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Opinion | The Cryptocurrency Adventures of Mark Zuckerberg and SBF

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Opinion | The Cryptocurrency Adventures of Mark Zuckerberg and SBF

Again in 2019,

Fb

needed to advertise a brand new digital forex, Libra, to prospects across the globe, a lot of them younger individuals coming into the money financial system for the primary time by their smartphones. It appeared then a promising innovation and nonetheless does now.

The proposal sadly landed at a second when the tech giants had been coming underneath political assault. A spirit of “let’s cease making an attempt new issues” was invading each political events. CEO

Mark Zuckerberg

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shortly retreated when he might need put Libra on the market in defiance of the politicians to let a world public determine if it was helpful.

“You consider you’re above the legislation,” ranted liberal Democratic Rep.

Maxine Waters

in a listening to wherein, for as soon as, she was seconded by average and even conservative colleagues.

Consequence: Libra was stillborn for 2 years and primarily deserted by Fb. Different experiments akin to bitcoin have continued, after all, serving, like porn within the Nineteen Nineties, as a check mattress for brand spanking new enabling applied sciences. However none have caught on as a very standard medium of trade and retailer of worth: too unstable, too esoteric, extra like a tulip bulb you would possibly purchase hoping it should go up for no good motive.

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The rise and fall of

Sam Bankman-Fried

and his FTX trade could be the greatest information in cryptocurrency, nevertheless it has performed nothing to reply fundamental questions. Will cryptocurrencies ever be helpful? Is blockchain an necessary innovation?

The episode does say one thing that hardly wanted saying about depositories or different companies that promise to maintain your property secure and don’t. If Mr. Bankman-Fried offered you a motorcycle lock and later was stealing your bike and getting in accidents with it, you’d have the identical grievance that prospects of his now-bankrupt cryptocurrency trade have.

The remainder of the story doesn’t ring any bells for novelty or originality both—the superficial fascination with a younger face and his short-lived, in a single day wealth primarily based on gee-whizzery that no one actually might clarify.

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Yawn.

The irony that strikes me as fascinating is the best way Mr. Zuckerberg was handled vs. the best way Mr. Bankman-Fried was handled.

When Mr. Zuckerberg tried to launch his cryptocurrency, he positioned his invaluable, established, closely scrutinized firm behind it, deployed armies of legal professionals and had each company and private incentive to do a accountable job, if solely to guard his personal popularity and billions price of Fb shares.

He sought the permission of the permissioncrats, was keen to handle their complaints, search their enter. In an amusing account, the Monetary Instances describes

Janet Yellen

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and

Jay Powell,

over breakfast, asking themselves “What’s in it for us?” and placing the ultimate stake in Libra on June 24, 2021.

To at the present time, as a result of it meets their wants, many nonetheless consider an infinitesimal driplet of Russian Fb advertisements elected

Donald Trump.

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Of the trigger célèbre of 2018, the Fb-Cambridge Analytica scandal, who caught round by the authorized course of that exposed it to be a nothing-burger?

It didn’t assist that Mr. Zuckerberg had been the villain of a Hollywood film earlier than his still-thriving firm even IPOed, whereas the inevitable

Netflix

or Hulu collection on SBF will arrive lengthy after the actual fact.

In interview after interview, Mr. Bankman-Fried now berates himself for not instituting enough controls to cease buyer cash from by some means getting used to make proprietary crypto bets that every one have gone south. “I ask myself lots how I made a collection of errors,” he moaned to this newspaper.

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The reply is straightforward. He didn’t institute controls as a result of he didn’t want any, as a result of buyer cash got here anyway on a crest of bought-and-paid-for credibility from politicians, superstar endorsers, sports activities groups sporting his emblem, media cheerleaders, sponsored business confabs wherein his pronouncements had been accorded gospel standing.

From the episode you would possibly deduce why caveat emptor is the worst regulator besides all of the others, and why authority figures are sometimes higher at looking for their very own pursuits than yours.

Joe Biden,

say, decides what he ought to do a few pending rail strike by asking what greatest serves the political pursuits of Joe Biden. As a rule, after all, this gives a workable method ahead and is why democracy stays the least horrible type of authorities.

Nevertheless it additionally produces its haywire moments. One got here when the political institution banded collectively to crush Mr. Zuckerberg’s conscientious try at a cryptocurrency experiment. One other got here when the identical institution helped fan Mr. Bankman-Fried’s hole simulation of a accountable enterprise till it relieved its trusting prospects of an estimated $51 billion in private wealth.

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FBI finds $8.3 million embezzled by ‘pure evil’ Kansas banker in a cryptocurrency account in the Cayman Islands

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FBI finds .3 million embezzled by ‘pure evil’ Kansas banker in a cryptocurrency account in the Cayman Islands

Sobs of relief broke out in a federal courtroom in Kansas on Monday as dozens of people whose life savings had been embezzled by a bank CEO learned that federal law enforcement had recovered their money.

“I just can’t describe the weight lifted off of us,” said Bart Camilli, 70, who with his wife Cleo had just learned they’d recover close to $450,000 — money Bart began saving at 18 when he bought his first individual retirement account. “It’s life-changing.”

In August, former Kansas bank CEO Shan Hanes was sentenced to 24 years after stealing $47 million from customer accounts and wiring the money to cryptocurrency accounts run by scammers. Prosecutors said Hanes also stole $40,000 from his church, $10,000 from an investment club and $60,000 from his daughter’s college fund and lost $1.1 million of his own in the scheme. Deposits were “jettisoned into the ether,” said prosecutor Aaron Smith.

Hanes’ Heartland Tri-State Bank, drained of cash, was shut down by federal regulators and sold to another financial institution. Customers’ savings and checking accounts amounting to $47.1 million were insured by the Federal Deposit Insurance Corp., which paid off their losses.

But there were still 30 shareholders of the community-owned rural bank Hanes helped found — including his close family friends and neighbors — who thought they lost $8.3 million in investments: well-planned retirements were upended, funds for long-term eldercare gone, education funds and bequests for children and grandchildren zeroed out.

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On Monday the shareholders stood to cheer federal Judge John W. Broomes in Wichita after he told them, one at a time, that they’d be paid back in full. The FBI recovered the funds from a cryptocurrency account held by Tether Ltd. in the Cayman Islands.

During an earlier sentencing hearing, these victims had called Hanes a “deceitful cheat and a liar,” and “pure evil.”

Margaret Grice came to court Monday figuring she’d get $1,000 back. Instead, she learned she’d be recovering almost $250,000, her entire 401(k).

“I’m just really thrilled,” she said. “I can breathe.”

Prosecutors said Hanes, who was the CEO of Heartland Tri-State Bank in Elkhart, Kansas, lost the money in a scam referred to as “pig butchering,” or the way pigs are fattened before slaughter. In the scam, a third party gains a victims’ trust and, over time, convinces them to invest all of their money into cryptocurrency, which immediately disappears. U.S. and U.N. officials say these schemes are proliferating, with scammers largely in Southeast Asia increasingly taking advantage of Americans.

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Hanes started buying what he thought was $5,000 in cryptocurrency in late 2022, communicating with someone who had reached out on WhatsApp, according to court records. A few months later he transferred over his church and investment club funds. Records show the scam accelerated in the summer of 2023, when Hanes wired $47.1 million out of customer accounts in 11 wire transfers over just eight weeks. Each transfer, he thought, was necessary to end the investment and cash out, court records said. He watched, on a fake website, as the money appeared to grow to more than $200 million.

“He was to take some of the money, and the rest of the money was supposed to go back to the bank,” his attorney John Stang explained. “Now it’s fiction, it didn’t exist. We all know that now … It failed big time.”

Hanes, who was not in court Monday, apologized at an earlier sentencing hearing.

“From the deepest depth of my soul, I had no intention of ever causing the harm that I did,” he said. ”I’ll forever struggle to understand how I was duped and how what I thought was just getting the money back was making it worse.”

Prosecutors said Hanes wasn’t just the victim of a scam, he crossed a line when he began taking customers’ money and violating banking regulations. He pleaded guilty to embezzlement by a bank officer in May.

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His prominent standing in his hometown of 2,000 made it easier for him to get away with it, a Federal Reserve System investigation found; he had been on the school board, volunteered as a swim meet official, and served on the Kansas Bankers Association.

He also was a banking leader beyond his rural community. In recent years, he testified to Congressional committees about the importance of local banks in farming communities, and he served as a director for the American Bankers Association, which represents almost all banking assets in the U.S.

On Monday, prosecutors said the FDIC wanted to be paid back for the insurance claims it reimbursed to bank customers. But Judge Broomes said the economic circumstances of shareholders “who became insolvent because of a fraud scheme” justified paying them back first, before the FDIC recovers anything.

Hanes, 53, may be in his late 70s when he is released and is unlikely to be able to pay the FDIC the $47.1 million still owed.

In a court filing, Hanes and his attorney tried to explain what had happened.

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“Mr. Hanes made some very bad choices after being caught up in an extremely well-run cryptocurrency scam,” they said. “He was the pig that was butchered.”

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$3M Bitcoin Forecast: Vaneck's Model Sees Central Bank BTC Adoption – Markets and Prices Bitcoin News

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M Bitcoin Forecast: Vaneck's Model Sees Central Bank BTC Adoption – Markets and Prices Bitcoin News
Bitcoin could reach $3 million, according to asset manager Vaneck, with a model showing its potential as a reserve asset held by global central banks. Bitcoin as Central Bank Asset? The $3M Target Driving Big Conversations Matthew Sigel, head of digital assets research at asset management firm Vaneck, analyzed bitcoin’s recent rise in an interview […]
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Malign interference and cryptocurrency: A new frontier in disinformation and national security

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Malign interference and cryptocurrency: A new frontier in disinformation and national security

This content was written by Chainalysis.

In a world where nearly half the population will participate in national elections in 2024, the stakes for securing democratic processes have never been higher. Disinformation campaigns—especially those funded through crypto—have become a potent tool for states like Russia, China, and North Korea to destabilize democratic institutions, influence public sentiment and erode trust in governance. Chainalysis’ Malign Interference and Cryptocurrency report sheds light on the pivotal role of crypto tracing in identifying and countering these threats.

In spite of their pseudonymity, the transparency of the blockchain provides investigators a powerful tool to investigate how malign actors abuse cryptocurrency. Each transaction leaves a permanent, traceable record, allowing analysts to connect the financial dots across complex networks of accounts. This traceability was crucial in identifying the funding behind Russian disinformation efforts in recent U.S. elections. The funds used to purchase web domains and social media accounts were traced back to Kremlin-affiliated actors, highlighting crypto’s role in the infrastructure of disinformation.

Sanctions are among the most effective countermeasures against malign actors using crypto for disinformation. For example, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has sanctioned multiple crypto addresses associated with Russian disinformation entities. These sanctions disrupt financing and make it difficult for actors to raise, transfer, and off-ramp their funds. However, these actors adapt quickly, finding new means of funneling funds and evading detection.

Looking ahead, as AI amplifies the reach and sophistication of disinformation, crypto tracing must continue to evolve. The ongoing development of blockchain analytics tools promises to meet the challenge of tracing disinformation funding in a world where deepfakes, bots, and AI-generated profiles are becoming the norm. The findings from the Malign Interference and Crypto report underscore the importance of collaboration across the public sector, private companies, and international organizations to safeguard democracies from crypto-fueled disinformation threats.

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