcement actions for sanctions violations and money laundering that have targeted foreign individuals or entities in cases in which their transactions touched the United States or its banks. In fact, we’ve already seen it in the cryptocurrency context, including with the 2017 indictment of foreign cryptocurrency exchange BTC-e and its Russian executive, Alexander Vinnik.”

In Fuller’s view, the BTC-e case is particularly interesting because on top of money laundering charges, the Department of Justice charged the exchange platform with failing to register as a money services provider in the United States, based on the volume of U.S.-connected transactions it facilitated.

James Farrell, deputy general counsel at trading solutions provider Apifiny, sees the enforcement guidelines as the reminder to the crypto industry about something that has been well-known to the traditional finance for over a decade: If an act of financial misconduct has a substantial effect in the U.S., the SEC and DoJ can and will go after those responsible. “Stating that a single U.S. server is enough just highlights how thin a reed the DOJ needs to assert jurisdiction,” Farrell added.

To Farrell, the novel – and striking – part of the report is invocation of “protective jurisdiction” – effectively worldwide criminal enforcement power – if the DOJ believes that the activity involving crypto may have national security implications. Farrell said:

“You see this concept enshrined in international treaties related to the taking of hostages, terrorist bombings and financing of terrorism. To hear that the same basis may be applied to the cryptocurrency industry was jarring and a marker of how seriously the DOJ is taking potential criminal misuse of this transformative and developing technology.”

Enforcement tools at DoJ’s service

Proclaiming jurisdiction over persons and entities that may be physically located thousands of miles away from U.S. shores is merely a symbolic move if there are no actual means for holding them accountable. U.S. law enforcement, however, commands quite an arsenal.

One heavy weapon is the degree of control that the United States’ financial authorities exercise over the traditional global monetary system. Shearman & Sterling’s Dan Newcomb observed to Cointelegraph:

“The key enforcement tool the U.S. has is the dominant role the U.S. dollar plays in international commerce and the fear conventional financial institutions have of being excluded from U.S. dollar transactions. Most holders of digital assets still need and want to convert those assets at some point into conventional currencies at financial institutions. Barring a digital player from access to conventional financial institutions is a powerful tool.”

Covington & Burling’s Devlin-Brown said that the Justice Department can rely on a number of powerful statutes that can be used to prosecute foreign-based cryptocurrency actors:

“For example, the U.S. money laundering statute can reach almost any dollar-denominated transaction that U.S. authorities can establish as linked to many types of criminal activity. Even a dollar-denominated payment from, say, Germany to Argentina is covered because the transaction would likely involve a U.S. bank as an intermediary.”

Michael Yaeger, a white-collar crime attorney at law firm Carlton Fields and formerly an assistant U.S. attorney for the Eastern District of New York, told Cointelegraph that the DoJ report does not reveal any new instruments for prosecuting foreign-based actors. However, Yaeger noted, the collection of past cases showcased in the document provides “useful examples of its powers, and perhaps signals which instruments will be used more in the future.”

One thing that caught Yaeger’s eye is the fact that the report seems to mention forfeiture efforts more than past DoJ reports on cyber crime:

“When forfeiture is combined with pre-judgment seizure of assets it is not only a powerful remedy, but an unusually fast one. The US has multiple cooperation agreements with other countries including data sharing agreements with foreign law enforcement and intelligence agencies, and has entered specific agreements related to forfeiture and the sharing of financial information.”

There is little doubt that the government is poised to leverage these and other international agreements in enacting its newly itemized enforcement strategy. Promoting cooperation with foreign governments and intergovernmental organizations like the FATF is listed among the crypto framework’s focal points.

The DoJ framework’s language on extraterritorial jurisdiction and cross-border enforcement may sound harsh to some. Yet, in fact the government is not articulating any principles dramatically different from those that are already being invoked in some high-profile crypto-related cases. Stating that these standards will be applied more systematically is only logical considering the expansion and maturation of the borderless realm of digital finance.

Source: https://cointelegraph.com/news/the-long-arm-of-justice-how-far-can-the-doj-really-go-in-prosecuting-foreign-actors

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Polkadot-based DEX Polkastarter to partner with Moonbeam

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Polkastarter, a Polkadot-based DEX built for cross-chain token pools and auctions, has partnered with Moonbeam, an Ethereum compatible parachain, to enable cross-chain interoperability.

In an announcement, Polkastarter stated that the partnership would allow for easy integration between the Ethereum and Polkadot ecosystems.

Moonbeam is able to transpile Solidity and other Ethereum-native logic & code to be compatible with Substrate and Web3 environments on Polkadot.

This technology will enable Polkastarter to re-deploy current Solidity code to Polkadot with limited changes and developer time/resources for the migration.

Polkastarter is a protocol for cross-chain token sales and swaps, whose main function is to facilitate transfers between the two main smart contracting platforms: Ethereum and Polkadot.

It raised $875,000 in a seed and private sale backed by NGC Ventures, Moonrock Capital, Signum Capital, and Astronaut Capital, earlier this year.

“The technology that Moonbeam provides will save us time and effort, in order to bring better products to our users, faster. This is an important step towards making truly autonomous and decentralized cross-chain swaps and token sales a reality.”, says Daniel Stockhaus, CEO of Polkastarter.

Nate Hamilton, Head of Business Development for Moonbeam at PureStake too commented on the partnership, stating, “Their platform will give projects an easier path to token exchange and raising capital in a decentralized fashion.”

Moonbeam is also a founding member of the newly formed Polkadot DeFi Alliance, which aims to create a more streamlined conversation around Polkadot’s potential for DeFi.

Founding members of this alliance also include oracle protocol, Chainlink, and Layer 2 technology provider, Plasm network.

This alliance is expected to encourage building on the Polkadot chain, advocating for its scalability, optimization, and core governance infrastructure that is seemingly lacking in legacy networks.

Source: https://eng.ambcrypto.com/polkadot-based-dex-polkastarter-to-partner-moonbeam

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The Curious Case of a Conflicted Bitcoin Bearish Wedge

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Bitcoin is stuck below $20,000.

The flagship cryptocurrency has attempted to break above the psychological resistance level multiple times in the last two weeks. In one of the instances, it reached as far as $19,915 only to face a bearish assault at the new record high that pushed its price lower by $2,000. It is evident that traders’ profit-taking behavior goes wild when Bitcoin closes towards $20,000.

Bitcoin Wedge

But looking from a wider perspective, the entire range between $19,500 and $20,000 prompts traders to exit their bullish positions for a short-term profit. In late November, the BTC/USD exchange rate made two back-to-back attempts to break above $19,500, but it succumbed to higher selling sentiment near the level, falling to as low as $16,200 later.

A pullback ensued, and the price again faced the same bearish bias near 19,700 — a development from $19,500, nonetheless. And now, the $19,900-area is giving the same vibes, having been crashed the price to $18,109 upon its latest test.

The price behavior has left Bitcoin in a sequence of modestly increasing higher highs and lower highs. Envisioning them together makes it look like that they are forming a Rising Wedge.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT

Bitcoin Rising Wedge pattern in development. Source: BTCUSD on TradingView.com

In retrospect, traders see Rising Wedge as a bullish-to-bearish reversal pattern. So it typically happens the price ascends inside the Wedge range but breaks below its support trendline eventually. If accompanied by higher volumes, the negative breakout crashed the price by as much as the maximum distance between the Wedge’s upper and lower trendline.

Bitcoin’s current Rising Wedge pattern’s height is $3,249. Depending on where it breaks lower from, its price would likely fall by roughly $3,000. That would mean a plunge towards $17,000 — at least.

But There Is A Catch

The Wedge’s upper trendline is almost flat, with the difference between higher high levels close to $200. Some traders can also assume that it is a horizontal resistance level. If true, it would throw the entire bearish reversal theory, as discussed above, into a bin.

A horizontal line makes the entire Bitcoin structure looks like an Ascending Triangle. It is a continuation pattern wherein the asset in concern typically continues in its previous trend’s direction with a breakout above the upper trendline. An ideal bull target is as much as the height of the Triangle.

That means Bitcoin price — again — expects a move worth $3,000-3,249 but to the upside. It puts the cryptocurrency’s bull target at around $23,000.

So far, fundamentals favor Bitcoin.

The inflation narrative sticks because of the Federal Reserve’s likelihood of buying short-dated bonds and corporate debts amid a low-interest environment. On the one hand, excessive US dollar liquidity prompts investors to dump the greenback. On the other, the prospects of earning lower yields divert their attention to riskier assets like Bitcoin.

That explains why the cryptocurrency’s Rising Wedge pattern appears less threatening.

Source: https://bitcoinist.com/the-curious-case-of-a-conflicted-bitcoin-bearish-wedge/?utm_source=rss&utm_medium=rss&utm_campaign=the-curious-case-of-a-conflicted-bitcoin-bearish-wedge

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Hackers Demand 200 Bitcoin Ransomware After Compromising Leading Israeli Insurance Company’s Sensitive Data

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A notorious hackers’ group called The Black Shadow has compromised one of the largest insurance companies in Israel – Shirbit. The attackers have already released sensitive client documents and have demanded a ransom in bitcoin, which could rise to $4 million by the end of the week.

Israeli Insurance Company Hacked

According to a local media outlet, the first confirmation of the hack came on Monday evening. Representatives of The Black Shadow group posted an initial batch of compromised documents on a Telegram channel.

Shirbit had contacted the National Cyber Directorate and Capital Market Authority to open an investigation. Shortly after, the organizations confirmed the breach and indicated that the hackers have also leaked numerous insurance details, alongside the initial documents.

According to the report, Shirbit has many high-profile customers, including government employees. Company CEO Zvi Leibushor said that the safety of its clients is Shirbit’s top priority.

“Shirbit has invested millions of shekels in securing databases and protecting against cyber-attacks and meets all the stringent regulatory requirements in this area.” He added that the firm has invested “all resources and efforts needed for an effective safe and rapid solution to this cyber-attack, whose real goal is to try to harm the Israeli economy.”

Demand Requested In Bitcoin

After releasing a small part of the compromised documents, The Black Shadow reps have contacted the victims to request 50 bitcoins (about $960,000 with today’s prices).

However, in case Shirbit failed to pay the attackers within the first 24 hours, the demand would double to 100 bitcoins. The procedure will repeat and double to 200 bitcoins if another 24 hours pass without payment.

Furthermore, the hackers threatened the insurance company that if it fails to transfer the funds by the end of this week, they will sell all compromised data to other bidders.

It’s worth noting that numerous other Israeli companies and high-profile individuals have recently become victims of similar hacks and demands.

CryptoPotato recently reported that 20 Israeli crypto executives, all clients of the local telecommunications giant Partner, were hacked by stealing their SMS messages.

Another coverage informed that a new type of ransomware attacked called Pay2Key has been executed against several Israeli companies in the second part of 2020. The perpetrators had requested the demand in bitcoins, similarly to the Shirbit hack.

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Source: https://cryptopotato.com/hackers-demand-200-bitcoin-ransomware-after-compromising-leading-israeli-insurance-companys-sensitive-data/

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