Category Archives: Foundation for Defence of Democracies Centre on Sanctions and Illicit Finance

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700 French Savers Targeted By Bogus Exchanges in $35 Million Hype

The Autorité des Marchés Financiers (AMF), the French independent stock market regulator in that country, has told French newspaper La Parisienne that 700 savers have fallen foul of a current bout of phone scams in this year alone.

The amount of money lost to the scams is estimated to be around EUR 31 million ($35 million) according to the newspaper report. The scammers have taken to targeting victims via phone, after promising huge investment returns on Bitcoin via ads posted by phony sellers online.

Unfortunately, most of the victims are not crypto-aware, know nothing of the technology, and can only see the possibility of making a fast return on their savings simply too good to pass up, according to the French site Cryptonaute.

Lawyer Hélène Féron-Poloni, who is a specialist in inheritance cases, maintains that most savers have exactly no idea what’s happening when they commit to transferring their funds to “fabulous investments,” often confused by the technical jargon fed to them by the callers.

Marketing Director of Coinhouse, Brian O’Hagan, describe this year’s epidemic as “a plague, we’ve spotted over 200 fraudulent websites,” he commented.

These events, involving scammers either offering high returns for Bitcoin investment or as has been the case in the UK, using celebrities to promote unsound and often illegal deals, are worrying, but the cases of Bitcoin used in major crimes have been proven to be highly exaggerated.

It is undeniable that just like cash, cryptocurrencies are on the radar of criminals but the use of Bitcoin in criminal activity has dropped to 35% of the market share from a peak of 80% when the flagship digital currency was in its infancy.

In the US, a senior member of the Foundation for Defence of Democracies Centre on Sanctions and Illicit Finance recently spoke out against anti-crypto rhetoric, particularly those aimed at the financing of militant jihads, a reason often used by governments as a cause celebre for not advocating the use of cryptocurrencies. He referred to a recent report which found that:

“The use of cryptocurrencies by terrorist groups has only involved low-level transactions – their main funding still stems from conventional banking and money remittance services.”

In response to this year’s figures, the Autorite des Marches Financiers has increased its blacklist of dubious exchanges suggesting that they offer “unauthorized operations and atypical investments” warning investors and savers that “no advertising materials should make you overlook the fact that high returns always involve high risk.”

France remains open to cryptocurrency and blockchain projects and the AMF is also gaining sweeping powers to grant licenses to new initial coin offerings (ICOs) in the country. The French government is hopeful that with sound legislation and a legal framework, France will be able to continue to attract investors from around the world.

 

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US Defense Expert Slams Crypto For Jihads Rhetoric

In the US, a senior member of the Foundation for Defence of Democracies Centre on Sanctions and Illicit Finance has spoken out against anti-crypto rhetoric, particularly those aimed at the financing of Jihads.

A senior member of the center, Yaya Fanusie maintains that despite continual references by governments around the world that cryptocurrency finances terrorist activity, terrorist networks have been mainly unsuccessful in using cryptocurrency to fund their activities.

He recently suggested in a congressional testimony, that cash is still king in the underworld; particularly in the zones that Jihadists operate in, mainly being locations where high tech hasn’t reached or is unavailable. He maintains that, though the nature of Bitcoin may seem suited to illegal activity amongst the groups such as Al Qaeda, ISIS, and Boko Haram, they continue to use cash to fund their jihads.

Forbes writer Ted Knutson reveals that the Center for a New American Security (CNAS) declared that the use of Bitcoin in terrorist activities between 2015 and 2017 amounted to only about eight bitcoins. The CNAS report released last year revealed that it was purely an anecdotal evidence which continues to back up politicians’ fears of terrorist financing through Bitcoin and other cryptocurrencies. It suggested that attempting to convert fiat to bitcoin may create logistical and security problems of their own for would-be Jihadists.

New legislation and regulation around tightening KYC and AML laws have made the terrorists job even harder with less opportunity to get their bitcoins to where they want them. More sophisticated tracking by exchanges and law enforcement makes any illegal activity even more challenging.

Drug Enforcement Agency (DEA) agent Lilita Infante says that 10% of Bitcoin transactions are associated with illegal activity. This is down from 90% of Bitcoin transactions being used for crime in 2013.

Legitimate Bitcoin trading, investing, and use for goods and services has increased dramatically and is outpacing the use of Bitcoin for illegal activity, even though overall, there is much more money being transacted with Bitcoin for illegal activities now than in 2013.

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