The free zone in Dubai is allowing customers to pay for Dubai trade licenses and visas with bitcoin (BTC), ether (ETH) and the tether (USDT)

Warning comes amid rising tensions between Australian law makers, news publishers and tech giants

Internet pioneer Tim Berners-Lee has said Australia’s plan to make tech giants pay for journalism could render the internet as we know it “unworkable”.

The inventor of the World Wide Web claimed that proposed laws could disrupt the established order of the internet.

“Specifically, I am concerned that that code risks breaching a fundamental principle of the web by requiring payment for linking between certain content online,” Berners-Lee told a Senate committee scrutinizing a bill that would create the New Media Bargaining Code.

If the code is deployed globally, it could “make the web unworkable around the world”, he said.

It’s a question dividing proponents and critics of the proposed Australian law: does it effectively make Google and Facebook “pay for clicks” and might it be the beginning of the end of free access?

The battle is being watched closely in the European Union, where officials and lawmakers are drafting sweeping new digital regulations.

Google contends the law does require it to pay for clicks. Google regional managing director Melanie Silva told the same Senate committee that read Berners-Lee’s submission last month she is most concerned that the code “requires payments simply for links and snippets.”

“The concept of paying a very small group of website or content creators for appearing purely in our organic search results sets a dangerous precedent for us that presents unmanageable risk from a product and business-model point of view,” Silva said.

Facebook regional vice president Simon Milner agreed that the potential cost for news under the code was “entirely uncapped and unknowable.”

Uniquely, Australia’s code includes a negotiation safety net. An arbitration panel would prevent digital giants from abusing their dominant negotiating positions by making take-it-or-leave-it payment offers to news businesses for their journalism.

In the case of a standoff, the panel would make a binding decision on whose best-offer wins.

Peter Lewis, director of the Australia Institute’s Center for Responsible Technology think tank, said the monetary value of public interest journalism has yet to be established.

“The reason it’s such as ephemeral process, if you like, is that no one’s ever tried this before,” Lewis told Australian Broadcasting Corp.

“How do you value fact-based news absent advertising? News has always been valued on the back of how much ads that the outlet can sell. Because Google and Facebook have dominated the advertising market and taken that out of the equation, we’re now trying to work out the value of public interest journalism,” Lewis added.

Google has reacted to the threat of compulsory arbitration by stepping up negotiations on licensing content agreements with Australian media companies through its own News Showcase model.

Facebook responded Thursday by blocking users from accessing and sharing Australian news.

Treasurer Josh Frydenberg amended draft legislation after weekend talks with Facebook CEO Mark Zuckerberg and Sundar Pichai, chief executive of Alphabet Inc. and its subsidiary Google, to make it clear the platforms would not be charged per news snippet or link.

“We never intended that . . . if the arbitrator was overseeing a deal between a television station and one of the digital platforms, that they would make that digital platform pay 2 cents, for example, for every click over the forthcoming year,” Frydenberg said. “That was never the intention. It was always the intention was to have a lump sum payment and that’s what we have made explicit in the code.”

Dan Stinton is managing director of Guardian Australia and New Zealand which is negotiating a licensing deal through Google’s News Showcase.

Stinton said Google has benefitted from news through engagement with search users who link to journalism, the consumer data Google collects from publishers and from its revenue share from ads that are published with news articles.

“Google have been prosecuting an argument that they’re being asked to pay for links in Search and that is not the case,” Stinton said.

“They’re not stealing published content, but I do believe they are using their market power to preference their own businesses to the detriment of publishers and that’s not right,” Stinton said.

“It’s not just paying for links and snippets within search, it’s paying for the entire benefit that Google receives,” he added.

Google has reached pay deals with more than 450 publications globally since it launched News Showcase in October.

The EU’s executive Commission has proposed new rules aimed at taming the biggest digital “gatekeepers.” Proposals working their way through negotiations among lawmakers from the 27-member bloc’s parliament could be amended to include elements of Australia’s model.

Britain, which recently left the EU, is planning similar digital reforms that include shaking up the relationship between online platforms and news publishers.

“There’s definitely an influence” from Australia, said Angela Mills Wade, executive director of the European Publishers Council, a lobbying group for media companies. “It is being closely monitored by all who have a stake in the outcome.”

Publishers in European countries already can request payments from tech companies for using their stories under recently revamped copyright rules. France was the first country to adopt those rules into national legislation and Google initially balked at payments. It changed its tune when a court ordered it into negotiations that resulted in a deal with a group of French publishers.

One part of the Australian model that has caught attention in Europe is the requirement for binding arbitration if payment talks don’t lead to an agreement, which Google has resisted because it would give the company less control.

Mills Wade said several leading EU lawmakers want to add an arbitration mechanism to the digital regulations.

“Given that Google and Facebook have been undermining the scope of the publishers’ right it is clear that regulatory measures are needed, especially the final arbitration mechanism,” said Mills Wade. “Otherwise the majority of publishers won’t have the negotiating power to reach agreements.”

Google has been striking other news payment deals, including a multi-year agreement with tycoon Rupert Murdoch’s News Corp.

Mills Wade welcomed that deal, saying it shows Google puts “enormous value” on news content.

“However, regulators in Australia, but also in Europe, should not be misled into thinking that single deals, especially just before comprehensive laws come into effect, are the answer to ensuring the fair remuneration due to all publishers large and small, whose content is used by Google,” she said.

Facebook’s decision to block news in the country may have allowed the tech giant to at least temporarily dictate the narrative, though Human Rights Watch’s Australian director Elaine Pearson described it as a “dangerous turn of events”.

She said: “Cutting off access to vital information to an entire country in the dead of the night is unconscionable.”

https://www.independent.co.uk/news/australia-internet-law-tim-berners-lee-b1803988.html

There’s a prime suspect as to the identity of the owner of the world’s biggest Dogecoin cryptocurrency wallet and it’s a name that should be familiar: Robinhood Markets.

The timing of the creation of the initial digital wallet used for storage in June 2018 tracks with Robinhood’s offering Dogecoin trading to its customers in July of that year. That’s according to blockchain data tracker Elliptic and echoed by online sleuths on Reddit’s Dogecoin forum.

“It almost certainly belongs to Robinhood,” said Tom Robinson, chief scientist and co-founder of Elliptic. “The timings of its creation, and the creation of the addresses that it received funds from, match the timings of Robinhood’s support of Dogecoin.”

Dogecoin has surged more than 950% since the beginning of the year from less than half a penny to more than five cents per coin as Reddit users have flocked to the cryptocurrency based on the meme of a smiling Shiba Inu.

The owner of the wallet, which controls nearly 29% of Dogecoin in circulation, became a subject of attention after Tesla Inc. Chief Executive Officer Elon Musk tweeted that “too much concentration” is the cryptocurrency’s only real issue before saying he’d pay the biggest holders to “void their accounts.”

https://twitter.com/elonmusk/status/1361094185412100096

Musk tweeted his suspicion Tuesday that Robinhood could be the biggest holder then later supported calls for Robinhood CEO Vlad Tenev to explain the broker’s previous decisions to curb trading in GameStop Corp. shares and Dogecoin during January’s market mania.



As attention ramped up Wednesday around who was the owner of the largest Dogecoin wallet, Robinhood tweeted that it would not confirm what addresses belong to them.

https://twitter.com/RobinhoodApp/status/1362143075485671424

A spokeswoman for Robinhood didn’t immediately respond to a request for comment.

https://economictimes.indiatimes.com/markets/forex/cryptocurrency-sleuths-point-to-robinhood-as-dogecoin-whale/articleshow/81082872.cms

question: do you ever try to assess the integrity of the team itself in any way before placing a bet? Do you think it matters in real life, or is it just a nice fantasy of a TV show?

Max Holloway finally figured out what caused UFC 226 ‘concussion-like symptoms,’ lawsuit pending

A year after former Featherweight champion, Max Holloway, was forced to withdraw from his scheduled title defense against Brian Ortega at UFC 226 due to “concussion-like symptoms,” the ex-champ seems to have found the root of the problem.

“I could tell exactly what it was. It was something we consumed,” Holloway said. “Like right now not that much people know, I left my old management. I’m with new management now and my manager now he’s like a behavioral science guy and he’s probably watching this stream squirming the way I’m talking about it but we got stuff going on,” he added.

“I’m looking to work on with lawyers and we plan on suing somebody. There’s a bunch of stuff that I really can’t talk about. That’s why he’s squirming back there. I probably shouldn’t be talking about it too much but that’s what it is. It was something I consumed. I don’t even know if I can tell you [what it was].”

https://www.mmamania.com/2019/12/19/21030710/max-holloway-figured-out-cause-ufc-226-concussion-like-symptoms-lawsuit-pending-mma

Is there any substantial evidence that these are North Korean hackers?

9/11/2001 FBI suspect alive and well

Saudi Arabian pilot Waleed Al Shehri was one of five men that the FBI said had deliberately crashed American Airlines flight 11 into the World Trade Centre on 11 September.

His photograph was released, and has since appeared in newspapers and on television around the world.

Now he is protesting his innocence from Casablanca, Morocco.

He told journalists there that he had nothing to do with the attacks on New York and Washington, and had been in Morocco when they happened. He has contacted both the Saudi and American authorities, according to Saudi press reports.

http://news.bbc.co.uk/2/hi/middle_east/1559151.stm

The world's debt-to-GDP ratio rose to 356% in 2020, a new report from the Institute of International Finance finds, up 35 percentage points from where it stood in 2019, as countries saw their economies shrink and issued an ocean of debt to stay afloat.

Why it matters: The increase brings numerous countries, including the U.S., to extreme debt levels, well beyond what economists have called untenable in the past.

• Nonfinancial private sector debt alone now makes up 165% of the entire world's economic output.

What they're saying: "The upswing was well beyond the rise seen during the 2008 global financial crisis," IIF economists said in the report.

• "Back in 2008 and 2009, the increase in global debt ratio was limited to 10 percentage points and 15 percentage points, respectively."

By the numbers: Global debt increased to $281 trillion last year, with total private and public sector debt rising by $24 trillion in the 61 countries IIF follows.

• That rise accounts for more than a quarter of the $88 trillion increase in debt that has been accumulated over the past decade.
• Government debt accounts for 105% of global GDP, up from 88% in 2019, rising by $12 trillion in 2020 or nearly triple its $4.3 trillion increase in 2019.
• Debt in the financial sector rose by more than 5 percentage points to 86% of GDP in 2020. This was the largest increase since 2007 and the first annual increase since 2016.

Why the debt matters: While worries about significantly pushing up inflation and borrowing costs have not come to pass, slow growth and diminishing returns have, and the world's already high debt levels look to be inhibiting economic growth and threaten to hold back a full recovery from the pandemic in the long run.

• Further, almost all of the debt issued in 2020 was to deal with present circumstances rather than to invest in forward-looking projects or growth, making future investments in such projects more difficult and potentially more costly.

Where it stands: The CBO projected U.S. GDP growth over the next 10 years will be largely below 2% (with the notable exclusion of 2021), and that annual budget deficits will increase.

• The federal debt is set to exceed the size of the economy this year for only the second time since the end of World War II and grow to 107% of GDP by 2031.
• That projection was made without including President Biden's proposed $1.9 trillion stimulus package.

https://www.axios.com/global-debt-gdp-898959ed-f96a-4c4d-85a3-5d3cc419631f.html

Where it stands: The CBO projected U.S. GDP growth over the next 10 years will be largely below 2% (with the notable exclusion of 2021), and that annual budget deficits will increase.

Three North Korean Military Hackers Indicted in Wide-Ranging Scheme to Commit Cyberattacks and Financial Crimes Across the Globe

Indictment Expands 2018 Case that Detailed Attack on Sony Pictures and Creation of WannaCry Ransomware by Adding Two New Defendants and Recent Global Schemes to Steal Money and Cryptocurrency from Banks and Businesses while Operating in North Korea, China

A federal indictment unsealed today charges three North Korean computer programmers with participating in a wide-ranging criminal conspiracy to conduct a series of destructive cyberattacks, to steal and extort more than $1.3 billion of money and cryptocurrency from financial institutions and companies, to create and deploy multiple malicious cryptocurrency applications, and to develop and fraudulently market a blockchain platform.

A second case unsealed today revealed that a Canadian-American citizen has agreed to plead guilty in a money laundering scheme and admitted to being a high-level money launderer for multiple criminal schemes, including ATM “cash-out” operations and a cyber-enabled bank heist orchestrated by North Korean hackers.

“As laid out in today’s indictment, North Korea’s operatives, using keyboards rather than guns, stealing digital wallets of cryptocurrency instead of sacks of cash, are the world’s leading bank robbers,” said Assistant Attorney General John C. Demers of the Justice Department’s National Security Division. “The Department will continue to confront malicious nation state cyber activity with our unique tools and work with our fellow agencies and the family of norms abiding nations to do the same.”

“Today's unsealed indictment expands upon the FBI’s 2018 charges for the unprecedented cyberattacks conducted by the North Korean regime,” said the FBI Deputy Director Paul Abbate. “The ongoing targeting, compromise, and cyber-enabled theft by North Korea from global victims was met with the outstanding, persistent investigative efforts of the FBI in close collaboration with U.S. and foreign partners. By arresting facilitators, seizing funds, and charging those responsible for the hacking conspiracy, the FBI continues to impose consequences and hold North Korea accountable for its/their criminal cyber activity."

“The scope of the criminal conduct by the North Korean hackers was extensive and long-running, and the range of crimes they have committed is staggering,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California. “The conduct detailed in the indictment are the acts of a criminal nation-state that has stopped at nothing to extract revenge and obtain money to prop up its regime.”

“This case is a particularly striking example of the growing alliance between officials within some national governments and highly sophisticated cyber-criminals,” said U.S. Secret Service Assistant Director Michael R. D’Ambrosio. “The individuals indicted today committed a truly unprecedented range of financial and cyber-crimes: from ransomware attacks and phishing campaigns, to digital bank heists and sophisticated money laundering operations. With victims strewn across the globe, this case shows yet again that the challenge of cybercrime is, and will continue to be, a struggle that can only be won through partnerships, perseverance, and a relentless focus on holding criminals accountable.”

The hacking indictment filed in the U.S. District Court in Los Angeles alleges that Jon Chang Hyok (전창혁), 31; Kim Il (김일), 27; and Park Jin Hyok (박진혁), 36, were members of units of the Reconnaissance General Bureau (RGB), a military intelligence agency of the Democratic People’s Republic of Korea (DPRK), which engaged in criminal hacking. These North Korean military hacking units are known by multiple names in the cybersecurity community, including Lazarus Group and Advanced Persistent Threat 38 (APT38). Park was previously charged in a criminal complaint unsealed in September 2018.

The indictment alleges a broad array of criminal cyber activities undertaken by the conspiracy, in the United States and abroad, for revenge or financial gain. The schemes alleged include:

• Cyberattacks on the Entertainment Industry: The destructive cyberattack on Sony Pictures Entertainment in November 2014 in retaliation for “The Interview,” a movie that depicted a fictional assassination of the DPRK’s leader; the December 2014 targeting of AMC Theatres, which was scheduled to show the film; and a 2015 intrusion into Mammoth Screen, which was producing a fictional series involving a British nuclear scientist taken prisoner in DPRK.
• Cyber-Enabled Heists from Banks: Attempts from 2015 through 2019 to steal more than $1.2 billion from banks in Vietnam, Bangladesh, Taiwan, Mexico, Malta, and Africa by hacking the banks’ computer networks and sending fraudulent Society for Worldwide Interbank Financial Telecommunication (SWIFT) messages.
• Cyber-Enabled ATM Cash-Out Thefts: Thefts through ATM cash-out schemes – referred to by the U.S. government as “FASTCash” – including the October 2018 theft of $6.1 million from BankIslami Pakistan Limited (BankIslami).
• Ransomware and Cyber-Enabled Extortion: Creation of the destructive WannaCry 2.0 ransomware in May 2017, and the extortion and attempted extortion of victim companies from 2017 through 2020 involving the theft of sensitive data and deployment of other ransomware.
• Creation and Deployment of Malicious Cryptocurrency Applications: Development of multiple malicious cryptocurrency applications from March 2018 through at least September 2020 – including Celas Trade Pro, WorldBit-Bot, iCryptoFx, Union Crypto Trader, Kupay Wallet, CoinGo Trade, Dorusio, CryptoNeuro Trader, and Ants2Whale – which would provide the North Korean hackers a backdoor into the victims’ computers.
• Targeting of Cryptocurrency Companies and Theft of Cryptocurrency: Targeting of hundreds of cryptocurrency companies and the theft of tens of millions of dollars’ worth of cryptocurrency, including $75 million from a Slovenian cryptocurrency company in December 2017; $24.9 million from an Indonesian cryptocurrency company in September 2018; and $11.8 million from a financial services company in New York in August 2020 in which the hackers used the malicious CryptoNeuro Trader application as a backdoor.
• Spear-Phishing Campaigns: Multiple spear-phishing campaigns from March 2016 through February 2020 that targeted employees of United States cleared defense contractors, energy companies, aerospace companies, technology companies, the U.S.Department of State, and the U.S. Department of Defense.
• Marine Chain Token and Initial Coin Offering: Development and marketing in 2017 and 2018 of the Marine Chain Token to enable investors to purchase fractional ownership interests in marine shipping vessels, supported by a blockchain, which would allow the DPRK to secretly obtain funds from investors, control interests in marine shipping vessels, and evade U.S. sanctions.
• According to the allegations contained in the hacking indictment, which was filed on Dec. 8, 2020, in the U.S. District Court in Los Angeles and unsealed today, the three defendants were members of units of the RGB who were at times stationed by the North Korean government in other countries, including China and Russia. While these defendants were part of RGB units that have been referred to by cybersecurity researchers as Lazarus Group and APT38, the indictment alleges that these groups engaged in a single conspiracy to cause damage, steal data and money, and otherwise further the strategic and financial interests of the DPRK government and its leader, Kim Jong Un.

Money Launderer Charged in California and Georgia

Federal prosecutors today also unsealed a charge against Ghaleb Alaumary, 37, of Mississauga, Ontario, Canada, for his role as a money launderer for the North Korean conspiracy, among other criminal schemes. Alaumary agreed to plead guilty to the charge, which was filed in the U.S. District Court in Los Angeles on Nov. 17, 2020. Alaumary was a prolific money launderer for hackers engaged in ATM cash-out schemes, cyber-enabled bank heists, business email compromise (BEC) schemes, and other online fraud schemes. Alaumary is also being prosecuted for his involvement in a separate BEC scheme by the U.S. Attorney’s Office for the Southern District of Georgia.

With respect to the North Korean co-conspirators’ activities, Alaumary organized teams of co-conspirators in the United States and Canada to launder millions of dollars obtained through ATM cash-out operations, including from BankIslami and a bank in India in 2018. Alaumary also conspired with Ramon Olorunwa Abbas, aka “Ray Hushpuppi,” and others to launder funds from a North Korean-perpetrated cyber-enabled heist from a Maltese bank in February 2019. Last summer, the U.S. Attorney’s Office in Los Angeles charged Abbas in a separate case alleging that he conspired to launder hundreds of millions of dollars from BEC frauds and other scams.

Accompanying Mitigation Efforts

Throughout the investigation, the FBI and the Justice Department provided specific information to victims about how they had been targeted or compromised, as well as information about the tactics, techniques, and procedures (TTPs) used by the hackers with the goals of remediating any intrusion and preventing future intrusions. That direct sharing of information took place in the United States and in foreign countries, often with the assistance of foreign law enforcement partners. The FBI also collaborated with certain private cybersecurity companies by sharing and analyzing information about the intrusion TTPs used by the members of the conspiracy.

In addition to the criminal charges, the FBI and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, in collaboration with the U.S. Department of Treasury, today released a joint cybersecurity advisory and malware analysis reports (MARs) regarding North Korean cryptocurrency malware. The joint cybersecurity analysis and MARs highlight the cyber threat North Korea – which is referred to by the U.S. government as HIDDEN COBRA – poses to cryptocurrency and identify malware and indicators of compromise related to the “AppleJeus” family of malware (the name given by the cybersecurity community to a family of North Korean malicious cryptocurrency applications that includes Celas Trade Pro, WorldBit-Bot, Union Crypto Trader, Kupay Wallet, CoinGo Trade, Dorusio, CryptoNeuro Trader, and Ants2Whale). The joint cybersecurity advisory and MARs collectively provide the cybersecurity community and public with information about identifying North Korean malicious cryptocurrency applications, avoiding intrusions, and remedying infections.

The U.S. Attorney’s Office and FBI also obtained seizure warrants authorizing the FBI to seize cryptocurrency stolen by the North Korean hackers from a victim in the indictment – a financial services company in New York – held at two cryptocurrency exchanges. The seizures include sums of multiple cryptocurrencies totaling approximately $1.9 million, which will ultimately be returned to the victim.

Jon, Kim, and Park are charged with one count of conspiracy to commit computer fraud and abuse, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison.

In relation to the case filed in Los Angeles, Alaumary has agreed to plead guilty to one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.

The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

The investigation of Jon, Kim, and Park was led by the FBI’s Los Angeles Field Office, which worked closely with the FBI’s Charlotte Field Office. The U.S. Secret Service’s Los Angeles Field Office and Global Investigative Operations Center provided substantial assistance. The FBI’s Cyber Division also provided substantial assistance.

The investigations of Alaumary were conducted by the U.S. Secret Service’s Savannah Field Office, FBI’s Los Angeles Field Office, and the U.S. Secret Service’s Los Angeles Field Office and Global Investigative Operations Center. The FBI’s Criminal Investigative Division also provided substantial assistance.

The case against Jon, Kim, and Park is being prosecuted by Assistant U.S. Attorneys Anil J. Antony and Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section, with substantial assistance from Trial Attorney Scott Claffee of the Department of Justice National Security Division’s Counterintelligence and Export Control Section.

Assistant U.S. Attorneys Antony and Shobaki are also prosecuting the case against Alaumary, in which the U.S. Attorney’s Office for the Southern District of Georgia and the Criminal Division’s Computer Crimes and Intellectual Property Section (CCIPS) provided substantial assistance. Assistant U.S. Attorneys Antony and Shobaki, along with Assistant U.S. Attorney Jonathan Galatzan of the Asset Forfeiture Section, also obtained the seizure warrants for cryptocurrency stolen from the financial services company in New York.

The Criminal Division’s Office of International Affairs provided assistance throughout these investigations, as did many of the FBI’s Legal Attachés, as well as foreign authorities around the world. Numerous victims cooperated and provided valuable assistance.

https://www.justice.gov/opa/pr/three-north-korean-military-hackers-indicted-wide-ranging-scheme-commit-cyberattacks-and

Most cryptocurrency money laundering is concentrated in a few online services, opening the door for law enforcement actions.



Criminals who keep their funds in cryptocurrency tend to launder funds through a small cluster of online services, blockchain investigations firm Chainalysis said in a report last week.

This includes services like high-risk (low-reputation) crypto-exchange portals, online gambling platforms, cryptocurrency mixing services, and financial services that support cryptocurrency operations headquartered in high-risk jurisdictions.

Criminal activity studied in this report included cryptocurrency addresses linked to online scams, ransomware attacks, terrorist funding, hacks, transactions linked to child abuse materials, and funds linked to payments made to dark web marketplaces offering illegal services like drugs, weapons, and stolen data.

But while you'd expect that the money laundering resulting from such a broad spectrum of illegal activity to have taken place across a large number of services, Chainalysis reports that just a small group of 270 blockchain addresses have laundered around 55% of cryptocurrency associated with criminal activity.

Furthermore, expanding this group further, Chainalysis says that 1,867 addresses received 75% of all criminally-linked cryptocurrency funds in 2020, a sum estimated at around $1.7 billion.



"This level of concentration is greater than in 2019," Chainalysis researchers said in a report published last week. "In particular, we see a much greater share of illicit cryptocurrency going to addresses taking in between $1 million and $100 million worth of cryptocurrency per year."

"We believe the growing concentration of deposit addresses receiving illicit cryptocurrency reflects cybercriminals' increasing reliance on a small group of OTC (over-the-counter) brokers and other nested services specializing in money laundering."

Compared to three years ago, when criminal groups used a wider array of services, Chainalysis says this bottleneck in money laundering operations is good news.

The company believes that the cryptocurrency-related money laundering field is now in a vulnerable position where a few well-orchestrated law enforcement actions against a few cryptocurrency operators could cripple the movement of illicit funds of many criminal groups at the same time.

Furthermore, additional analysis also revealed that many of the services that play a crucial role in money laundering operations are also second-tier services hosted at larger legitimate operators.

In this case, a law enforcement action wouldn't even be necessary, as convincing a larger company to enforce its anti-money-laundering policies would lead to the shutdown of many of today's cryptocurrency money laundering hotspots.

https://www.zdnet.com/article/270-addresses-are-responsible-for-55-of-all-cryptocurrency-money-laundering/

Banque Worms

Last August, Citigroup Inc. wired $900 million to some hedge funds by accident. Then it sent a note to the hedge funds saying, oops, sorry about that, please send us the money back. Some did. Others preferred to keep the money. Citi sued them. Yesterday Citi lost, and they got to keep the money. I read the opinion, by U.S. District Judge Jesse Furman, expecting to learn about the New York legal doctrine of finders keepers—more technically, the “discharge-for-value defense”—and I was not disappointed. But I was also treated to a gothic horror story about software design. I had nightmares all night about checking the wrong boxes on the computer.

The story—we have discussed it before—is that, in 2016, Revlon Inc. took out a seven-year syndicated term loan. Citibank N.A. is the administrative agent on the loan; it gets interest and principal payments from Revlon and passes them on to the lenders. Revlon ran into a bit of trouble and, as companies do these days, it did some creative stuff with its debt: In May 2020, it convinced some of the term-loan lenders to strip collateral from the term loan so it could be used to back new debt. The lenders who were part of this “incredibly aggressive” deal got to roll over into the new, effectively more senior debt; the other lenders were left with worse debt and got mad. Some of them got together to work on a lawsuit, which they filed on Aug. 12.

Twenty hours before they filed the lawsuit, though, they got lucky: Citigroup just wired them all their money. They received wire transfers for the full amount of principal and accrued interest they were owed on the loan. Their first reaction was mostly “well this is weird, I guess Revlon decided to pay off the loan rather than fight about it.” Their second reaction, after Citi sent them frantic notices saying it was a mistake, was to send each other Bloomberg chat messages making fun of Citi. Their third reaction, after some more serious reflection, was to say “we are keeping the money, see you in court.” All of these reactions were pretty reasonable and worked out well for them.

What happened? Well, it starts with the fact that some of the term-loan lenders had agreed to the aggressive deal to put in new money and roll their term loans into new, better-secured debt. 1  So they came to Citi and Revlon, handed in their old debt and got back new debt. When they do this, customarily, they get paid accrued interest on their old debt. Citi, for some reason, couldn’t handle that sensibly; from the opinion:


So instead of just paying interim interest to the lenders who were rolling their old loans into new loans, Citi had to pay it to all of the lenders, and Revlon agreed to make an interim interest payment to everyone. 2  So Revlon wired $7.8 million—for an interest payment—to Citi, and Citi got set up to pay it to the lenders: 3


But the Angelo Gordon funds were getting taken out of the loan entirely and rolled into the new facility, so their principal also had to be paid off. (Not really—they would get cashed out at par and roll their money into the new facility, without taking out actual cash—but as a bookkeeping matter.) Here is a paragraph that I think you can only read with slowly dawning horror:


Ah ha ha! Yes! The “easiest (or perhaps only)” way to pay off some lenders but not others was to instruct the software to pay off all the lenders! But tell it only to pretend to pay them! Just send that money to a wash account! This is all fine! Let’s read another horrifying paragraph!


This is just demented stuff. If you want to send out interest payments in cash, but send the principal payment to the wash account, you have to check the box next to “PRINCIPAL” and also the boxes next to “FRONT” and “FUND.” “PRINCIPAL” sounds like principal: You are sending the principal to the wash account, sure, right, yes, check that box. “FRONT” and “FUND” sound like nothing. So the Citi operations people messed it up:


The software gave him a warning, but not a very good one:


Here’s Figure 1; it does not particularly explain itself:



See, the “don’t actually send the money” box next to “PRINCIPAL” is checked, but that doesn’t do anything, you have to check two other boxes to make it not actually send the money.

When they discovered the error the next day, their first reaction was not to email the lenders asking for the money back (that was their second reaction); their first reaction was to email tech support to say the software was broken:

At 10:26 a.m., Fratta emailed Citibank’s technology support group: “Yesterday we processed a payment with Principal to the wash and Interest to be sent to lenders. All details in the front end screens yesterday le[d] us to believe that the payment would be handled in that manner. . . . Screenshots provided below indicating that the wash account . . . is present and boxes checked appropriately for the principal components.” Fratta then forwarded the same email to members of his team, with the subject line “Urgent Wash Account Does not Work.” He stated: “Flexcube is not working properly, and it will send your payments out the door to lenders/borrowers. The wash account selection is not working. This lead [sic] to ~1BN going out the door in error yesterday for an ABTF Deal, Revlon.” ...

Over the course of the day, Fratta learned that the principal payments — which were made with Citibank’s own money, as Revlon had provided funds only for the interim interest payments to be made in connection with the roll up transaction —were not caused by a technical error, but by human error: the failure to select the FRONT and FUND fields when inputting the default override instructions in Flexcube.

Nope, nope, he was right the first time, this whole setup is a “technical error.” Citi’s software will only let you pay principal to some lenders if you pretend to pay it to every lender, and it will only let you pretend to pay principal to every lender if you check the “just pretend” box next to “PRINCIPAL” (fine!) and “FUND” (what?) and “FRONT” (what even?). What a terrifying thing.

Anyway so, right, clearly it was a mistake, and Citi asked for its money back. It wired about $900 million of mistaken principal payments, and funds that got about $500 million refused to give the money back. “Finders keepers” is not actually a rule of New York law, and in general if you get a mistaken wire transfer you have to give it back. Citi sued, and the funds said, well, we were owed this money, and you sent it to us, so we’re going to keep it. The legal doctrine—the exception to the general rule that you have to give back mistaken wire transfers—is called the “discharge-for-value defense”:

The recipient is allowed to keep the funds if they discharge a valid debt, the recipient made no misrepresentations to induce the payment, and the recipient did not have notice of the mistake. As the New York Court of Appeals explained the exception: “When a beneficiary receives money to which it is entitled and has no knowledge that the money was erroneously wired, the beneficiary should not have to wonder whether it may retain the funds; rather, such a beneficiary should be able to consider the transfer of funds as a final and complete transaction, not subject to revocation.”

The leading case is called Banque Worms, which sounds right. When a bank wires someone money by mistake it can say “ugh we’ve got the banque worms again.”

Honestly it is a very strange doctrine. Here it makes some rough sense because the lenders had a real argument that Revlon had defaulted on the loan (by doing the aggressive collateral-stripping transaction), so it was immediately due and payable, but that’s not actually a requirement of the discharge-for-value defense and isn’t really discussed in the opinion. 4  If everything was fine with the Revlon loan, the lenders had no complaints, and Citi accidentally wired them the money, they’d still get to keep it. 5

Much of the dispute in this case is about whether “the recipient(s) did not have notice of the mistake,” that is, whether the lenders should have known, or did know, that the wire transfers were a mistake when they got them. They argued that they had no idea anything was wrong, that the payments were the exact amounts they were owed, that they assumed Revlon was intentionally paying down its loan to avoid litigation or do some other weird transaction, and that it didn’t cross their mind that Citi had messed up until Citi sent them recall notices the next afternoon.

Once Citi did send the recall notices, of course, the lenders knew it was a mistake, and they all sent each other chat messages making fun of Citi. “Not surprisingly,” writes Judge Furman, “given the nature and size of the mistake, many of these were quite colorful.” He can’t resist quoting some funny ones and neither can I:

DFREY5: I feel really bad for the person that fat fingered a $900mm erroneous payment. Not a great career move

. . . .

JRABINOWIT12: certainly looks like they’ll be looking for new people for their Ops group

DFREY5: How was work today honey? It was ok, except I accidentally sent $900mm out to people who weren’t supposed to have it

DFREY5: Downside of work from home. maybe the dog hit the keyboard

JRABINOWIT12: the song “Had a Bad Day” playing the background

But the judge points out that these chats only happened after the recall notices went out, and “the number and nature of these communications reinforce why the absence of such communications before the Recall Notices is so significant.” That is, if the lenders had thought the payments were a mistake when they got them, they would have been unable to resist hopping into a chat room and cracking jokes about Citi, as proven by the fact that when they got the recall notices they did all crack jokes about Citi. The fact that they didn’t make any jokes for almost a full day proves that, when they got the payments, they thought they were legit.

It is a weird rule that, if you get a payment that you think is legit, and then one minute later you get a notice saying “no sorry this payment was an error,” you nonetheless get to keep the payment, but I guess that’s the rule. Banque Worms!

What a mess. Obviously this is good for the funds who kept the money. It is awkward for the funds who returned the money; they can’t ask Citi to send it back to them. They’re stuck holding the loan until it matures or defaults; Bloomberg tells me that it’s trading at around 42 cents on the dollar. Their clients are going to have questions about their aggressiveness and creativity. Aggressiveness and creativity are kind of the whole ballgame when you are trading distressed debt; the business is about hunting for arcane advantages that you can exploit to get more money than the other guys. In a sense the discharge-for-value exception is an arcane advantage, but in another sense “well they sent us money so we’re going to keep it” is the least arcane imaginable thing, and if you don’t have that instinct perhaps you were meant for a gentler corner of the financial world.

It’s awkward for Citigroup and Revlon too. What do they do? Does Revlon owe Citi the $500 million now? Payable in 2023? I mean, presumably, right? 6  Presumably when Citi accidentally paid off Revlon’s loan, that wasn’t just a gift to Revlon? But neither did it accelerate Revlon’s debt? Citi just bought $500 million worth of the term loan at par and has to wait to get paid back? “‘If appeals fail, Citi will ultimately step into the shoes of the lenders and own $500 million of that nearly $900 million term loan,’ said Philip Brendel, a senior distressed debt analyst at Bloomberg Intelligence.” Can it syndicate whatever this is? Sell some of its weird phantom claims on the term loan to distressed-debt funds? Maybe the same funds that just took it for $500 million? Or I suppose Citi and Revlon could cut a deal where Citi gets paid back X cents on the dollar soon and leads some weird new debt-restructuring transaction for Revlon to fund it. That should be easier now. All the aggressive funds are gone.

When this all happened, there was a certain amount of commentary to the effect of This Proves Citi Is Too Big To Manage and a Threat to Global Financial Stability. That feels a little overblown to me—meh, now Citi owns $500 million of a mispriced loan to Revlon, it’s had bigger problems—but on the other hand, what an absolutely hair-raising description of Citi’s software this is. It is all well and good to say that a bank is “too big to manage,” but what that means in practice is surely something like this. It means you have to check three boxes to not send out money instead of one, and people forget to check two of them.

https://www.bloomberg.com/opinion/articles/2021-02-17/citi-can-t-have-its-900-million-back

A senior federal law enforcement source said the fraud is so complex and multilayered that it will take months to develop a full accounting.

When investigators raided a strip mall store in Garden Grove, California, in December, they found a line of customers snaking around the parking lot and huge stacks of cash inside the store.

Orange County prosecutors say Nguyen Social Services was charging up to $700 a pop to file false unemployment claims for people who did not qualify to receive Covid-19 relief money.

The brazen fraud was part of an overall scheme that cost taxpayers an estimated $11 million, prosecutors say.

“This isn’t just an Orange County problem. It isn’t just a California problem,” said Orange County District Attorney Todd Spitzer. “This is a breakdown of catastrophic proportions that has failed the American taxpayer.”

Government aid programs have long been fertile ground for scammers. But the scale of the fraud in the unemployment program created by the CARES Act has reached a staggering level, state and federal officials say.

The Labor Department inspector general has yet to complete a full investigation but, based on previous programs, estimates at least $63 billion of the $630 billion in disbursements has been misspent. The full scope of the loss in taxpayer funds is likely many times higher, experts and officials say, soaring well beyond $100 billion.

A rush to release the funds put enormous strain on state workforce agencies, creating a bonanza for individual scam artists and international cybercrime rings. And the federal government was slow to act despite early red flags, according to interviews with more than two dozen fraud experts, senior law enforcement officials and state and federal officials.

The Justice Department has assembled a task force to root out fraud across all 50 states and U.S. territories. Only now is the extent of the theft of taxpayer funds starting to come into focus.

A senior federal law enforcement source familiar with the investigation said the fraud is so complex and multilayered that it will take months to develop a full accounting.

Full coverage of the coronavirus outbreak

“It just continues to kind of spiral out and connect to other types of fraudulent acts,” the source said.

Officials in California, one of the only states to launch a review of the Covid-19 relief program, said they have tallied $11 billion stolen from taxpayers so far, but the total figure could be as high as $30 billion, or 27 percent. An early review in Nebraska, which looked at all statewide payments through June, found roughly 66 percent of unemployment money was misspent.

"In California, this is unquestionably the largest fraud against public agencies in our history," said Vern Pierson, president of the California District Attorneys Association. "Increasingly we are learning there could be fraud of historic proportions nationwide. While we don’t know the exact price tag, we know the amount of the loss of taxpayers is staggering."

A tsunami of attacks
The CARES Act was supposed to be a lifeline for a U.S. economy in free fall. Seeking the most efficient way to get cash into the hands of millions of jobless Americans, Congress turned to state workforce agencies, which administer unemployment insurance programs.

One of the act’s mandates was a new initiative called the Pandemic Unemployment Assistance program, aimed at helping gig workers, caregivers and people who are self-employed, all of whom are not typically eligible for unemployment insurance.

The program was quickly flagged as high-risk by the Labor Department’s inspector general. There was no former employer to verify this category of claims, so states had to build the program around self-reported work history. On top of that, many states also relaxed internal controls amid pressure to quickly approve a crushing influx of claims, according to state and federal officials.

“Water is going to find the leak. The criminals are going to find the weakest link,” said Alyssa Levitz, who leads the unemployment team at U.S. Digital Response, a nonprofit that provides tech assistance to local governments responding to crises. “And as the Pandemic Unemployment Assistance was being stood up, it was the weakest link.”

NBC News asked all 50 state workforce agencies how much money they have lost to fraud, but the vast majority that responded said they did not yet know the full extent of the loss.

Early indications in some states point to massive problems.

In routine reviews of payments through last June, Nebraska’s auditor found two-thirds of unemployment funds were misspent, and Kentucky’s auditor found that the program’s internal controls were so weak that they violated federal law.

The former executive director of Kentucky’s state workforce agency wrote in an email to staff: “Keep in mind, the goal is to put money in people’s hands ASAP to help them survive,” according to the audit.

The nationwide theft of taxpayer dollars continued quietly until December when Congress mandated that states verify the identity of claimants.

ID.me, an identity verification company that has now been contracted by 21 states, told NBC News that it is holding the line against a “veritable tsunami” of fraudulent claims flooding into state systems, raising questions about what passed through unseen before they got there.

“It’s like looking at fire burning inside of a house, but no fire alarm is going off,” said Blake Hall, the chief executive officer of ID.me. “It really is a national crisis.”

A wide array of fraudsters
More than 100 defendants have been charged across 71 cases in connection with CARES Act unemployment fraud, according to the Department of Justice. Federal authorities have seized or frozen $65 million, which is close to half of the actual losses associated with the crimes.

Many more people have been charged in state courts in connection with defrauding the program.

Huy Duc Nguyen and Mai Dacsom Nguyen, the pair accused of forming Nguyen Social Services to steal taxpayer funds, have each been charged with multiple counts including perjury and conspiracy to defraud another of property. They were released from custody but have not yet entered a plea.

Attempts to reach them were not successful. A spokesman for Orange County Superior Court said the court has not been notified that they have hired an attorney. The Nguyens are due back in court next month.

But for the overwhelming majority of phony unemployment claims, the culprits have not been caught.

The most common tactic used to fraudulently obtain cash meant for newly unemployed people is not especially sophisticated, experts say.

Identity thieves, who use Social Security numbers and other personal information stolen in data breaches and available on the dark web, account for 20 percent of the phony claims identified by ID.me, according to a company report.

“It’s so widespread and indiscriminate that they even target people who are heads of law enforcement agencies,” said Illinois Attorney General Kwame Raoul, who told NBC News that a scammer used his personal information to illegally obtain funds.

High-profile politicians such as Sen. Dianne Feinstein, D-Calif., and Ohio Gov. Mike DeWine were also victimized in this way.

Many identity theft victims may have no idea that benefits were filed in their name. But in recent weeks, millions of Americans began receiving 1099 tax forms from the IRS for benefits they never got.

Michael Webb, a 41-year-old former business owner from Lexington, Kentucky, was dumbfounded when he received a 1099 that showed $13,000 in benefits was filed in his name.

Webb had filed for unemployment benefits in March — and followed up repeatedly since then — but never got his claim approved. He now suspects it may have been because someone had already made a claim using his personal information.

“We're this close to losing everything,” said Webb, a father of three.

Another 10 percent of fraud comes from more elaborate “social engineering” attacks where an attacker tricks a victim into sharing personal data or otherwise cooperating in the fraud.

These attacks have played out in the form of multistage romance schemes, in which scammers try to woo victims and then convince them to hand over personal information, and even mass scam texts purporting to be from government agencies. To pass facial recognition checks, some criminals have even used 3-D printers to create masks of identity theft victims’ faces, according to ID.me.

In one chat transcript shared with NBC News, a victim thought he was getting hired by a German packaging company. Whoever was behind “Mr. Chapin Floyd, Materials and Quality” succeeded in convincing the victim to send his government ID, credit score and wireless carrier, among other details.

The opportunities have attracted garden-variety criminals, jail and prison inmates and at least a few desperate first-time offenders. But the most prolific offenders appear to be transnational organized crime groups out of West Africa, Asia and Eastern Europe, law enforcement officials say.

Cybersecurity firm Agari issued a report last May detailing how Scattered Canary, a Nigerian cybercrime ring that specializes in online scams, was targeting CARES Act unemployment insurance.

Researchers say it didn’t take long for playbooks on how to target unemployment agencies to pass through the dark web to like-minded scammers in places like Dubai, Hong Kong and Moscow.

“They are seeing essentially trillions of dollars that is up for grabs,” said Crane Hasshold, Agari’s senior director of threat research. “This is their World Series. This is their Super Bowl.”

A slow government response
There were early red flags that unemployment insurance was being targeted heavily by criminals.

Over the first few months of the program, Washington state announced hundreds of millions lost to fraud, and law enforcement agencies including the FBI and the Secret Service issued warnings. Meanwhile, some economists puzzled over why data showed there were more people collecting benefits than were actually unemployed.

The Labor Department’s inspector general has issued several public reports, including a June report to Congress that warned “the volume of UI investigative matters currently under review is unprecedented in the DOL-OIG’s history” and warned of losses higher than $36 billion.

The previous administration issued guidance to states and provided funding to combat fraud but took little public action other than that. In a November report, the Labor Department inspector general noted the department has “made efforts to focus on program integrity” but needed to develop better oversight of state unemployment claims.

A senior Labor Department official under the Biden administration told NBC News, “There was not enough focus from this agency and others, that was swift enough and focused specifically on the evolving type of fraud that it was seeing.”

A Labor Department spokesperson said in a statement to NBC News: “We are working on a comprehensive approach to partnering with states to minimize fraud, waste and abuse, while making sure Americans who have lost their jobs through no fault of their own are able to receive the benefits they deserve and desperately need.”

The embattled state agencies are likely to face further strain — at even higher stakes for taxpayers — with the next round of federal stimulus. The situation is “extremely serious,” in the words of the senior official at the Labor Department.

Criminals continue to flood the system, bouncing between states. ID.me recently caught 2.2 billion server requests out of Hong Kong in a single day and four major distributed denial-of-service attacks — attempts to overwhelm the server — originating from Nigeria in a single morning.

“It’s going to take a while to figure out the scope of this thing,” said Mason Wilder, a senior research specialist at the Association of Certified Fraud Examiners. “But the scale of it just dwarfs anything else.”

https://www.nbcnews.com/news/us-news/how-billions-pandemic-aid-was-swindled-con-artists-crime-syndicates-n1257766

Last month’s GameStop trading mania was sparked by members of a popular Reddit investing community who said they hoped to strike back at the Wall Street elites who had long dismissed them as dumb money. But growing evidence casts doubt on the idea that the episode mostly benefited small-time investors.

Giant mutual funds that own the largest stakes in GameStop saw the biggest gains in value. Hedge funds — some that have started using algorithms to track retail investors on social media sites — appear to have bought and sold millions of shares during the stock’s most volatile period of trading, industry experts said.

And, in at least some cases, novice investors lost their shirts.

Instead of heralding a new wave of investor populism, the rise and fall of GameStop’s stock may end up reinforcing what professional investors have known for a long time: Wall Street is very good at making money, and more often than not, smaller investors lose out to wealthy traders and giant institutions.

The four largest asset managers in the world together own 39 percent of GameStop shares, according to regulatory filings. Those stakes, which are mostly held for years in passive index funds, have collectively gained roughly $1 billion in value since the beginning of this year. One hedge fund, Senvest Management, recently boasted to clients that it made more than $700 million from a bet it placed on GameStop in September, the Wall Street Journal reported last week.

Steve Bruce, a spokesman for Senvest, declined to comment on the GameStop trades.

The sheer number of shares that changed hands during the stock’s most manic trading period in late January suggests the episode was driven by more than just small, retail investors. Some hedge funds bought shares because they were forced to “cover” their short positions — a financial cost imposed on investors who bet a stock will go down before it goes up. Meanwhile, other hedge fund managers were probably taking calculated, short-term risks buying and selling as the stock price traded up, said Robert J. Shapiro, a policy fellow at Georgetown University and former economic adviser to President Bill Clinton.

“You have hundreds of millions of shares being traded at prices of $200 to $300 a share,” Shapiro said. “The Reddit crew cannot afford to play in this game in any significant way.”

The question of who profited from the stock bonanza is important to regulators, who are investigating whether the market was manipulated for profit. Individual investors can freely share their opinions about a stock on social media, but it’s illegal for a group of investors to coordinate an effort to pump up a stock price, said Jacob S. Frenkel, a former senior counsel at the Securities and Exchange Commission.

GameStop frenzy leaves behind a mess for Wall Street regulators

Professional investors who are licensed by the Financial Industry Regulatory Authority to give investment advice face stricter limits around how they can discuss their stock positions, Frenkel said. Legal experts think financial regulators will probably be combing through social media posts to determine whether sophisticated investors used online anonymity to stoke demand for stocks.

The hidden hand of larger investors

The category of individual traders known as retail investors has ballooned with the rise of commission-free online trading apps such as Robinhood. There’s no doubt these traders showed up in record numbers to help drive up GameStop and other stocks last month, creating a temporary liquidity crisis for Robinhood, which had to raise $3.4 billion to help cover the cost of guaranteeing all of its customer deposits.

But the rise in retail investors has also led some Wall Street firms to pay more attention to the mom-and-pop investors they used to ridicule. Hedge funds have started to build algorithms or hire outside firms that specialize in scanning conversations on Reddit and Twitter for clues about what retail traders are thinking. Several of these services, with names like Swaggy Stocks, Robintrack and Quiver Quantitative, popped up in the past two years.

“The most innovative investment firms realized that tracking Reddit was important to portfolio management,” said Justin Zhen, co-founder of Thinknum Alternative Data, a New York software firm with more than 300 clients who pay for data scraped from various sources across the Web.

Aside from Senvest, the New York hedge fund that manages $2.4 billion in assets, Wall Street firms have kept mum about any GameStop gains. Most investors, with the exception of top corporate executives and shareholders who own at least 5 percent of a company, aren’t required to disclose their trading activity.

But industry experts say the soaring stock price was almost certainly given a boost by the hidden hand of larger investors.

Benn Eifert, chief investment officer of San Francisco-based investment fund QVR Advisors, said the largest hedge funds probably knew about the GameStop buzz early because they are actively monitoring conversations on social media forums.

“You better believe the large sophisticated firms in the space have technology to tell them about what’s happening in the world in real time,” Eifert said. He declined to comment on whether QVR took a position in GameStop or specify what technology his firm uses to monitor social media.

Like GameStop, Bed Bath & Beyond has been reduced to a stock meme. But 42,000 people work there.
Last year, prominent hedge funds including Point72, D.E. Shaw, Two Sigma and Capital Fund Management were all found to be siphoning trading data from a popular app called Robintrack, which collected information on which stocks users of Robinhood bought and sold. Casey Primozic, the programmer who created the now-defunct app, tweeted his finding in May that he had traced large volumes of traffic back to servers that appeared to belong to those firms.

“It was mostly a vindication of the fact that the data does have value to these bigger players,” Primozic said in an interview.

Spokespeople for Point72, Two Sigma and Capital Fund Management all declined to comment on that incident or whether they participated in trading of GameStop. D.E. Shaw did not respond to a request for comment.

GameStop has 47 million shares available to trade in the stock market. And yet, on its roller coaster ride from a share price of $17 to $483 in the span of three weeks, investors bought and sold those shares hundreds of millions of times. Over three of the stock’s most volatile trading days, GameStop shares changed hands 554 million times — more than 11 times the number of total shares available.

This pattern suggests there is more to the story than retail investors buying shares and holding them through the stock surge, said Shapiro, the Georgetown policy fellow.

“The same shares are being bought and sold four or five or six times a day,” Shapiro said, a pattern he thinks points to the involvement of hedge funds with large amounts of capital to bet on highly volatile stocks. “Hedge funds make money off of volatility and price change. If prices are going to change very rapidly, that gives you a lot of opportunity to make profit.”

If social media scraping has been a secret weapon for Wall Street, the secret is out.

Quiver Quantitative, a firm that compiles data sources including social media, regulatory filings and lobbying records, saw a surge of interest in its product from hedge funds and other institutional investors in the past two weeks, said Christopher Kardatzke, who launched the company with his twin brother last year. The company also offers a Web dashboard of data for ordinary investors.

“A lot of people want to know what retail investors are talking about,” he said. “It’s a force which is going to be influencing the markets for a while now.”

Professionals and the ‘pumps’

Another possibility regulators are examining is whether employees of large Wall Street firms were actively using the Reddit forum to boost their portfolios. Though posters are anonymous, r/WallStreetBets has long been populated by users who grasped complex trading concepts, shared screenshots of their Bloomberg terminals and discussed six-figure bets on single stocks, said Jaime Rogozinski, who founded the forum in 2012.

“Since it was started, it’s always attracted professionals,” said Rogozinski, who is 39 and lives in Mexico City. “It’s easy to miss them or assume they are not there because of the crude language.”

The sophistication of some forum members was evident, Rogozinski says, during an incident in late 2019 when they discovered a glitch in the Robinhood app. Redditors shared a “free money cheat code,” which they said let them borrow an infinite amount of money to perform trades. One user named MoonYachts claimed to have placed a $1 million bet with only $4,000 of his own cash before Robinhood fixed the bug.

“It’s evident that these guys knew exactly what they were doing,” said Rogozinski, who said he stopped moderating the subreddit last year.

Joey Brookhart, an analyst at a hedge fund in Denver, has monitored the subreddit for years as a form of entertainment. He said a typical post on the site is a “pump” — a message designed to get other users to drive up the price of a stock. Brookhart said he thinks most of these posts are shared by active traders but not necessarily professionals.

“They kind of realize the power of a network that’s ripe for manipulation,” he said. “There’s a pretty easy formula if you want to go pump something.”

Robinhood and Citadel’s relationship comes into focus as Washington vows to examine stock-market moves
It’s clear that Redditors helped spark the initial surge that sent shares of GameStop trading to levels far above what any rational investor would have paid for a failing bricks-and-mortar retail chain. One veteran of r/WallStreetBets who goes by the username DeepF---ingValue has evangelized GameStop since last year, when he bought about $50,000 of the stock.

Last month, as his position soared above $47 million, the user was unmasked as Keith Gill, a 34-year-old certified financial adviser in Massachusetts. Gill, who did not respond to a request for comment, has told interviewers he is not trying to pump up the price of the stock and always intended to hold his shares for the long term.

Debra O’Malley, a spokeswoman for the Massachusetts secretary of the commonwealth, said the state is examining Gill’s social media activity as it relates to his role as a registered broker and employee of MassMutual. She said the state has asked MassMutual for details about his employment, his disclosures and the terms of his departure from the company on Jan. 28.

“It’s our understanding they were unaware of his [social media posts] and likely would not have approved them,” O’Malley said in an interview.

Paula Tremblay, a spokeswoman for MassMutual, confirmed Gill no longer works at the company. She said MassMutual is reviewing the matter but declined to comment further.

Andrew Hong, an analyst for a financial software company in Toronto who bought stock options in GameStop in August, said he thinks investors on Reddit actually have a lot in common with the Wall Street investors they claim to despise: At the end of the day, they’re all trying to make money.

“There are some really smart people on [WallStreetBets], but for the most part, all this is just poor habitual gambling addicts versus rich habitual gambling addicts,” Hong said. “No one is a good guy here.”

https://www.msn.com/en-us/money/companies/how-the-rich-got-richer-reddit-trading-frenzy-benefited-wall-street-elite/ar-BB1dvfI7

Nicolás Maduro’s mismanagement may have brought dark days for Venezuela, but there’s a Bitcoin-shaped light at the end of the tunnel.

Between hyperinflation, stalled oil operations, and deepening tensions with the United States, it is safe to say that Venezuela is in crisis and it is ordinary Venezuelans who are hurting the most.

Hyperinflation means that many Venezuelans are forced to use black-market dollars in order to purchase goods. However, there is hope on the horizon. Cryptocurrencies like Bitcoin could help Venezuelans break out of their government’s self-made crisis and thrive.

A Crashing Bolivar Has Caused Economic Disaster

Crypto use in Venezuela has been driven by a catastrophic economic collapse. Since 2013 the value of the Venezuelan Bolivar has lost more than 200,000 percent in value compared to the US dollar. This has led to skyrocketing prices. This situation has been significantly worsened by tightening US sanctions and increased unemployment.

This has led to a surge in emigration and thus a surge in remittances sent back to the nation. Ecoanalítica estimated that in 2019 around $4 billion flowed back into Venezuela from abroad and that there were another $1.5 billion in withdrawals from foreign bank accounts. However, these remittances often lose a lot of value if sent using traditional means, and every dollar counts in a country experiencing shortages of just about every necessity.

Venezuelans Have Turned to Cryptocurrency to Survive

In the face of these troubles, Venezuelans have turned to Bitcoin and other cryptocurrencies. Unlike US dollars, Bitcoin (BTC) can be purchased digitally and directly by using Peer2Peer (P2P) exchanges. It is an asset that can be purchased anywhere in the world.

This has enabled Venezuelans to digitally convert remittances or foreign bank accounts into cryptocurrency. This has the advantage of being more stable than the local Bolivar. In fact, recently, the value of the major cryptocurrencies have been rising.

Venezuela is one of the most rapid adopters of cryptocurrency in the world. Typically, Venezuelans aren’t holding cryptocurrency as a long-term hedge against inflation. Instead, they are using it to buy food, medical supplies, and day-to-day purchases.

In order to accommodate this, merchants in Venezuela have started to directly accept BTC payments. A deal between Panamanian-based cryptocurrency exchange Cryptobuyer and Venezuelan payments processor Mega Soft has created around 20,000 point-of-sale terminals in the South American nation.

However, even with these services, Bitcoin can be difficult to use and many Venezuelans have instead turned to custodial solutions like AirTM. This wallet allows Venezuelans to spend their Bitcoin within a network, making it easier to send and receive cryptocurrency.

This is particularly useful for freelancers and makes it easier for Venezuelans to make purchases abroad. Without Bitcoin and the private companies offering related services, it would be exceedingly difficult for many Venezuelans to function.

The Venezuelan Government Is Trying to Wrest Control of the Crypto Revolution

Cryptocurrency is a lifeline for many Venezuelans but it is a headache for Nicolás Maduro's government. One of the key positives of Bitcoin is that it provides a way for citizens to engage in commerce and trade without government interference. This enables a black market to form outside of the government’s control, which could weaken its grip over the populace.

In order to combat this, the government has taken steps to create a nationalized cryptocurrency. The first attempt was to create the Petro in 2018. This coin was tied to Venezuelan oil and provided a state-approved alternative to other cryptocurrencies. The government eagerly pushed the cryptocurrency and made payments for passports and other government services in Petro mandatory.

Despite this backing, the Petro fell flat. Many were concerned about reports that the Venezuelan oil that supposedly backed the coin didn’t exist and that the true backer was the debt-ridden state oil operator PDVSA. Additionally, the Petro saw limited external support from Venezuela’s allies. Since Venezuelans were reluctant to adopt the cryptocurrency, the Petro is all but dead.

Venezuelan Government Gets Behind Crypto

However, the Venezuelan government hasn’t abandoned its cryptocurrency ambitions. It has realized that it can take advantage of the private nature of cryptocurrencies to circumvent international sanctions.

In September, Maduro announced that his government would begin using cryptocurrencies for domestic and international trade. It appears that the government plans to experiment with holding Bitcoin and Ethereum to help replace its static oil reserves.

On the back of this announcement, the Venezuelan government has introduced a new DeFi platform called BDVE that will supposedly allow Venezuelan citizens to swap ERC20 tokens in a noncustodial manner. However, many observers are skeptical about the government’s claims that it is decentralized, and the registration process requires users to reveal their identities.

Could Crypto Herald the End of Socialism in Venezuela?

While these do seem like the desperate attempts of a government to claw back control, the embrace of cryptocurrency by the Venezuelan government could be a sign of positive change. If it pushes through with attempts to build state-backed platforms, this will introduce more Venezuelans to the idea of cryptocurrency, and could add a further boost to cryptocurrency use.

Glasnost and Perestroika bought freedoms that eventually triggered the collapse of the Soviet Union. We could be witnessing the beginning of a similar phenomenon in Venezuela. It is entirely plausible that state-backed economic freedoms in the form of cryptocurrency will help weaken government control over its citizens and inadvertently usher in more libertarian economic policies by weakening the control of the state.

In any case, increased access to cryptocurrency can only be positive for Venezuelans. A more liquid and stable means of payment and transfer would go some distance to mitigating the disastrous decisions of the socialist government in the South American nation.

With some luck, decentralized currencies could help to break down the grip of the state and let Venezuelans finally breathe free.

https://fee.org/articles/how-bitcoin-could-smash-socialism-in-venezuela/

"You will own nothing and you will be happy."

This is what they are planning for your future.