The digital Don
Trump goes all in on crypto
The Republican party adopts an avowedly pro-crypto platform.
In Loose change: Crypto ATM scams, Goldman Sachs plans.
Australian BitConnect fraudster banned for 5 years.
Tether freezes $29m following links to Cambodian scammers.
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Blockchain gang: The Republican party has officially adopted a pro-crypto platform under former President Donald Trump, who, following the failed assassination attempt, is now the heavy favorite to win a second term in office.
The unAmericans: A document published by the Republican National Committee lays out the party’s priorities, flipping both its and Trump’s previously skeptical view on digital assets. “Republicans will end Democrats’ unlawful and unAmerican crypto crackdown and oppose the creation of a central bank digital currency (CBDC),” it says.
“We will defend the right to mine Bitcoin, and ensure every American has the right to self-custody of their digital assets, and transact free from government surveillance and control.”
Republicans have weaponized the idea of CBDCs as being a Democrat tool for greater surveillance of citizens, despite Federal Reserve chair Jerome Powell and other government figures previously stating any digital dollar would be supervised by the central bank rather than the government.
Opportunity blocks: While support among the wider Republican party for crypto has raised eyebrows, Trump’s official pivot to crypto is unsurprising. A series of Trump-branded non-fungible tokens released in December 2022 sold out in a matter of hours, before later being pulled from sale as the value of the items tanked along with the rest of the market.
Campaign finance data revealed around $3m in crypto was raised for Trump last quarter, with donations from some well-known names including the Winklevoss twins and Kraken co-founder Jesse Powell.
“The probability of a Donald Trump victory has increased significantly,” said Grzegorz Dróżdż, market analyst at currency company Conotoxia. He suggested a Trump victory would “positively impact” crypto.
Sweet child o’mine: In May, Trump began courting donations via digital currencies through a new website linked to the major exchange Coinbase – a first for any presidential candidate. Days later, on his own Truth platform, Trump began to extol the virtues of cryptocurrency, stating he was “very positive” about this “new and burgeoning industry.”
It was the first of several statements promising support for Bitcoin miners, with representatives from some US-based firms later meeting Trump at his Mar-a-Lago resort.
It is a far cry from his previous stance that Bitcoin is a scam and the entire sector is “a disaster waiting to happen”.
In an interview with Bloomberg this week, Trump said of crypto: “If we don’t do it, China is going to figure it out, and China’s going to have it – or somebody else.”
Not everyone is convinced the conversion is honorable, however. “Just like Biden, Trump was previously anti-crypto and is pandering to get votes,” said Adam Cochrane, a partner at Cinneamhain Ventures on X. “Trump isn’t someone to honor his transactions.”
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Loose change
Rage against the machine: Crypto ATM scams bilked around $120m from US citizens last year, according to a new report by the Organized Crime and Corruption Reporting Project (OCCRP) and the Miami Herald. In one case, a 77-year-old Chicago woman lost $9k in cash to a fraudster posing as a Federal Trade Commission agent. The money was wired to an offshore crypto wallet and was never recovered, the report said.
The OCCRP, a global network of investigative journalists, said soaring levels of crime related to crypto ATMs are often down to the lack of stringent identification requirements by most crypto teller machine operators.
Many are located in vape shops, gas stations, laundromats and other low-key places, the report said, with operators pitching them as an easy way to exchange cash for crypto.
Both the FBI and US Secret Service contributed to the report.
Crypto ATMs were banned in the UK in 2023.
Token care of business: Goldman Sachs is planning three tokenization projects this year. Mathew McDermott, head of digital assets at the Wall Street titan, told Fortune that investors can expect action involving US funds and a debt issuance in Europe.
While asset managers in the tokenization space have primarily targeted retail clients, Goldman is aiming at institutions.
Russia’s Ministry of Finance is mulling a regulatory tweak that will allow traditional exchanges to handle digital asset trading for select investors, according to state media.
Ministers have responded to two regulatory proposals regarding the possibility of “conducting organized trading in digital currency, recognized as a commodity, on the basis of an exchange license or a trading system license.”
Russia’s central bank has previously touted digital currency usage as a workaround for the financial sanctions placed on many businesses in response to the war in Ukraine.
DWS is creating the first German-regulated cryptocurrency. The Deutsche Bank-owned asset manager has announced the launch of a company that will bring a new euro stablecoin to market next year. The currency will be regulated by Germany’s Federal Financial Supervisory Authority.
Goes to zero
Losing my edge: The founder of a first-of-its-kind blockchain-based iCasino operation, which promised punters the chance to play on a platform that offers no advantage in terms of the odds, is reported to have gambled away investor funds.
Zero Edge – not to be confused with libertarian website ZeroHedge – was founded by Richard Kim, a former GP at crypto investment firm Galaxy’s interactive gaming offshoot, according to CoinDesk.
Zero Edge reportedly raised over $7m in a seed round completed less than a month ago.
However, according to emails seen by CoinDesk, Kim has admitted to misappropriating more than half of the total.
“I really f****d up”: Kim told the news website he “lost that money. It was grossly negligent. But I didn't intend to go run away with this money.”
BitConnect fraudster ban
Bitter end: The Australian promoter of crypto exchange Ponzi scheme BitConnect has been banned from owning a business for five years. John Bigatton avoided jail but was convicted by a Sydney court for providing unlicensed financial advice, according to the country’s trading watchdog.
Between August 2017 and January 2018, Bigatton promoted BitConnect through seminars and social media, providing financial advice without proper authorization, the court heard.
Don’t ask me no questions: The fraud required investors to acquire BitConnect Coin (BCC) to participate in its investment opportunities, which Bigatton promised came with high returns. Investors could also invest or loan the tokens in return for high interest rates, he said.
However, it later emerged investors had no control over their loans and could not withdraw their capital until the lending period ended, the Australian Securities and Investment Commission (ASIC) said.
ASIC first successfully applied to the Federal Court to freeze Bigatton’s assets in 2018 – a first for the regulator involving handling digital currencies.
Tether’s freeze
Stop right there: Tether has frozen more than $29m of its stablecoins believed to be connected to a sprawling Cambodian online marketplace offering up services for so-called pig butchering scams. Researchers from blockchain analytic experts Elliptic recently revealed how Huione Guarantee has become a central ecosystem for cybercriminal operations in Southeast Asia.
Huione Guarantee is part of Huione Group, a Cambodian conglomerate with links to the country’s ruling Hun family.
Merchants are using the site to sell money laundering services, deepfake technology, stolen data and, in some cases, equipment such as chains and shackles for restraining trafficked workers.
Huione acts as a guarantor for all transactions, with most executed in the stablecoin Tether.
Over three years, the researchers tracked $11bn in transactions on the platform they suspect to be linked to crime.
Stuck in the middle: Earlier this year, a report from the United Nations Office on Drugs and Crime on organized crime in East and Southeast Asia said Tether was key to a nexus of casinos, junkets and cryptocurrencies fuelling transnational organized crime across much of Asia and beyond.
Blockchain analysis company Bitrace linked an address on the TRON platform, whose funds had been frozen the day before, to Huione Group.
A Tether spokesperson confirmed the company had frozen the funds, which were “associated with activities allegedly linked to fraudulent and transnational criminal operations.”
“This action was initiated based on a direct request from law enforcement, underscoring our commitment to collaboration with authorities worldwide,” they said.
According to Bitrace, after the funds were frozen, Huione Group “once again activated a new business address” and sent 114,800 USDC stablecoins from the original TRON wallet.
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