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Malta, Italy Issue Joint Warning Over Potential Unlicensed Cryptocurrency Exchange

A statement from Maltese regulators requires site OriginalCrypto to stop serving the Italian and Maltese markets.

Malta has warned citizens about an unlicensed cryptocurrency exchange serving its domestic market. Regulators ordered the platform to stop operating in a notice Dec. 5.

The offending platform, OriginalCrypto, had first come to the attention of Italian officials concerned it may not have the required license to offer authorized “investment services and activities.”

The platform’s owner, SolutionsCM Ltd., has now come under scrutiny from both countries, with Malta’s Financial Services Authority (MFSA) sharing the warning from Italy:

“The Commissione Nazionale per le Società e la Borsa (CONSOB) has ordered the following companies to cease infringement of art. 18 of the Italian Legislative Decree No. 58/1998, consisting of the provision of unauthorised investment services and activities to the Italian public performed by SolutionsCM Ltd. via the website.”

As Cointelegraph frequently reports, Malta has sought to become one of the world’s most permissive jurisdictions regarding both cryptocurrencies and blockchain technology.

As part of its bid to transform into a so-called “Blockchain Island,” various regulatory overhauls have accompanied MFSA-endorsed deals with industry businesses, including major exchanges such as Binance and Huobi.

OriginalCrypto remains far from those legitimate activities, however, sources warning about the likely “scam” scheme earlier this year.

“Portraying their platform as a cryptocurrency financial brokerage, has engineered a clever marketing approach to promote their illicit investment services to consumers across the world,” monitoring site ScamBitcoin wrote in February.

According to the site’s investigations, OriginalCrypto had made dubious claims about its setup, including being operated by a Bulgarian-based parent company “Bali Limited Ltd.”

“We could find no evidence to support that Bali Limited Ltd was an actual corporation,” the site warned:

“Furthermore, the alleged corporate address provided for Bali Limited Ltd does not appear to be a factual physical address and computes to a variance of their disclosed address.”

Last week, the U.S. state of Ohio’s decision to accept cryptocurrency for tax payments drew the ire of the mainstream press after it emerged officials involved were unaware of the scams that had affected previous such efforts elsewhere.

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Seven EU States Sign Declaration to Promote Blockchain Use

During an EU meeting, seven southern EU member states released a declaration asking for help in the promotion of blockchain.

Seven southern European Union member states have released a declaration calling for help in the promotion of Distributed Ledger Technology’s (DLT) use in the region, the Financial Times (FT) reports Dec. 4.

The declaration was reportedly initiated by Malta and signed by six other member states, France, Italy, Cyprus, Portugal, Spain and Greece, during a meeting of EU transport ministers in Brussels on Tuesday.

The participating governments explained that DLT –– one type of which is blockchain –– could be a “game changer” for southern EU economies.

Namely, the document cites “education, transport, mobility, shipping, Land Registry, customs, company registry, and healthcare” as services which can be “transformed” by this technology. The group also cites blockchain tech’s use for protecting citizens’ privacy and making bureaucratic procedures more efficient.  

The report further notes that this technology has potential beyond digital government services:

“This can result not only in the enhancement of e-government services but also increased transparency and reduced administrative burdens, better customs collection and better access to public information.”

In mid-November, a member of the Executive Board of the European Central Bank, Benoit Coeure, declared that he considers Bitcoin the “evil spawn of the [2008] financial crisis.”

Also in November, banking groups BBVA and Banco Santander joined the EU International Association for Trusted Blockchain Applications (IATBA), Cointelegraph reported. The association itself is set to be launched Q1 2019 and aims to develop blockchain infrastructure and standards.

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Global Retail Giant Auchan Expands Blockchain Tracking Solution to Five More Countries

French retail giant Auchan has expanded its blockchain products’ traceability solution after successful a 18-month pilot in Vietnam.

Global retail giant Auchan is expanding TE-FOOD’s blockchain solution to improve the transparency of products’ history, U.S.-based news agency Cision PRWeb reports today, Dec. 4.

The French retail group, which is reportedly the 13th largest food retailer globally with operations in 17 countries, has extended TE-FOOD’s FoodChain solution to five more countries.

FoodChain is the international traceability information ledger by TE-FOOD, first applied by Auchan in its Vietnam branch. After a 18-month test of TE-FOOD’s blockchain tool in Vietnam, Auchan has now decided to deploy the products’ traceability solution in France, Italy, Spain, Portugal, and Senegal.

The blockchain-powered retail monitoring system provides tracking for selected product categories from farm-to-table, as well as recording food quality data and related logistics information. Auchan consumers are able to check products’ history via their smartphones by scanning the products’ QR codes and getting access to authentic data recorded on FoodChain.

According to the article, TE-FOOD’s blockchain solution implemented by Auchan is reportedly the world’s largest farm-to-table food traceability program in Vietnam, with over 6,000 clients including major global food giants such as AEON, CP Group, Lotte Mart, and others.

In mid-November, another French retail giant Carrefour revealed it was implementing a blockchain-enabled food tracking platform powered by Hyperledger for tracing poultry in Spain.

Earlier in September, U.S. retail giant Walmart and its division Sam’s Club, a membership-only retail warehouse club, also announced that they will require suppliers of leafy greens to deploy farm-to-store tracking system based on blockchain.

In late November, a fintech expert predicted that market value of blockchain in global retail will see a 29-fold increase in value in the next 10 years.

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Coinbase Takes on Cryptocurrency Gift Cards With Limited Rollout

Major U.S. cryptocurrency wallet and exchange Coinbase has entered the crypto gift card market, allowing customers in certain countries to exchange coins for brand e-certificates, according to their July 25 blog post.

In the post, Coinbase confirmed the new option was made possible through a partnership with UK-based startup WeGift, and will effectively allow cryptocurrency holders to pay for goods and services through brands such as Nike, Tesco, Uber, Google Play, Ticketmaster, and Zalando:

“Starting today, Coinbase customers in the EU and Australia are able to instantly spend their cryptocurrency balances on e-gift cards, making us the first trading platform to offer direct withdrawals into e-gift cards.”

The blog post notes that the new service will be initially be available in the UK, Spain, France, Italy, the Netherlands, and Australia, with plans to expand both the number of retailers and markets “over the next three months, as well as looking to expand into other countries soon after.”

While cryptocurrency acceptance among major brands remains decidedly low — travel booking giant Expedia quietly removed their Bitcoin (BTC) payment option in June — other industries accepting crypto have met with positive responses. The nonprofit Freedom of the Press Foundation received a 1,000 Ethereum (ETH) (around $469,000 today) donation the first day it added crypto payment options.

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Italy and Crypto: Naples Mayor Talks About City’s Focus Group to Promote Blockchain and Possible Municipal ICO

A working group devoted to blockchain on the initiative of institutions, hundreds of volunteers from all over the world, a big and efficient plan for the future – it’s happening in Naples, the capital of the Italian region of Campania in the south of the country. The city, through a recent press release, announced the creation of a special “focus group,” whose purpose is to “develop and eventually implement objectives related to blockchain technology”.

In response, hundreds of scholars, experts, professionals and enthusiasts signed up as volunteers to participate in the project. We are talking about 300 people from all over the world.

Naples working group

We spoke with Felice Balsamo, an associate of the mayor of Naples, so that he could explain to us the details of one of the very first institutional projects in Italy. One could notice Felice’s competence in talking about ICOs, cryptocurrencies and blockchain as a tool to speed up government procedures.

Felice told Cointelegraph that Naples started discussing this project last December. Currently the administration is creating focus groups with participants divided by skills and goals. Among the volunteers there are students, engineers, developers, as well as lawyers, accountants and spokespeople of various institutions.

All the discussions start from a central theme: transparency. Volunteers will examine and develop possible solutions for birth records, elections and public administration in general. Another group will study the issue of transparency from a “private” point of view instead.

The focus groups won’t deal with just public administration, but also the businesses of the city — the beating heart of its economic life.

Solutions will be studied to train small- and medium-sized enterprises, teaching them to accept cryptocurrency payments and to embrace the advantages of these technologies.

Other focus groups will deal with international relations with other cities active in the sector, including Spain, Portugal, Argentina and Venezuela, involving city councilors.

There is also talk about fundraising for projects necessary for the city and even about an ICO aimed at developing a city cryptocurrency.

According to the mayor’s associate, the focus group could indeed create a new cryptocurrency, designed to promote transactions between public administration and citizens, but also contribute to the city’s economy with many different projects.

Among the participants there’s also ANN — a company which operates in the field of public transportation — and ASIA — a society specialized in environmental health services.

There are many ideas, but also many challenges. An example of this is provided by Felice Balsamo himself, who asks:

“What would happen if the city of Naples would receive a Bitcoin donation?”

The city often receives money and property donations, Felice explains, but what would happen with a cryptocurrency donation? Which institution should accept this donation? What regulation is necessary to accept it?

The Italian Agency of Revenue (Agenzia delle Entrate — the governmental body aimed at collecting taxes and revenue) is also a member of the group, and it will surely be an important resource to solve these problems.

After all, the various discussions will deal with issues that the Italian government would consider sooner or later. Will the focus group in Naples be an explorer for the institutions of all of Italy?

Vision of the Mayor

Cointelegraph spoke with Luigi de Magistris, mayor of Naples, to better understand the vision of the city council about the project.

Cointelegraph: Do you think these new technologies could be beneficial for an economy such as that of Naples?

Luigi de Magistris: Naples is considered the capital of the Mediterranean. In the last years we introduced important innovations in the field of administration, implementing a proper grassroots democracy. Just think of all our decisions considered innovative, such as the registry for civil partnerships we introduced, or the collective use of public assets: our experience is considered an example by many Italian and European cities. We were the first major city to issue an electronic ID through 24 registration ATMs.

Thinking about an economy based on blockchain, based on participation by the people, could be a valid solution for the regulatory and historical constraints of traditional finance.

Combining traditional economy with a new economy based on cryptocurrencies could lead to a huge economic potential for over 3.5 million residents of the metropolitan city of Naples.

Cointelegraph: What’s the purpose of “generating, distributing and using a new cryptocurrency (ICO) tied to the economy of the city,” as you can read on the official page of Naples City?

Luigi de Magistris: I have to say something first. In the last few years Naples has become the Italian city with the fastest-growing tourism sector, our airport is the first in terms of traffic, Naples is the most searched city for tourism on the web. This revolution, which happened in just a few years, involves the adjustment of supply and demand. This means improving our services and public transportation, experimenting with innovative payment systems, attracting a very different target, deploying an alternative system for electronic payments throughout the territory.

We are studying other [Italian] towns like Rovereto, or other cities in Europe like Barcelona, or Portugal, or our neighbor Switzerland. But in our case we want to open this new technology to cryptocurrency owners, generating a new economy in the city, regardless of whether we develop a new currency or not: this will be a long process, as shown by over 300 experts who signed up for our “public calling” from all over the world.

We want to involve trader associations and businesses in our city, that could expand their market thanks to the current availability of cryptocurrencies.

The creation of our ICO, in compliance with other programs already existing in Europe, could be one of the objectives of our project Napoli Autonoma [Autonomous Naples].

Our economy will be based on the specific historical features of the city, fueling a real economy based on our products, on the quality of our craftsmanship, on tourism, on our monuments, on our food. An economy based on the historical and social value of the city of Naples.

Blockchain and city administrations

The future of the economy and public administration could be dramatically changed thanks to the potential of blockchain technology and cryptocurrencies.

Recently, the Barcelona administration has revealed that it wants to establish a digital center to promote the growth and development of the blockchain ecosystem.

In March, Dubai unveiled a virtual business-to-business market in the pipeline, designed for the tourism industry and based on blockchain technology.

Now there is also the southern Italian city of Naples that joined the innovative movement which is spreading throughout the world.

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Italian Authorities Seize Bitcoin From BitGrail Wallets Following Court Order

Italian cryptocurrency exchange BitGrail has announced that bitcoins (BTC) stored in the firm’s wallets have been seized by Italian authorities, according to official announcement published June 15.

The statement says that authorities removed the funds from the exchange’s wallets following a court order by the Tribunal of Florence on June 5, but did not mention the current worth of the seized assets:

“On June 5, 2018, pursuant to the Tribunal of Florence orders, the bitcoins contained in the company’s wallets were seized and brought under control of the judicial authorities pending further Court decisions in the pre-bankruptcy proceeding.”

The seizure of BitGrail’s BTC follows a petition to the court filed by victims of the BitGrail hack, asserting that the exchange is bankrupt under article 6 of Italian bankruptcy law. The petition was filed on behalf of a BitGrail creditor, Espen Enger, whom over 3,000 claimants have allegedly contacted so far.

In February, BitGrail suffered a cyber attack that caused the loss of 17 million Nano (XRB, formerly Raiblocks) that was worth $187 million at the time. After trading was halted, CEO Francesco Firano argued that it would be impossible to refund the stolen amount.

The hack caused a series of arguments between BitGrail and the Nano Foundation ас it was unclear whether hackers exploited a BitGrail security weakness or a vulnerability in Nano’s blockchain.

In April, the Nano Foundation announced it would support a legal fund to provide all victims of the hack with equal access to representation to pursue their legal interests associated with BitGrail’s insolvency.

On May 3, Bitgrail reopened, but three hours later shut down operations at the order of the court of Florence. The court ordered an immediate closure of the exchange in accordance with a request made by Bonelli law office on behalf of a client. The exchange stated, “Even though we don’t agree with this decision, we are obliged to respect the law and to suspend any BitGrail business immediately.”

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Bank of Italy Deputy Governor: Gov’t Cryptocurrencies Can Save EU up to €76 Bln

Fabio Panetta, deputy governor of the Bank of Italy, gave a keynote address focused on central bank digital currencies (CBDCs) at the SUERF/BAFFI CAREFIN Centre Conference in Milan Thursday, June 7.

Unlike cryptocurrencies – “a liability belonging to nobody” – the deputy governor stressed from the outset that a CBDC would be a liability of the central bank, backed by its assets.

First addressing CBDCs as a potential means of payment, Panetta considered their advantages as “at best unclear” when compared with the existing digital payment mechanisms offered by the private sector.

Where Panetta saw a key potential justification for CBDC issuance was to reduce costs in the production, transportation, and disposal of cash. He cited estimations that these costs amount to about half of a percentage point of GDP in the EU annually, around €76 bln – a figure equal to almost half of the annual EU budget.

Panetta added that if combined with Distributed Ledger Technology (DLT), the potential cost efficiency gains of a CBDC could be even more significant.

Considering CBDCs’ potential use as a store of value, Panetta highlighted that in addition to virtually zero storage costs, a CBDC could function as an asset with “unique characteristics,” free of credit and liquidity risks. As such it could become preferred to other means of storing wealth, including bank deposits.

Panetta however nuanced concerns that a switch from bank deposits to a CBDC would necessarily threaten the financial system as a whole, even though it might squeeze the net interest margin (NIM) profitability that underpins banks’ lending models.

He emphasized instead that CBDCs could innovate existing operational frameworks, and push the market towards a “narrow banking model” that would need to be considered anew.

Panetta notably raised traceability and privacy – “probably the most important issue” surrounding CBDCs – as a “political” question for society as a whole, beyond the purview of central banks alone.

Last month, the Bank of England issued two staff working papers devoted to the issue of CBDCs. The first laid out various risk analyses for CBDCs, finding that there was no reason to believe that introducing a CBDC would have adverse effects on private credit or on total liquidity provision to the economy.

The second paper suggested, like Panetta, that the adoption of CBDCs could pose a competition threat to commercial banks, echoing a March report by the Bank of International Settlements (BIS) that also suggested that “in times of financial stress, domestic investors are likely to consider CBDC attractive relative to bank deposits, with many possible side effects… for financial stability.”

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Bank of Italy Official: Central Banks Not Ready to Issue Digital Currencies

Central banks aren’t ready – at least in the short-term – to handle the implications of launching wholly digital currencies, the deputy governor of the Bank of Italy said Thursday.

Fabio Panetta delivered the keynote address for the SUERF and BAFFI CAREFIN Centre Conference held at Bocconi University. In his remarks, he became the latest to discuss the possibility for central banks to issue currencies digitally, including those that incorporate elements of cryptocurrencies like bitcoin or some of the concepts that underpin blockchain.

At the same time, Panetta began his keynote by distancing the conversation from cryptocurrencies.

He was quoted as saying (according to a transcript of his remarks published by the Bank of International Settlements):

“In fact – just like banknotes – a [central bank digital currency (CBDC)] would be a liability of the central bank and would be backed by its assets. It would be supported by the credibility of the central bank and ultimately, by the rule of law. Crypto-assets, on the other hand, are a liability belonging to nobody: there is no asset that backs them up and no clear governance structure that can guarantee trust… the value of a CBDC would not suffer from the excessive volatility that affects crypto-assets.”

Of course, by this logic, CBDCs would continue to suffer from the same volatility created by the potential for government intervention on monetary policy, a concern that has been previously linked as a cause for individuals seeking out crypto-assets like bitcoin.

Knowns and unknowns

Panetta did point out other advantages of CBDCs, though.

For example, he highlighted the lower costs of managing digital currency as opposed to a physically distributed currency.

“Since it would be completely dematerialized, a CBDC would have very few or no storage costs and would be a convenient way for households and firms to keep liquid wealth. Mattresses could be freed from their role of vaults!”

Moreover, CBDCs would be an asset “free of credit and liquidity risk.”

Such effects in his view would not “necessarily be disruptive for banks.” However, a number of other key issues surrounding digital currencies very well might.

For example, Panetta asked whether digital currencies should be traceable or “designed to guarantee, to the extent possible, anonymity.” On this, he raised ethical concern for a future where banks are able to trace all consumer transactions and make decisions on an individual’s creditworthiness based on such information.

“If central banks decided to make an asset – the CBDC – free of credit and liquidity risk, possibly remunerated, and available to anybody at no cost, their role in the economy would fundamentally change… Are central banks ready to play this new role and to deal with the attendant complexities? In the short term my answer is no.”

In the long term, the answer is unclear but Panetta affirmed the benefits of research to uncover the answer are certain and, “here to stay, independently of whether one day we will live in a world with digital cash.”

Bocconi University image via Shutterstock

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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Chinese Prosecutors Charge Final Suspects In $2.3 Bln OneCoin Investigation

The last four suspects in a two year case against alleged pyramid scheme OneCoin have been prosecuted in China’s Hunan Province, government-supported local news source the Justice Network reports Wednesday, May 23.

The Zhuzhou Country Procuratorate of the Hunan Province examined 106 people, publicly prosecuted 98, and recovered around 1.7 bln yuan (around $266 mln) from over 20 provinces across China in the course of the case. Those prosecuted have received up to 10,000  – 5 mln yuan in fines (about $1,500 – $782,000) as well as four years or less of prison time.

In 2016, Chinese authorities had already seized over $30 mln dollars during their investigation of the alleged pyramid scheme.

The Justice Network reports that OneCoin organization – “Weika Coin” in China – whose server is located in Copenhagen, Denmark, worked by “constantly induc[ing] new investors to realize imaginary high profits” by “deceptively advocating” the coins’ worth and “tempting others to invest huge sums of money into its established website.”

The pyramid scheme, or MLM organization, reportedly had 27 fund pool accounts, more than 140 member levels of varying costs, and a total of over 2 mln registered users located in China. In total, the funds involved in the scheme are more than 15 bln yuan (around $2.3 bln), according to the Justice Network.

Last fall, Italy imposed a €2.5 mln fine on OneCoin after the Italian Antitrust and Consumer Protection Authority (AGCM) branded the organization a pyramid or ponzi scheme.

More recently, in January of this year representatives of the Bulgarian law enforcement as well as European Union crime fighting units raided OneCoin’s office in Bulgaria at the behest of a German prosecutors office. While documents and servers were seized from the offices and 50 witnesses questioned, no arrests were made at the time.

Back in 2015, Cointelegraph warned readers to stay away from OneCoin, referring to it as likely to be a scam.

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Crypto Exchange Bitgrail Opens For Three Hours Before Legally Forced Shutdown

Recently hacked Italian crypto exchange Bitgrail tweeted Wednesday, May 2, that they reopened their exchange, only to report its temporary closure three hours later.

Bitgrail posted a statement on its website later that day in order to explain the reason for the abrupt shutdown, which they “don’t agree with”:

‘This morning, following the re-opening, we were notified of a deed by the court of Florence requesting the immediate closure of BitGrail and this situation will persist until a decision is made by the courts, about the precautionary suspension request made by the Bonelli law office on behalf of a client.

The decision is scheduled for May 16 2018.

Even though we don’t agree with this decision, we are obliged to respect the law and to suspend any BitGrail business immediately.”

On Feb. 8, 17 mln coins of cryptocurrency Nano – now worth around $136 mln – were discovered missing from the Italian exchange. The loss led to controversy between Nano developers and BitGrail’s owner and operator, Francesco “The Bomber” Firano, after the developers reported that Firano had reportedly asked for the Nano ledger to be altered to cover the losses – a claim Firano denied.

It is still unclear where the fault for the hack lies – either subpar security from Bitgrail or an issue with Nano’s blockchain – but a mid-March update from Bitgrail noted that users would be refunded as long as nobody sued.

At the beginning of April, a US class action suit was filed against the Nano developers that alleges that Nano’s core team illegally sold unregistered securities as well as negligently misrepresented the reliability of crypto exchange BitGrail. The lawsuit asks that a hard fork be implemented to restore users’ funds.