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Report: Financial Criminal Allegedly Revealed as Figure Behind ‘Blockchain Terminal’ ICO

The man behind the “Blockchain Terminal” ICO has been ousted as a convicted financial criminal who concealed his former identity.

The man behind the “Blockchain Terminal” (BCT) Initial Coin Offering (ICO) has been ousted as a financial criminal who concealed his former identity from employees and investors alike. An investigation into the circumstances were published Dec. 11 on news outlet The Block Crypto

The BCT project and its affiliated firm, CG Blockchain, are alleged to have raised as much as $31 million in an ICO to launch a crypto-focused version of the ubiquitous “Bloomberg Terminal” — a highly-successful financial data and trading tool for the traditional financial sector.

According to the report, BCT’s glossy “institutional-grade” tool for crypto “trading professionals” had at its helm a man who operated as “Shaun MacDonald,” but was in reality a convicted fraudster, Boaz Manor, who had received a four-year prison sentence in Canada in 2012 for siphoning $106 million from a Toronto-based hedge fund he co-founded.

The Canadian fund reportedly had $800 million in assets under management at its peak from 26,000 investors: Manor was also found guilty of using investors’ money to purchase $8.8 million worth of diamonds that later disappeared.

Having agreed to a lifetime ban from the securities industry, Manor-turned-MacDonald withheld his conviction and identity from his colleagues at BCT, reportedly “growing a beard and [dying] his hair red.” While formally assigning the company’s presidency to Bob Bonomo — former chief information officer at $500 billion asset management firm AllianceBernstein — MacDonald was reportedly the primary driver behind the BCT venture.

Although it marketed its $999 “Blockchain Terminal” to crypto hedge funds — a 32-inch “HD Terminal” with a hardware private key — the company is alleged to have raised most of its funds via a lucrative $31 million ICO for its native BCT token, which launched in September 2017.

One of the project’s purported investors is the high-profile crypto analyst and host of CNBC’s show Cryptotrader Ran Neuner, who tweeted his endorsement of the Blockchain Terminal in June, and is alleged to have invested as much as $1.3 million in the company’s ICO, according to two unnamed sources.

NeuNer yesterday stated he had “lost a ton” of his own cash investing in the BCT “fraud,” but accused The Block of “defamatory” misreporting, and falsely claiming to have reached out to contact him for comment on the story.

NeuNer has not responded to Cointelegraph’s request for comment by press time.

Besides MacDonald’s misrepresentations, the Block reports that Bonomo “quietly resigned” from BCT in summer, following which MacDonald revealed himself as Manor to his employees, and purportedly ceased to pay them. With Manor’s whereabouts “unclear,” BTC has now rebranded as BCT Inc., and announced in late October its Terminal would go on sale in to the public.

In June, the Bloomberg Terminal announced that it would begin listing crypto exchange Huobi’s Cryptocurrency Index, as well as nine crypto-trading pairs.

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Israel: Former PM Calls Crypto a ‘Ponzi Scheme,’ But Underlines Importance of Blockchain

Cryptocurrencies are “Ponzi schemes,” while blockchain is “important,” says former Israeli prime minister.

Ehud Barak, a former Israeli Prime Minister, has compared digital currencies to Ponzi schemes, Israeli media agency Arutz Sheva reported on Dec. 3.

Barak had participated in the Camp David Accords in 2000 as part of an attempt to solve the Israeli-Palestinian conflict, and now serves as the chairman of medical marijuana producer InterCure.

Speaking an event hosted by Israeli financial outlet Globes in Tel-Aviv this Sunday, Barak fielded a question comparing the alleged marijuana investment “bubble” to crypto by underlining that “he would never invest” in cryptocurrencies as “Bitcoin and cryptocurrencies [are] a Ponzi scheme.”

Meanwhile, Barak underlined that blockchain technology and smart contracts are important and useful technological and mathematical concepts, noting:

“Anyone who has patience and understands the depth of blockchain will find many uses, from holding sensitive medical information to smart contracts.”

Earlier this year, the Bank of Finland, the country’s central bank, had published a study calling cryptocurrencies not real currencies but instead “accounting systems for non-existent assets,” Cointelegraph wrote Jul. 2.

Back this fall, Israel’s central bank had also announced that it did not intend to issue its own digital currencies. A similar negation has been expressed by Masayoshi Amamiya, the deputy governor of the Bank of Japan (BOJ), who has doubted in the effectiveness of central bank-issued digital currencies (CBDC).  

Meanwhile, Christine Lagarde, the head of the International Monetary Fund (IMF), has urged international financial institutions to “consider the possibility to issue [state-backed] digital currency,” as Cointelegraph wrote Nov. 14.

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Thailand’s Revenue Departments Tests Blockchain for Tracking Value-Added Tax Payments

Thailand’s Revenue Department is conducting tests of a blockchain system for tracking value-added tax (VAT) payments.

Thailand’s Revenue Department is testing blockchain to track value-added tax (VAT) payments, English-language media outlet Bangkok Post (BP) reports Dec. 3.

Ekniti Nitithanprapas, director general of the Thai Revenue Department, said that the department “wants to use blockchain technology to prevent VAT refund fraud.” According to the BP, the nation is “on the path to becoming the first country to use the distributed ledger for tax probes if the technology is adopted.”

The article cited Nitithanprapas explaining that “blockchain is expected to help verify VAT invoices” and “root out fake invoices for VAT claims,” defining “adoption of new technologies” as his priority.

Thailand’s revenue department has also “set its sights on adopting machine learning and using artificial intelligence to learn and study tax-cheating practices” to ultimately “compel more people to enter the formal tax system.”

As Cointelegraph recently reported, the deputy secretary of the Thai Securities and Exchanges Commission recently stated that Thai-based Security Token Offerings (STOs) would break laws if they were released in international markets.

Tipsuda Thavaramara, the aforementioned deputy,explained that the regulator hasn’t decided “how to deal with STOs” yet. Moreover, Thailand also plans to legalize Initial Coin Offerings (ICOs), while also authorizing crypto exchanges and legitimizing cryptocurrency through regulation.

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Japan’s Financial Regulator to Introduce New ICO Regulations

The Japanese Financial Services Agency is introducing new, stricter ICO regulation to protect investors.

Japan’s financial regulator is set to introduce new Initial Coin Offering (ICO) regulations to protect investors from fraud, local news outlet Jiji Press reported Dec. 1.

According to “informed” sources cited by Jiji, business operators conducting ICOs will be required to register with Japan’s Financial Services Agency (FSA).

The agency is reportedly planning to submit bills revising financial instruments, exchanges and payment services laws to the ordinary parliamentary session that starts in January.

This action has been undertaken “in view of a number of possibly fraudulent ICO cases abroad” as a way “to limit individuals’ investment in ICOs for better protecting them.”

A study reported by Cointelegraph this July identified 80 percent of the ICOs conducted in 2017 as scams.

As Cointelegraph Japan reported last month, the FSA Study Group on Virtual Currency Exchange industry conducted its tenth meeting to discuss ICOs. The tokens emitted during ICOs where classified into three categories: virtual currencies without issuer, virtual currencies with issuer and tokens with issuers that are also obliged to distribute revenues.

According to the report, the first and second token classifications are subject to settlement regulation such as the Financial Instruments and Exchange Act. The third of ICO tokens is subject to investment regulations like the Financial Instruments and Exchange Act.

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Belgian Government Issues Cryptocurrency Fraud Warning

Belgium’s top financial regulator has issued a new warning about cryptocurrency scams.

The Financial Services and Market Authority (FSMA) declared that “cryptocurrencies are the hype of the year” in an announcement published on Monday. The FSMA is a public institution that supervises the Belgian financial sector alongside the National Bank of Belgium (NBB).

The regulator said in its missive that would-be investors should beware of would-be fraudsters who are peddling the idea of big profits through crypto-sales that ultimately prove to be fictitious.

The FSMA wrote:

“Fraudsters are well aware of that, and try to attract customers online through fake cryptocurrencies and huge profits. The only thing they actually do, however, is take the customers’ money and disappear. It is as simple as that.”

Officials added a list of 28 trading platforms that they have said are fraudulent in nature, and the agency said that it issued the update “based solely on the findings of the FSMA, in particular as a result of consumers’ reports.”

In February, FSMA issued its first warning on crypto scams, contending that people who trust suspicious-looking websites with their money “never recover the funds invested” or “simply have heard nothing further from the company with which they invested their money.”

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Greek Supreme Court Rules to Extradite Alleged BTC-e Owner Alexander Vinnik to Russia

The Supreme Civil and Criminal Court of Greece has ruled to extradite alleged BTC-e owner Alexander Vinnik to Russia to face several cyber fraud charges, Russian state news agency RIA Novosti reports Tuesday, September 4.

The formal decision on extradition to Russia will be issued September 14, coming into force the same day.

During the actual hearing, the Supreme Court will also consider France’s request on the alleged BTC-e owner’s extradition.

According to RIA, Vinnik agreed with his extradition to Russia. “[This case] is now up to politicians and their will,” his attorney Timofey Musatov stated.

The U.S., France, and Russia are currently arguing about the location of Vinnik’s extradition. Several Greek courts have previously ruled in favor of all three countries, with the final decision taken by Greek Minister of Justice.

Vinnik was arrested by Greek police back in July 2017 as the U.S. Department of Justice convicted him of fraud and money laundering around $4 billion worth amount of Bitcoin (BTC).

France later charged Vinnik with “defraud[ing] over 100 people in six French cities between 2016 and 2018”.

In the same time, the Russian government also intervened in the case, asking to extradite the Russian national to his home country. The amount of fraud Vinnik is charged with in Russia is equal to 667,000 rubles (around $9,800), RIA had reported last year.

Days before the final hearing in the Supreme Court, Vinnik’s attorney Makarov accused French prosecutors of trying to question Vinnik without Greek officials’ permission, Cointelegraph reported last week.

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Major Chinese Insurance Firm to Apply Blockchain Technology via New Partnership

Major insurance firm the People’s Insurance Company of China (PICC) will apply blockchain technology to its operations via a new partnership, according to a September 1 press release.

PICC has partnered with blockchain platform VeChain, and a global quality assurance and risk management company DNV GL to make their business more time and cost efficient. Additionally, the new partnership intends to improve fraud prevention, Know your Customer (KYC) compliance, as well as the claims experience.

In the announcement, PICC says that blockchain technology will bring digital transformation to the insurance industry, which will reportedly create an “instant compensation” for companies by offering a more profitable business model.

Specifically, the VeChainThor Platform will assist PICC with expanded data management and more effective data processing, while DNV GL will guarantee the insurance system’s data integrity as an independent third-party assurer.

Other insurance organizations worldwide have begun adopting blockchain technology. In August, the American Association of Insurance Services (AAIS) introduced the “first secure, open blockchain platform” for managing the collection of statistical data by insurance carriers, regulators, as well as other participating contributors.

In April, global insurance brokerage and risk management firm Marsh announced the first commercial blockchain service for proof of insurance in order to switch their system “from complicated and manual to streamlined and transparent.”

VeChain, which is headquartered in Shanghai, is reportedly the first blockchain firm to launch cooperation with Chinese government. VeChain’s token VET was launched in 2015, and is currently the 17th top cryptocurrency by market capitalization, trading at $0.0189 with a market cap of around $1 billion at press time.

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France’s Interrogation of Alleged BTC-e Owner Alexander Vinnik Was ‘Fake’, Says Attorney

Alleged former owner of crypto exchange BTC-e Alexander Vinnik was indicted and subjected to a “fake” interrogation by French prosecutors on Tuesday, August 28, his attorney Timofey Musatov told Russian news outlet Izvestiya Thursday, August 30.

Musatov claims that his client Vinnik was brought to a court in Greece where he is currently awaiting extradition and then informed about official charges in France.

Musatov also told Izvestiya that French prosecutors attempted to hold a “fake” interrogation without informing his lawyers, which he insists was a violation of Vinnik’s rights.

He further explains that under Greek law only local security forces can conduct investigation procedures in the country. Vinnik’s attorney raises the question to reporters of why “French citizens though involved in prosecution can proceed with investigation in another country with no relevant permission.”

According to Izvestiya’s report, Musatov did not specify which particular accusations Vinnik is facing in France nor did he mention the questions Vinnik was allegedly asked during the examination.

Vinnik was arrested by Greek police in July 2017 under the order of the U.S. Department of Justice, who accused him of fraud and laundering $4 billion in Bitcoin over the course of six years.

As Cointelegraph reported this July, France charged Vinnik in absentia of “defraud[ing] over 100 people in six French cities between 2016 and 2018” and requested his extradition. That same month a Greek court ruled to extradite Vinnik to France, but his attorneys appealed against the court’s decision in the Greek Supreme Court.

At the time of Greece’s ruling, the Russian government also intervened in Russian national Vinnik’s case, asking the court to extradite him to his home country.

The decision over which country will eventually apprehend Vinnik is up to Greece’s justice minister. The next hearing will reportedly be held on Tuesday, September 4, in the Supreme Civil and Criminal Court of Greece.

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New York District Judge Rules That CFTC Can Permanently Ban Crypto Firm

The U.S. Commodities Futures Trading Commission (CFTC) has won a court order to permanently bar the operator of the New York-based firm CabbageTech Corp. for cryptocurrency-related “bold and vicious fraud,” Bloomberg reported August 24.

Earlier this year, Patrick McDonnell, cryptocurrency promoter and operator of CabbageTech Corp., was charged with “fraud and misappropriation in connection with purchases and trading of Bitcoin (BTC) and Litecoin (LTC).” McDonnell subsequently argued that the CFTC did not have the authority to regulate his commercial operations; however, New York district judge Jack B. Weinstein rejected his claim.

In July, Weinstein reportedly held a nonjury trial where he claimed that McDonnell ran a “boiler room,” deceptively luring investors in different states and counties using “trickery, false statements and misappropriation of funds,” Bloomberg notes. Weinstein delivered a judgement that McDonnell must pay $290,429 in restitution and $871,287 in penalties.

According to Bloomberg, CabbageTech was not represented by a lawyer, as McDonnell claimed he could not afford to pay for counsel. McDonnell also stopped appearing in court during the trial.

McDonnell was also involved in a different lawsuit by the CFTC against his another company, Coin Drop Markets. The CFTC claimed in the the lawsuit that customers who paid McDonnell and Coin Drop for crypto trading advice did not receive the advice they paid for, and that McDonnell shut down Coin Drop’s website and failed to respond to customers. The lawsuit also notes that Coin Drop was not registered with the CFTC.

Last month, speaking from Capitol Hill, Congressman Bill Huizenga argued that Congress should empower financial regulators such as the U.S. Securities and Exchange Commission (SEC) and the CFTC to regulate the cryptocurrency market in compliance with the same rules governing other currencies and stocks.

In May, the CFTC chairman Chris Giancarlo said he doesn’t see comprehensive crypto legislation coming from the federal level in the near future, pointing out that the statutes by which the CFTC is operating were written in 1935. He added that embracing a modern innovation like Bitcoin within terms invented decades ago will take time.

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AT&T Sued for $224 Million After Phone Hackers Rob Crypto Investor

Cryptocurrency investor Michael Terpin has sued the telecom giant AT&T, alleging that the company failed to protect his cell phone from a hacking incident that ultimately cost him $24 million.

In a lawsuit filed by Los Angeles litigation firm Greenberg Glusker on August 15, Terpin claimed that AT&T’s employees have been complicit in a SIM swap fraud. In this type of scam, criminals pose as the owners of their victims’ mobile phone numbers, convincing telecom providers to grant them access to their phones.

This allows them to access the victim’s accounts at various services, which includes cryptocurrency wallets.

The lawsuit claims that Terpin’s account has been hacked twice in seven months, saying “most troubling, AT&T has not improved its protections even though it knows from numerous incidents that some of its employees actively cooperate with hackers in SIM swap frauds by giving hackers direct access to customer information and by overriding AT&T’s security procedures.”

Terpin is seeking $24 million in compensatory damages and a further $200 million in punitive damages, according to the suit.

The lawsuit also claims that security issues are nothing new to AT&T, which has been already accused of failing to protect its clients.

“In recent incidents, law enforcement has even confirmed that AT&T employees profited from working directly with cyber terrorists and thieves in SIM swap frauds,” the plaintiff contended.

In a statement, Terpin said that “mainstream adoption of cryptocurrency cannot take place as long as phone company employees are handing over critical unauthorized access to the heart of everyone’s digital lives.”

When reached for comment, AT&T director for corporate communications Jim Greer told CoinDesk that “we dispute these allegations and look forward to presenting our case in court.”

He declined to elaborate on the company’s objections to the allegations.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.