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China Busts a Crypto-Related Money Laundering Network of 1,100 People

China Busts a Crypto-Related Money Laundering Network of 1,100 People

The Chinese government keeps enforcing its cryptocurrency crackdown campaign as it has arrested over a thousand people who allegedly got engaged in money laundering through cryptos. According to a report from The Times of India, the detained people used profits from different crimes to acquire virtual currencies.

Specifically, the country’s Ministry of Public Security unveiled that it busted a criminal ring of 1,100 people involved in money laundering, who charged clients a fee ranging between 1.5% – 5% to exchange illicit proceeds into cryptos via digital asset exchanges. However, authorities did not disclose the exact amount of money laundered on the scheme or the exchanges used for such transactions.

Also, the Ministry said that most of the illegal profits laundered via cryptocurrencies came from telephone and internet-related scams, according to a statement released on the Ministry of Public Security’s WeCht account. The crackdown comes in the midst of a stricter stance that China has strengthened this year against crypto-related activities such as mining and trading.

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Chinese Crypto Crackdown Keeps Alive

The authorities first banned crypto trading in 2017. However, the latest headlines suggest a broader campaign to taking down all Bitcoin mining operations and enhancing the existing rulings on cryptocurrencies in the Asian giant. In fact, China’s crypto mining industry is one of the biggest ones in the world.

Still, the Chinese government has been on the hunt for mining farms, as on Wednesday, the northwestern province of Qinghai banned crypto-related mining. There are no major details on the significance that such a province means for the industry as of press time. Similarly, in April, the northern region of Inner Mongolia shut down all its crypto mining operations, arguing it did not comply with the energy consumption targets’ standards.

Moreover, the crypto crackdown in China has extended to domestic social media, as several cryptocurrency-related accounts were reportedly blocked on Weibo over the weekend.

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Banking Regulators Call for Conservative Capital Rules in Bitcoin Holdings

Banking Regulators Call for Conservative Capital Rules in Bitcoin Holdings

The Basel Committee on Banking Supervision (BCBS), a group composed of regulators from the globe’s leading financial centers, said on Thursday that banks should set aside enough capital to cover any Bitcoin holdings in full, seeking a conservative approach. According to the committee, the strategy should be adopted to prevent any side effects due to the widespread use of cryptos by major lenders.

In fact, the group, quoted by Reuters, proposed some ‘twin approach’ to capital requirements for virtual currencies in the wake of what they named a rising sector. Furthermore, the Swiss-based Basel committee stated in a public consultation paper that although banks exposure is limited to crypto-assets, it could pose a risk for the future if proper capital requirements are not implemented on time.

One of the proposals made by the committee is to split the current conditions into two groups. One should include tokenized traditional assets and stablecoins, which should be treated in the same way as bonds or equities. “This means the weighting could range between 0% for a tokenized sovereign bond to 1,250% or full value of asset covered by capital,” the report reads.

The second group should have overall cryptocurrencies like Bitcoin, but with a ‘conservative prudential treatment’ that seeks a risk weighting of 1.250%.

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“The capital will be sufficient to absorb a full write-off of the crypto-asset exposures without exposing depositors and other senior creditors of the banks to a loss,” the Basel Committee on Banking Supervision commented.

El Salvador Case

Additionally, there are concerns about the recent officialization of Bitcoin as a legal tender in El Salvador by the government of Nayib Bukele. Central banks have been keeping a cautious stance towards cryptos, repeatedly warning investors that they could lose all their money on any crypto-related investment.

Still, the Swiss-based Basel committee recommends conducting more public consultations on capital requirements before establishing final rules.

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American Financial Giant Launches Dedicated Cryptocurrency Division

American Financial Giant Launches Dedicated Cryptocurrency Division

State Street Corporation, one of the oldest financial firms in the US, announced yesterday that it has launched a new dedicated digital finance unit to focus on cryptocurrency assets, blockchain and tokenization.

According to an announcement, the company has appointed Nadine Chakar as the Head of the new division. Dubbed ‘State Street Digital’, the newly launched unit will support cryptocurrency assets. Additionally, the company is planning to enhance its current digital finance capabilities.

State Street is one of the largest financial firms around the world. The company has more than $40.3 trillion worth of assets under custody along with $3.6 trillion in assets under management. State Street has nearly 39,000 employees across the world.

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Commenting on the latest announcement, Ron O’Hanley, Chairman and Chief Executive Officer of State Street Corporation, said: “The financial industry is transforming to a digital economy, and we see digital assets as one of the most significant forces impacting our industry over the next five years. Digital (cryptocurrency) assets are quickly becoming integrated into the existing framework of financial services, and it is critical we have the tools in place to provide our clients with solutions for both their traditional investment needs as well as their increased digital needs.”

Cryptocurrency Adoption

Since the start of 2021, the adoption of cryptocurrency assets has increased rapidly. Financial services companies including Goldman Sachs, JPMorgan and Morgan Stanely have started offering cryptocurrency services to wealthy clients. In a research note published in April 2021, JPMorgan’s strategists gave Bitcoin a long-term price target of $130,000. With the launch of a dedicated digital finance division, State Street is planning to take advantage of the growing interest in the cryptocurrency market.

“The objective is to evolve the platform into a multi-asset platform to support cryptocurrency assets among other asset classes. The aim will also be to support our peer-to-peer ambitions by creating new liquidity venues for our clients and investors worldwide,” State Street mentioned in the official announcement.

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VanEck Lists Bitcoin and Ethereum ETPs on SIX

VanEck Lists Bitcoin and Ethereum ETPs on SIX

VanEck, a New York-based investment management firm, has listed four new cryptocurrency exchange-traded products (ETPs) on SIX, Switzerland’s leading stock exchange.

Officially announced on Friday, the newly listed products will give investors exposure to the prices of the top two digital currencies: Bitcoin and Ethereum. They can be traded against both the US dollar and Swiss franc.

Exchange-traded cryptocurrency products are seen as a gateway for mainstream adoption. Traders can cut short the technicalities of cryptocurrency trading and purchase and sell the assets directly from their regular brokerage accounts.

Altcoin Demand Is Soaring

VanEck has become one of the many companies with their crypto products listed on the Swiss exchange. Additionally, SIX earned the reputation of becoming a crypto-friendly venue with a total of 100 crypto ETPs and structures products.

Though the initial rush was only for Bitcoin, demand for top altcoins like Ethereum is also gearing up.

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“Ethereum is the second most liquid cryptocurrency after Bitcoin,” said Christian Reuss, Head SIX Swiss Exchange. “We’re proud to offer 59 products on the two most liquid cryptocurrencies for trading with a market capitalization of USD 1,000 bn.”

Moreover, the volatility in the cryptocurrency market spiked the demand for such exchange-listed products. SIX revealed that nearly CHF 4.6 billion in volume of its listed cryptocurrency products have been traded since the beginning of this year. That was a 310 percent gain compared to the figures for the entire 2020.

In addition, VanEck is approaching other European exchanges with its crypto products. At the end of last month, the company listed Bitcoin and Ethereum exchange-traded notes on Euronext’s Amsterdam and Paris exchanges.

Meanwhile, the company could not manage to gain approval from the United States financial markets regulator for the listing of a much-anticipated Bitcoin exchange-traded fund (ETF). VanEck is one of the many companies whose applications are currently being reviewed by the SEC.

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South Korean Energy Company to Audit Companies Suspected of Mining Cryptos

South Korean Energy Company to Audit Companies Suspected of Mining Cryptos

KEPCO, the South Korean state energy company, announced that it would start overseeing and auditing companies that it suspects of using industrial and agricultural electricity for cryptocurrency mining. According to Seoul Kyungjae, the power supply distributed for both industries are cheaper than the electricity used for general use.

Authorities are concerned about the increasing use of crypto mining powered by cheap electricity because it leads to a significant deficit in the incomes of KEPCO, as the mining farms run 24 hours a day. “We have started a field investigation targeting customers who use electricity a lot among agricultural and industrial customers, and the related investigation will be conducted by the end of this month,” a KEPCO official said on the matter.

In fact, electricity spent for industrial and agricultural purposes is subsidized mainly by the government. However, KEPCO believes there are suspicious of several people secretly mining cryptocurrencies by using subsidized power. But this is not the first time that the state-run energy company is launching a crackdown on the illegal usage of electricity for crypto mining.

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Previous Crackdowns

In 2018, KEPCO found that 38 companies used industrial and agricultural power to run digital asset mining, leading to multiple investigations and fines for about 500 million Korean won. The crackdown was possible due to a survey conducted by the company, which spotted a sudden surge in the electricity rates and irregular patterns in the usage of the power.

Furthermore, KEPCO officials are concerned that crypto mining farms could lead to overload power systems, and eventually, it can affect transmission and distribution that end on a blackout. “Recently, as the value of a virtual currency rises, the amount of electricity used in violation of the contract seems to be increasing. If caught, a penalty may be charged by adding a penalty to the unfair profit, and if the penalty is not paid, the power can be cut off,” a representative from the energy company added.

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US SEC Charges Florida Dentist for Three Separate Securities Frauds

US SEC Charges Florida Dentist for Three Separate Securities Frauds

The US Securities and Exchange Commission (SEC) announced on Friday that it had charged Edgar M. Radjabli of Boca Raton, Florida, and two entities he controlled for engaging in three separate securities frauds – one of them related to a token offering.

According to the press release, Radjabli owned an unregistered investment adviser firm named Apis Capital Management LLC that allegedly conducted a fraudulent offering of a coin dubbed “Apis Tokens.” These cryptos represented tokenized interests Apis Capital’s main investment fund, the US SEC said. In fact, Radjabli – formerly a practicing dentist – published a press release, falsely claiming such a token offering raised $1.7 million.

Furthermore, the complaint alleges that the former dentist also allegedly manipulated the securities market for Veritone Inc., an existing and publicly traded artificial intelligence company, as he announced in 2018 an unsolicited cash tender offer to purchase the firm for $200 million.

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However, that was another false statement, as Radjabli and his adviser company didn’t have any money to make that purchase possible. “Radjabli allegedly generated $162,800 in illicit profits on the resulting increase in Veritone’s stock price by trading Veritone securities on behalf of Apis Capital and an affiliated fund,” the SEC added. The third fraud consisted of another fraudulent securities scheme, as Radjabli allegedly raised around $20 million from more than 450 investors via My Loan Doctor LLC.

Defendants Agreed to Settle

“Radjabli falsely represented that investor funds raised by Loan Doctor would be used to originate loans to healthcare professionals which then would be securitized and sold to large institutional investors.  Instead, Radjabli allegedly invested the bulk of the investor funds in unsecured and uninsured loans to digital asset lending firms and loaned almost $1.8 million of investor proceeds to Apis Capital,” the complaint reads.

The defendants in the case have agreed to settle the charges against Radjabli, Apis Capital, and Loan Doctor. If the court approves the settlement, it would require Radjabli to pay a total of $600,000 in monetary relief comprised of $162,800 in disgorgement, $17,870 in prejudgment interest, and $419,330 in civil penalties.

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