The week’s developments in the crypto currencies world including OneCoin lawyer found guilty in ‘crypto-scam’

Quadriga: Lawyers for users of bankrupt crypto firm seek exhumation of founder

Lawyers representing users of bankrupt cryptocurrency exchange QuadrigaCX are asking Canadian authorities to exhume the body of its founder. They say they want an exhumation given “questionable circumstances” surrounding his death. Gerald Cotten died suddenly last year in India from complications related to Crohn’s disease. Following his death, the exchange was unable to locate or secure significant cryptocurrency reserves.

When he died, the 30-year-old founder was the only person who had passwords to digital wallets containing C$180 million ($137m; £105m) in cryptocurrencies. His untimely death forced the closure of QuadrigaCX, which had some 115,000 users at the time. Online rumours have circulated since, speculating that Cotten faked his own death and sought to abscond with the funds, though no evidence of such a scheme has been revealed in the year since he died.

On Friday, the legal team representing users of the platform in the bankruptcy proceedings sent a letter to the Royal Canadian Mounted Police seeking an exhumation and post-mortem autopsy be performed on Cotten’s body “to confirm both its identity and the cause of death”.
Source: BBC News

OneCoin lawyer found guilty in ‘crypto-scam’

A US lawyer has been found guilty for his role in the OneCoin cryptocurrency scam, which raised billions of pounds from investors convinced they were buying into a new digital currency. A New York jury found that Mark Scott helped to perpetrate the scheme, routing approximately $400m (£310m) out of the US while working to conceal the true ownership and source of the funds. Prosecutors said he made about $50m.

Mr Scott’s lawyers had said he did not know that OneCoin was worthless. They said he was simply doing the job asked by Dr Ruja Ignatova, a co-founder of the Bulgaria-based OneCoin. The federal jury in Manhattan rejected those arguments, finding Mr Scott guilty of conspiracy to commit money laundering and bank fraud.

In total, investigators believe as much as £4bn was raised globally via what is said to have amounted to a Ponzi scheme, with investors based in Uganda, China and the UK among other countries. “OneCoin used the success story of Bitcoin to induce victims to invest under the guise that they, too, could get rich through their investments,” New York state attorneys said in one filing. “This was, of course, completely false because the price of OneCoin was a fiction and not based on supply and demand.”

Source: BBC News

Thailand Set Up Its Vision of Becoming the Next Blockchain Force

WBS Bangkok saw the participation of 300+ regional and international blockchain and crypto experts who came together to assess Thailand’s blockchain ecosystem. WBS Bangkok had a cohesive agenda that essentially explored multiple facets of blockchain and cryptocurrency in the global context and for Thailand’s blockchain ecosystem. One of the major topics of discussion at the conference included the global outlook for 2020. While talking about the legal and regulatory landscape in Asia and Thailand, Kullarat Phongsathaporn, Partner at Baker & McKenzie Ltd added, “We’re likely to see more regulations globally in the digital asset world. This is a good sign, in that it is creating a real impact and more traction, so much so that the regulators are really active. We need a holistic direction from the government, so next year we can expect more synchronization from regulators.”


Blockchain Might Be a Silver Bullet for Fighting Deepfakes

Deepfakes are videos generated with help from artificial intelligence that show a recognizable figure (like Barack Obama or Mark Zuckerberg, for example) saying things that they’ve never actually said. By putting false words in the mouths of prominent, powerful people, deepfakes are a perceived threat purportedly true information. A 72-page report issued by Witness Media Lab goes in depth on the tools that stand a chance to push back against the threat of deepfakes, and blockchain is one of them. It’s not the first time this idea has been floated, but it’s certainly one of the more thoughtful explanations we’ve seen.

The general idea goes like this: images, videos, and audio can be cryptographically signed, geotagged, and timestamped to establish their origins. This kind of “verified capture” calls for applications to perform a number of checks, ensuring that transmitted data conforms with the source material. That media can be assigned a cryptographic hash based on the image or audio data it contains — comparing that source hash to another in search of any mismatches will easily tell you if the media has been manipulated or not. In other words, blockchain can verify source media against copycats or outright manipulations the same way it verifies crypto transactions. While not 100% foolproof, blockchain-based authenticity measure allow you to confirm that a media item hasn’t been tampered with on its way to you from the original point of capture.


Venezuela’s Maduro Says He Will Airdrop Half a Petro Each to Public Employees, Retirees

Venezuelans including public sector workers, retirees and the military are set to receive a petro token handout this Christmas, so long as they register for the state’s crypto payments platform. Venezuelan President Nicolas Maduro announced Friday that those groups would be airdropped 0.5 petro (said to be worth $30) as a holiday bonus this week, according to local news source El Universal.

To be eligible, citizens will first have to sign up to PetroApp, the official government crypto wallet that launched back in May. The only platform that supports the oil-backed cryptocurrency, PetroApp is designed to allow users to purchase goods and services from their phones, as well as for standard transfers. PetroApp can also be used to exchange other cryptocurrencies, too, meaning users may well use the app to swap their airdropped petro for the currently supported bitcoin, litecoin and dash.

Maduro said that the airdrop will be another opportunity to encourage Venezuelans to switch to the petro, which has been available to the public since October 2018. Considering the national minimum wage is less than $10 a month, eligible citizens will be strongly incentivized to register for the app. This is the latest in a series of efforts to push nationwide adoption of the petro.


Claire Cummings

Claire practises financial services law with a focus on regulatory issues, cryptocurrencies and tokens, trading and brokerage documentation and advising both existing and start-up funds and fund managers.

If you would like to discuss any of the points we raise, please contact me or one of our other lawyers.

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