In this issue:

• Blockchain Solutions Advance in Manufacturing, Food, Pharma and Grant Management

• Marco Polo Network Completes Pilot, Banks Make Crypto Moves, Bitcoin Futures Launch

• Multiple US Enforcement Actions for ICOs, Dark Web Sales, Fraud and SIM Swapping

• Reports Detail Crypto Hacks, Ransomware, Dark Markets and Crypto Fraud Schemes


Blockchain Solutions Advance in Manufacturing, Food, Pharma and Grant Management

Last week, one of the world’s largest industrial cobalt producers announced plans to join the Responsible Sourcing Blockchain Network (RSBN). RSBN is a network of auto brands, refiners and miners that aim to use blockchain technology to promote responsible sourcing and production practices in the industry. RSBN will reportedly offer a highly secure and immutable record of relevant mine-to-market supply chain information that can be shared with members of a permissioned blockchain platform powered by Hyperledger Fabric. Also last week, a global food and beverage company announced a new project that leverages blockchain technology to facilitate responsible sourcing practices in the coffee bean industry. Participants will reportedly be able to store supply chain transaction records in a transparent, immutable and verifiable format and thus interact in a more trustworthy and efficient manner.

The Food and Drug Administration (FDA), in conjunction with a leading national pharmaceutical manufacturer, a national professional services firm and a global technology firm, completed the Drug Supply Chain Security Act Interoperability Pilot earlier this month. The pilot reportedly demonstrated the visibility into the end-to-end pharmaceutical supply chain offered by blockchain technology. In a related development, the second-largest health insurance company in the U.S. recently announced plans to use blockchain technology to help patients securely store, share and access their medical data. According to reports, the feature is in the pilot phase but will be ready for commercial adoption in the next two to three years. Also this week, a leading professional services firm announced the release of its third-generation zero-knowledge proof blockchain technology for the Ethereum public blockchain. According to a press release, these updates significantly reduce transaction costs by batching up to 20 private transfers together into one transaction, which cuts the cost per transaction to $0.05 and reportedly makes public blockchains scalable for enterprise.

Diginex, a blockchain financial services and technology company, in conjunction with the United Nations Migration Agency, recently announced plans to launch a blockchain-based tool that aims to prevent the exploitation of migrant domestic workers in Hong Kong and to facilitate ethical recruitment. Through the tool, agencies will reportedly be able to assess their current level of adherence to global ethical recruitment principles as set forth by the IRIS Standard.

Earlier this month, the U.S. Treasury Department’s Office of Financial Innovation and Transformation announced plans to explore blockchain technology as a solution for grant management. The solution would reportedly leverage a permissioned version of Ethereum to tokenize the details and payments found in letters of credit sent to grantees. By embedding all the grant information in the token, the solution will seek to reduce reporting burdens, improve transparency and reduce labor costs.

For more information, please refer to the following links:

Marco Polo Network Completes Pilot, Banks Make Crypto Moves, Bitcoin Futures Launch

In a press release published late last week, the Marco Polo Network announced the completion of a seven-week trial involving more than 70 companies across multiple industries and five continents to test the receivables financing (i.e., “factoring”) solution enabled by the R3 Corda blockchain platform. According to the press release, a survey of project participants found that “100% of respondents believe that Marco Polo will accelerate and improve the receivables discounting process and reduce costs for both banks and corporates, with 75% believing this will happen within 5 years.” Shortly after the press release, a global consulting firm announced that it had invested in TradeIX, a blockchain startup with a central role in the Marco Polo Network.

Institutional financial firms also made moves this week in the cryptocurrency market. One press release announced that a major U.S. financial institution has partnered with the Gemini Trust Company to launch a pilot that would allow customers “to consolidate the reporting of their digital assets serviced by Gemini, an independent digital asset custodian, with their traditional assets” serviced by the U.S. financial institution. Another report provided details on another major U.S. financial institution’s plans to expand its U.S.-based digital asset custody services to European investors.

Finally, this week, cryptocurrency exchange ErisX announced the launch of a market for physically settled bitcoin futures contracts. The futures contracts will be traded through Commodity Futures Trading Commission-regulated entities, which will operate alongside Financial Crimes Enforcement Network-regulated entities that trade in the bitcoin spot market.

For more information, please refer to the following links:

Multiple US Enforcement Actions for ICOs, Dark Web Sales, Fraud and SIM Swapping

This week, the Securities and Exchange Commission (SEC) published a consent order related to an initial coin offering (ICO) conducted by Blockchain of Things, Inc., a New York-based startup focused on providing a development platform for digital assets and messaging applications. As part of its settlement agreement with the SEC, the company agreed to return all invested funds (nearly $13 million), pay a $250,000 fine and comply with U.S. securities laws moving forward. The company entered the agreement based on its sales of digital tokens to U.S. consumers in December 2017 through an ICO after the SEC’s publication of the “DAO Report,” in which the SEC warned that ICOs may be considered securities offerings.

In Seattle, law enforcement sentenced a 40-year-old man this week for selling thousands of doses of fentanyl on the dark web. More than $1 million in cryptocurrency and other holdings were seized from the man in December 2018, which the man admitted were proceeds obtained from his crimes. Law enforcement identified the man after his contact information and dark web monikers were found in the possession of other drug traffickers in California and Oklahoma.

Authorities in the U.S. recently indicted two men for subscriber identification module (SIM) swapping. A SIM card is a technology used to identify and authenticate mobile phone users. SIM swapping occurs when fraudsters persuade – usually by force, trickery, bribery or extortion – mobile carrier employees to swap out cell phone numbers from victims’ SIM cards to those in possession of the fraudsters. According to the indictments, both men accused were able to leverage this scheme to access victims’ cryptocurrency accounts. One of the indicted men allegedly used the unlawful proceeds to purchase real property, including royalty rights in 20 songs and a Rolex watch, while the other man walked away with more than $1 million using “little more than an iPhone and computer.”

Two Canadian residents were arrested this week in connection with a scheme to steal bitcoin from a resident in the U.S. The fraudsters executed the scheme by launching a Twitter account designed to trick users of a Hong-Kong based cryptocurrency exchange into believing it was a customer service portal. In doing, so the fraudsters obtained one victim’s email and digital exchange login credentials, allowing them to abscond with approximately $160,000 worth of the victim’s bitcoin.

For more information, please refer to the following links:

Reports Detail Crypto Hacks, Ransomware, Dark Markets and Crypto Fraud Schemes

VeChain Foundation, the Singapore-based nonprofit behind the VeChain public blockchain platform, recently announced that about $6.7 million worth of its VET tokens were stolen late last week. The company attributed the hack to human error and lack of oversight by its finance and auditing teams rather than any fundamental problems with its hardware wallet or standard procedures. VeChain made a list of addresses associated with the hack and requested all exchanges to flag or freeze funds coming from them. VeChain is working internally and with Singapore law enforcement to ascertain more details about the incident.

Also last week, the New Orleans government fell victim to a cyberattack that apparently involved Ryuk, a type of ransomware used to lock up computer data until a ransom is paid (usually in bitcoin) to unlock it. A state of emergency was declared last Friday, and more than 4,000 government computers and servers were shut down. Although some online services remained affected early this week, the government said it expected the data loss was expected to be minimal. This is the fourth attack against a U.S. city this December; others occurred in Pensacola, Florida; St. Lucie, Florida; and Galt, California.

According to reports, one of the largest Russian illicit marketplaces on the darknet, Hydra, says it will raise funds for international expansion with an ICO. Dec. 16 was identified as the ICO start date, but it is unclear whether the ICO actually occurred. Among other things, the ICO would purportedly fund the development of a new service called Eternos, a worldwide darknet marketplace combined with an encrypted messenger, a cryptocurrency exchange and an anonymized browser akin to Tor.

Also this week, reports are linking the drop in bitcoin price to the PlusToken cryptocurrency scam that occurred earlier this year. PlusToken, a China-based entity posing as a wallet, allegedly obtained $2 billion to $3 billion worth of cryptocurrency in a massive Ponzi scheme. Although individuals were arrested in connection with the fraud, the stolen cryptocurrency has largely been unrecovered. A recent report by blockchain analytics firm Chainalysis hypothesizes that bitcoin obtained through the scheme are being reintroduced in the market, thereby lowering the bitcoin price. The Chainalysis report tracks the bitcoin and its movement with the apparent corresponding drop in price. The report concludes that a little under half of the stolen bitcoin has yet to be laundered.

For more information, please refer to the following links: