Blockchain Solutions Launch in Pharma, Energy and Food Industries

According to reports, the Chinese branch of one of the largest pharmaceutical companies in the world recently announced that it will work with VeChain to develop a blockchain-based solution for tracking the supply chain of clinical drugs. The solution will reportedly record batch numbers related to specific drugs on a permissioned blockchain. A recent article in Harvard Business Review noted how blockchain may help companies achieve compliance with provisions in the U.S. Drug Supply Chain Security Act and the EU’s Falsified Medicines Directive that address the combating of counterfeiting and tampering in the pharmaceutical supply chain.

Last week, a major global telecommunications firm announced a partnership with Energy Web, a nonprofit focused on building blockchain solutions for the energy sector. According to a press release, the partnership will seek to leverage blockchain and IoT to integrate assets like wind turbines, batteries, heat pumps and solar panels with energy grids. Separately, according to reports, a nonprofit focused on offshore energy recently completed a pilot that leveraged blockchain to collect data and generate invoices during the process of transporting wastewater byproducts collected in the extraction of oil and natural gas. A spokesperson for the nonprofit said the pilot showed that opportunities exist “for blockchain to reduce costs, increase efficiency, provide transparency and eliminate disputes in the oil and gas industry.”

In food supply chain developments, the Chinese subsidiary of a major U.S. grocery and retail company recently announced that it will partner with VeChain to implement a blockchain system for tracing food products. The Chinese office of a Big Four accounting and consulting firm will reportedly assist in the project. Also in China, the province of Yunnan has reportedly launched a blockchain solution for tracing tea products.

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Digital Dollar Project Launches, Cryptocurrency Focused Bank Receives Investment

A nonprofit foundation and a Fortune 500 company recently published a whitepaper and announced a partnership to further exploration into a central bank digital currency (CBDC), or a “digital dollar.” The purposes of the Digital Dollar Project are, among others, to promote research and public discussion on the potential benefits of a tokenized dollar and to propose possible models to support the public sector as it considers the development, testing and adoption of a CBDC. Last February, the Federal Reserve announced that it is exploring the possibility of issuing a CBDC.

A proposed Wyoming-based bank that will specifically service the cryptocurrency industry recently announced that it had raised enough funds to begin the process of applying for a charter. While the bank will need to raise additional capital if granted a charter, the bank’s CEO said the bank plans to open for business in early 2021.

Last week a major U.S. bank agreed to pay $2.5 million to settle a class action suit over its 2018 decision to start treating purchases of cryptocurrency with credit cards as cash advances, resulting in higher fees. In the motion, filed last Tuesday in Manhattan federal court, the plaintiffs said the settlement would permit class members to get back approximately 95% of the fees they claim were unlawfully charged, while the bank, as part of the settlement, will not admit to wrongdoing.

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French Regulator Approves ICO, New Token Standards Body Launches

The French financial regulator, Autorite des Marches Financiers (AMF), has granted its second approval of a capital raise through a public token offering. The AMF granted the expected €10 million ($11.2 million) raise under its “ICO visa,” which is part of a comprehensive legal framework for cryptocurrencies launched in 2019. The visa requires applicants to show the AMF they have provided all relevant information to purchasers about the sale and the risks involved. According to reports, the visa was granted to GreenToken, an Ethereum ERC-20 standard token that will be used to acquire and value goods and services on the GreenToken network, a professional community focused on renewable energy. The token will reportedly become tradable on the French cryptocurrency exchange SAVITAR, as well as directly on the GreenToken network, beginning Dec. 1.

The InterWork Alliance (IWA) has formally launched its operations as a self-described “platform-neutral, non-profit organization dedicated to creating the business-level standards and tools needed to build distributed applications and increase innovation across token-enabled ecosystems.” IWA is reported to have more than 30 organizations participating and aims to enable organizations to adopt a variety of tokenized assets by agreeing to distributed business models in a platform-agnostic manner. The IWA will focus on three frameworks: (1) the Token Taxonomy Framework, which defines a token and how its value can be exchanged (and was initiated by the Enterprise Ethereum Alliance); (2) the InterWork Framework, which is for the legal clauses that match up with token standards; and (3) the Analytics Framework, which is to enable market data and analytics in a privacy-preserving manner.

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DOJ and SEC Continue Prosecuting Crypto Crimes, CipherTrace Issues AML Report

A New York City man has been charged with conspiracies to engage in computer hacking for credit card information and money laundering through the use of bitcoin. As alleged in the indictment, the defendant improperly accessed vulnerable computer networks containing credit and debit card account information, sold the information in a criminal marketplace, and used bitcoin and other cash transactions to launder the proceeds from his crimes. He faces up to five years in jail if convicted.

In its continuing enforcement efforts against unregistered token offerings, the SEC recently obtained an asset freeze from a Texas federal court on all the proceeds received from a $9 million token offering that the agency claims was procured by fraud and in violation of federal securities laws. Among other things, the complaint alleges the defendants falsely claimed that the Meta 1 Coin was backed by a $1 billion art collection and/or $2 billion in gold. The complaint also alleges that a portion of the monies raised in the ICO were spent to purchase a Ferrari.

CipherTrace has issued its Spring 2020 Cryptocurrency Crime and Anti-Money Laundering Report. The report examines the first five months of the year and finds, among other things, that crypto thefts, hacks and frauds totaled $1.36 billion, with over $1.3 billion coming from fraud and misappropriation. The report also notes that 74% of bitcoin moved in cross-border exchange-to-exchange transactions, highlighting the need for exchanges to adopt tighter controls to ensure anti-money laundering and counter-terrorist financing compliance. According to the report, 88% of funds sent by U.S. bitcoin ATMs to exchanges in 2019 were sent to exchanges located offshore. The report also finds that while the total value collected by criminals from crypto crimes is among the highest recorded, the global average of criminal funds sent directly to cryptocurrency exchanges dropped 47% in 2019. This suggests that many criminals are finding it harder to offload their illicit funds into cryptocurrency exchanges, indicating effective implementation of AML measures around the world.

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