Bitcoin

Bitcoin Daily: SEC Freezes Crypto Firm’s Assets, Alleging It Stole $12M From Investors; Hong Kong: 39 Pct Of New FinTechs There Are Blockchain Firms; Coinbase Eyes Selling Blockchain Analytics To IRS, DEA

The Securities & Exchange Commission (SEC) has moved to freeze the assets of a $12 million cryptocurrency mining and multi-level marketing (MLM) scheme, Coindesk reports.

The defendant in the case is Utah resident Daniel F. Putnam, whose businesses — MMT Distributions and R&D Global — and associates — Angel A. Rodriguez of Utah and Jean Paul Ramirez Rico of Colombia — are alleged to have lied to investors and misappropriated funds.

The scheme by the “Modern Money Team,” as Putnam referred to the entire operation, was reportedly to offer investors “cryptocurrency trading packages” they had purchased, which could have ostensibly been used for “arbitrage” opportunities at Bitfinex.

The group managed to get $12 million from 2,000 investors, Coindesk reports.

But the defendants allegedly ceased paying out investors in November 2019 while still raising funds well into 2020. Putnam reportedly used some the money for a condominium and a spa, according to the complaint.

In Hong Kong, 39 percent of new FinTech firms launched in the last year are now operating via blockchain, Cointelgraph reported.

The firms are operating using distributed ledger technology (DLT), which has been growing — in 2018, the number of firms using it sat at only 27 percent by comparison.

Enterprise DLT solutions are the largest chunk of the total with 45 percent utilizing blockchain, while trading platforms make up 27 percent, and digital asset custodians comprise 14 percent of the total. Trade finance settlement makes up 9 percent.

Coinbase is looking to sell Coinbase Analytics, its blockchain analytics software, to the U.S. government, The Block reported.

Though no sale has been made as of Sunday (June 7), there are some firms beginning to show interest, with both the U.S. Drug Enforcement Association (DEA) and Internal Revenue Service (IRS) looking to buy the license, according to documents seen by The Block. The purchase, according to the IRS document, would be useful to help keep ahead of crimes related to cryptocurrency and digital banking.

The news comes a year after Coinbase’s purchase of blockchain intelligence platform Neutrino, which engineering director Varun Srinivasan said would be an aid in preventing fraud and identifying bad actors.

The purchase gained some controversy due to Neutrino’s founder’s involvement in Hacking Team, the Italian spyware firm. Coinbase said it would part ways with the team members involved with that firm.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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