Silvergate Bank Onboarded 59 New Crypto Customers in Q4 2018

Crypto-supportive Silvergate Bank has signed on a slew of new cryptocurrency customers in the fourth quarter on 2018, according to a recent filing with the United States Securities and Exchange Commission (SEC).

The filing reveals that as of Dec. 31, 2018, Silvergate had 542 digital currency-related clients including cryptocurrency exchanges and miners, custodians and global investors, among others. This marks an increase of 59 crypto-related customers since a previous filing in September 2018.

By Dec. 31, 232 cryptocurrency customers were purportedly in various stages of the bank’s customer onboarding process, including regulatory compliance.

The bank further says that it believes that acceptance of digital currency by traditional financial institutions will continue to grow, highlighting the following data:

“Currently, there are over 300 institutional investment funds with aggregate estimated assets under management of between approximately $7.5 billion to $10 billion. Over $8.3 billion has been invested in digital currency-related projects, excluding initial coin offering funding, since December 31, 2013. Approximately $1.3 billion in venture funding was raised in the digital currency and blockchain market in the 12 months ended June 30, 2018, which is the most recent date such information is available.”

Per the document, in the fourth quarter of 2018 the bank saw two exchanges, 33 companies, and 24 investors among its new clients, including software developers, cryptocurrency miners, and service providers.

Throughout the whole year, Silvergate’s deposits derived from cryptocurrency customers reportedly increased by $150.4 million, or around 11.4 percent. Digital currency investors’ deposits saw a growth by $4.8 million to $577.5 million, while other startups’ balances increased by $46.4 million, reaching $273.9 million.

Last February, the Digital Currency Group (DCG), a cryptocurrency venture capital firm, announced that they had invested in the Silvergate Capital Corporation, which contains the Silvergate Bank. As the Corporation later revealed on its website:

“Proceeds from this placement will support further growth in the Bank’s nationwide fintech deposit initiative and its business banking and residential lending activities.”

New York Voters Blame Amazon Fiasco on ‘Villain’ Ocasio-Cortez

A new poll has revealed that 38 percent of New Yorkers believe that AOC was the ‘villain’ in Amazon’s failed attempt to bring its second headquarters to Queens, New York.

New York Says Amazon HQ2 Loss is AOC’s Fault

The Siena College poll, which was released on Monday, has revealed that New Yorkers believe Rep. Alexasandria Ocasio Cortez (D-N.Y.) was the biggest antagonist when it comes to apportioning the blame for Amazon’s decision to pull out of locating its second headquarters in Queens.

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In the same poll, only 12 percent of people said that they believe AOC was the ‘hero’ of the story.

Alexandria Ocasio-Cortez is not alone in being cast as the villain, however, with Gov. Andrew Cuomo and New York City Mayor Bill de Blasio also being singled out for their parts in the Amazon HQ2 fiasco.

Another 26 percent pointed the finger at Amazon itself for backing out of its agreement.

New Yorkers Overwhelmingly Favored Amazon HQ2

The Siena College poll paints a clear picture of who exactly New Yorkers feel is most responsible for Amazon pulling out of Queens. It also suggests that AOC made a big mistake when deciding to go to war with the Jeff Bezos-controlled e-commerce superpower.

By a margin of 67 percent to 21 percent, the New Yorkers questioned in the poll believe that not welcoming Amazon to Queens was a bad move on the part of NYC.

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And in a further question related to the terms of the deal which so incensed AOC, a margin of 61 percent to 30 percent stated that they were in favor of the $3 billion in state and city incentives that Amazon was due to receive for bringing 25,000 jobs to New York.

It seems as though the AOC-influenced the decision for Amazon to backtrack on its plans also played badly with those supporters whom the freshman senator would most likely consider her base.

Fifty-six percent of self-described liberals also believe that not bringing Amazon to New York was bad for the state.

Siena College pollster Steven Greenberg had this to say on the poll’s findings:

“While some may have celebrated Amazon’s announcement to pull the plug, the vast majority of New Yorkers of every stripe thought it was bad for the Empire State.”

Voters Want Amazon to Reconsider NYC Exit

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Despite high-profile protests partially led by Alexandria Ocasio-Cortez, most New York voters supported Amazon’s HQ2 plans. | Source: Stephanie Keith/Getty Images/AFP

Interestingly, according to Greenberg’s reading of the poll’s results, New Yorkers would be overwhelmingly in favor if Amazon and local politicians could perform an about-face that would see the company finally decide to locate its HQ2 in Queens.

Mr. Greenberg stated:

“The Amazon deal was seen as very contentious, however, there was strong support for it last month, before it got cancelled. There is an overwhelming feeling that its cancellation was bad for the state. And there is strong support – among all demographic groups – for Amazon to reconsider and move forward. Clearly, jobs outweigh the cost of government incentives in the minds of most voters.”

With the majority of New Yorkers obviously massively against the decision for Amazon to abandon NYC, it remains to be seen whether Ocasio-Cortez will be one of those politicians willing to mend fences with Mr. Bezos and the Amazon suits in order to give New Yorkers what they want.

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

Kakao Affiliate Dunamu Launches Blockchain Service Platform

Dunamu, the fintech arm of South Korea’s largest Internet corporation Kakao, is reportedly launching a blockchain service platform designed to help companies start businesses using blockchain. Korea’s JoongAng Daily reported the news on March 19.

The platform, which is called Luniverse and supervised by blockchain technology research lab Lambda256, is geared to help IT startups develop blockchain-based services. The platform reportedly has a high level of security and an automated scaling function, that can adjust blockchain sizes in accordance with the amount of data stored on it.

To implement the service, Dunamu reportedly collaborated with blockchain companies that provided various blockchain apps and products following clients’ business fields. Park Jae-hyun, CEO and former research head of Lambda256 said that “in the past, a lot of companies built their own blockchain, but an alternative is outsourcing the establishment of a blockchain in the form of a service offered on cloud systems.”

Yesterday, Kakao announced the integration of its cryptocurrency wallet in its messaging app KakaoTalk, which will purportedly enable more than 44 million South Korean KakaoTalk users to send peer-to-peer transactions using Kakao’s crypto-powered wallet.

Also in March, Cointelegraph reported that Kakao will repeat its initial coin offering after netting $90 million from investors. Klaytn, the blockchain platform which is the responsibility of spin-off firm Ground X, will now seek to raise another $90 million. In December 2018, Kakao had first announced that it was planning to raise around $300 million through Ground X to develop its own token.

As reported in February, in the fourth quarter of 2018 Kakao’s operating expenses related to new businesses, such as blockchain and artificial intelligence, was 65 billion won ($57.5 million), which reportedly led to a net loss for the whole period. Kakao’s consolidated operating income was 4.3 billion Korean won ($3.8 million).

Why Huawei’s 5G Dominance Threatens Liberal Democracy

When U.S. President Donald Trump signed off on a ban on equipment from Chinese 5G infrastructure giant Huawei for government employees and contractors last year, the move raised few eyebrows. The fact that the ban came under the Defense Authorization Act seemed to tell an open and shut story of national security and the threat of Chinese spying. Events over the past few months, however, are painting an altogether different picture of why the U.S. government is treating Huawei in particular as a hostile entity.

CCN reported recently that Huawei CFO Meng Wanzhou was recently approved for extradition to the U.S. from Canada on a range of charges including financial impropriety, circumventing U.S. sanctions on Iran, and stealing proprietary technology from T-Mobile. It turns out that more than just being the dominant player in the emerging 5G race, Huawei has designs on altogether more exalted – and dangerous – targets which it might very well achieve.

 Huawei & Chinese Soft Power

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It’s concerning that so many countries are contracting to use Huawei’s 5G infrastructure. | Source: Pau Barrena / AFP

As is typically the case with large Chinese corporations, Huawei has a very cozy relationship with Beijing. Not only are Chinese companies legally obligated to assist their government with its intelligence-gathering efforts, but its founder Ren Zhengfei is himself a veteran technologist from the People’s Liberation Army. This poses an immediate concern regarding a potential security threat to countries that use Huawei’s world-leading equipment in building out their 5G networks.

Much of the world outside of the U.S. uses Huawei 5G infrastructure extensively including Germany, the UK, India, and the UAE, driven mostly by Huawei’s price advantage and its unrivaled expertise in 5G development. To put the minds of foreign governments at rest, Huawei has opened centers in Bonn, Germany and Brussels where security officials can examine its equipment for security flaws and backdoors.

This strategy is in line with China’s largely successful Belt and Road Initiative, which seeks to spark China’s slowing economic growth and increase China’s foreign influence and power projection through trade and infrastructure deals. Under the initiative, Europe, Asia, and Africa will be connected under a new circle of Chinese influence, as the world’s second-largest economy seeks to supplant the U.S. using trade instead of military might.

Soft Power Comes Before Hard Power

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Chinese Prime Minister Xi Jinping’s Belt and Road Initiative has met with great success thus far | Source: Shutterstock

The trouble with allowing Huawei to gobble up such huge tracts of the global 5G pie unopposed is that while China may pursue a seemingly benign foreign policy driven by trade and cooperation, China itself is not really a benign entity. It bears out reminding that China still has a habit of making political dissidents disappear and locking up entire groups of people deemed “undesirable” in concentration camps. A liberal democracy, the Red Dragon is not!

Inevitably, the temptation for China to lean on Huawei to provide it with intelligence from a global 5G trojan horse will become irresistible. China, over the past 40 years, largely created its technological revolution off the back of possibly the largest unauthorized transfer of intellectual property in recorded human history.

With President Trump’s recent posture seeming to indicate that he is willing to use the U.S. government’s position on Huawei as a makeweight in ongoing U.S.-China trade talks, the prognosis does not look good. If Huawei gets its hands on most of the world’s 5G infrastructure contracts, that would effectively mean that the entire world of tomorrow, including IoT frameworks and self-driving vehicles, will effectively fall under the control of the world’s largest dictatorship.

Clearly, Huawei is a vastly successful company with a big role to play in the 5G future. If we value liberal democracy, however, it should not be allowed to swallow up the future unopposed.

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

Report From Former CFTC Chairman Calls for Advanced Crypto Regulations

A recent report published for the Brookings Institution is calling for enhanced regulations on cryptocurrencies. The report was authored by Harvard University fellow Timothy Massad, who served as chairman of the United States Commodity Futures Trading Commission (CFTC) during the administration of Pres. Barack Obama.

The report dubbed “It’s time to strengthen the regulation of crypto-assets” addresses the purported need for better regulation on digital currencies, the illicit use of cryptocurrencies, as well as measures for reducing the risk of cyber attacks. The report also provides direct recommendations of how to improve existing cryptocurrency regulations.

Per the report, there is a gap in the regulation of crypto assets that contributes to fraud and weak investor protection, which is partly represented by the fact that traditional standards required for securities and derivatives market intermediaries are not applied to cryptocurrency trading platforms.

Massad writes that cryptocurrency exchanges are not properly regulated, making them vulnerable to fraud and manipulation, as well as conflicts of interest, which raises the need for regulations to minimize operational risk and implement system safeguards.

The report points out that insufficient regulatory supervision creates broader risks in respect to cyber security and illicit payments, which results in more hacking attacks.

The former CFTC Chairman suggests that the U.S. Congress has to address the aforementioned issues by developing regulatory oversight of the cash market for crypto assets, trading platforms and other intermediaries that operate in the market.

Both the U.S. Securities and Exchange Commission (SEC) and the CFTC are purportedly competent enough to regulate the industry, so there is no need to establish a separate agency. The report states that Congress should authorize the SEC to regulate cryptocurrency circulation and regulation of trading platforms, custodians, brokers and advisors.

The legislation should also set forth core principles, rather than specifics for regulations, the same way Congress has done for futures and crowdfunding, Massad states. He added that the industry should continue to develop its own self-regulatory standards.

In January, Jeremy Allaire, the CEO and co-founder of crypto finance company Circle, said the biggest regulatory hurdle facing crypto today is the lack of clarity from the SEC. Allaire wrote in a Reddit AMA session:

“The biggest and most immediate regulatory hurdle we face is the lack of specific guidance from the SEC on how to classify various crypto assets. We believe many are clearly currencies and commodities, and there needs to be more specificity on what are really securities. This can unlock a lot of market activity, and also clearly enable the growth of a market for crypto-based securities.”

Google Nemesis Becomes Big Tech Ally Against Warren Breakup Plan

The European Union’s antitrust commissioner has emerged as a surprise ally for Facebook, Google, and even Apple as Elizabeth Warren bets her presidential bid on breaking up big tech. Margrethe Vestager, until now a thorn in the regulatory side of technology giants like Amazon and Google, has surprisingly emerged in their support.

Vestager: Leave Private Businesses Like Google Alone

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Margrethe Vestager, an enemy of big tech companies, is siding with them against Elizabeth Warren and her plans to break them up. | Source: Shutterstock

Vestager, who levied a record $2 billion fine against Google, spoke out against Elizabeth Warren‘s proposed big tech breakup. The commissioner explained:

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To break up a company, to break up private property would be very far reaching, and you would need to have a very strong case that it would produce better results for consumers in the marketplace.

Vestager advocates for “mainstream tools” and her current “antitrust” approach to allow correction in the market, adding:

We’re dealing with private property; businesses that are built and invested in and become successful because of their innovation.

Vestager appears to answer 2020 presidential candidate Elizabeth Warren’s controversial proposal to strip Amazon, Google, and others of their oligopoly, stating:

When it comes to the very far reaching proposal to split up companies, for us, from a European perspective, that would be a measure of last resort.

This is “the woman Silicon Valley fears,” but maybe not anymore.

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Getting in the Way of Elizabeth Warren

She is described as the world’s toughest technology regulator and a “nemesis” of social media, e-commerce, and internet giants.

That’s why Vestager’s comments are so surprising. She may have mellowed as she nears the end of her term as the head of the EU’s Commission for Competition on November 1. This is long before the 2020 elections, though she is on the shortlist for the next presidency of the EU Commission.

In her current term, Vestager is responsible for record fines and tax actions against technology companies. The commission, under her watch, has fined Google over $6 billion in antitrust penalties, recouped over $14 billion in back tax from Apple, and fined Facebook $122 million over WhatsApp violations. It still has ongoing monopoly investigations pending against Amazon and other pending issues with Google.

U.S. President Donald Trump reportedly told Jean-Claude Juncker, current President of the European Commission:

Your tax lady, she really hates the U.S.

Why Warren Wants Limits in Place

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Senator Elizabeth Warren recently commented that it was time to “break up Amazon, Google, and Facebook.” She believes big tech companies have ”too much power over our economy, our society, and our democracy.” She says these giants should not be able to run marketplaces and sell their own products.

A day later, she was asked if Apple should also be broken apart. She responded with:

Either they run the platform or they play in the store. They don’t get to do both at the same time.

Warren likens breaking up technology giants to the action taken against America’s railroad companies a hundred years ago. She objects to “market dominance” and the ability to price-hike and cut out competition because of it.

TNW: Binance Lite to Allow Australians to Purchase Bitcoin at Newsagents

Major cryptocurrency exchange Binance is expanding its “Binance Lite” service to allow Australian residents to purchase Bitcoin (BTC) at newsagents, technology news outlet The Next Web reported on March 19.

The new service Binance Lite — which will initially be introduced in Australia — is purportedly set to enable customers to buy digital currency with fiat money from more than 1,300 supported newsagents within the country. The service currently supports only the purchase of Bitcoin, although it will offer more digital currency and fiat options at a later date.

Before using the service, customers are requested to pass account verification, including Know Your Customer (KYC) and Anti-Money Laundering procedures. Following that, users will be able to place an order online, deposit cash at a newsagent, and receive their Bitcoin “within minutes.” Australian customers of Binance Lite will reportedly be required to pay a five percent fee for operations.

Earlier this month, CEO of Binance Changpeng Zhao hinted at the creation of a new fiat-to-crypto exchange in Argentina in a tweet. Following the tweet, crypto news website CoinSpice reported about an agreement between the government of Argentina with Binance Labs — the exchange’s investment and social impact arm — to co-invest in blockchain projects that are backed by the exchange.

In January, Binance added support for credit card cryptocurrency purchases through its partnership with payment processor Simplex. Zhao said then that the exchange’s clients can purchase digital assets with credit cards and “start trading in minutes.”

Last November, Binance confirmed to Cointelegraph that it would use an automated KYC application provided by financial software firm Refinitiv. This will purportedly allow Binance to integrate the World-Check Risk Intelligence database into their internal workflow and streamline the screening process for onboarding, KYC, and third-party risk due diligence.

After QuadrigaCX: New Regulations for Canadian Exchanges Are in the Works

As anxiety grows around every new twist and turn in the ongoing QuadrigaCX drama, along with extensive QuadrigaCX media coverage, Canada’s mainstream media has been calling on the government to bring in better oversight and regulation of cryptocurrency businesses, especially cryptocurrency exchanges.

In response to these calls for more regulation and calls from some crypto businesses for more regulatory clarity, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) released a discussion paper on March 14, 2019, with a “New Proposed Platform Framework” that would aim to specifically tailor regulations to the special risks posed by cryptocurrency exchanges.

The CSA consultation paper, which can be viewed here, asks 22 questions and requests comments from crypto/fintech companies, market participants/investors and other crypto stakeholders about what regulations would best fit in the unique new cryptocurrency marketplace.

When Is a Crypto Exchange a Securities or Derivatives Dealer?

As a number of observers have commented, this round of consultations is mainly about how to define the new business of cryptocurrency exchanges and how far to go in imposing old regulatory models on a new economic system.

Calgary-based securities and cryptocurrency lawyer Matt Burgoyne commented on Twitter:

“There is a lot to unpack in the new CSA consultation paper on cryptocurrency exchanges. Exchanges must consider whether their interactions with users create a derivative contract or futures contract.”

He added, “Non-security tokens trading on Canadian exchanges may be derivatives and still subject to regulation … this is a really detailed set of consultation questions, comments from industry due May 15.”

Lawyer Evan Thomas, who headed up a legal team at Osler, Hoskin & Harcourt LLP to produce a summary of the CSA consultation paper, told Bitcoin Magazine:

“A big issue with this proposal is that it is not clear as a legal matter that Canadian securities regulators have jurisdiction to regulate platforms for trading bitcoin and other crypto-assets that are not securities.”

One of the goals stated in the Osler paper is:

“To ensure that the CSA does not exceed its jurisdiction over the cryptoasset industry, we are hopeful that Platform regulation will provide further clarity regarding types of cryptoassets and related services that are not subject to securities regulation, such as tokens that are not investment contracts or derivatives and non-custodial cryptocurrency wallets.”

Third Time Lucky?

The Canadian government has conducted two previous consultation rounds with the cryptocurrency industry (in 2014 and 2018) but Thomas, who is cautiously optimistic, notes that this new initiative is a more direct response to cases like that of QuadrigaCX.

“Earlier regulation was directed at combating money laundering and terrorist financing. This proposed framework is motivated by investor protection concerns; that is, trying to protect crypto users who use custodial exchanges from risks like hacking, embezzlement and market manipulation,” Thomas explained.

The ghost of QuadrigaCX can be seen in the current discussion paper which asks: What operational requirements should be put in place to prevent a collapse like that of QuadrigaCX? What measures can affect market integrity, fair pricing, disclosure of conflict of interest and business continuity planning?

Would the Proposed Regulations Have Prevented the QuadrigaCX Collapse?

It’s an interesting question whether the proposed regulations in the discussion paper would have prevented what happened at QuadrigaCX — and the answer is likely no.

Amber D. Scott, CEO of Outlier Canada, a cryptocurrency compliance consulting company, told Bitcoin Magazine that without adequate enforcement resources, it’s unlikely the new rules would have affected the outcome.

“Background checks for beneficial owners and executives are useful if they are sufficiently in-depth and acted upon. The QuadrigaCX story is interesting because they were registered with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) at one point (though it’s not clear whether they were up front in their application about the beneficial owners).

“Similarly, proposed audits are useful tools, but I expect that fooling auditors would be possible, especially given that there will be very few experienced auditors that also understand crypto assets at this stage.”

She added that, in many cases, the impact is likely to be a greater cost of compliance burden for companies that choose to operate within these frameworks, and very little for those that do not. “In my estimation, some of the most important (and lacking) resources are those needed to investigate and prosecute bad actors. Fraud is already illegal.”

Clear Regulations Are Good for Crypto Business

Despite this, a number of Canadian crypto exchanges, including Coinsquare and Coinberry, have said they would welcome clear, fair regulations that make it easier to be compliant and will help bring them into the financial mainstream.

The Osler paper highlights the positive benefits of regulation including better relationships with the banking sector:

“By establishing a regulatory regime for Platforms, the Framework may make it easier for Platforms to obtain and maintain commercial relationships with banks and other financial institutions, which remains an ongoing challenge for certain Platforms.”

In addition, clear regulations that apply to crypto asset securities dealers would be an opening for businesses that are currently flying under the radar.

“The Framework potentially opens the door for Platforms that transact in cryptoassets that are securities or derivatives to operate within Canada in a compliant manner. Examples may include Platforms dealing in security tokens or tokenized assets, decentralized prediction markets or other so-called ‘decentralized finance’ (DeFi) activities.”

The proposed regulations will apply to crypto platforms located in Canada, as well as foreign platforms with Canadian participants, which might be eligible for exemptions if they are appropriately regulated in their home jurisdiction.

The CSA is a federal government agency coordinating financial regulations for Canadian capital markets and IIROC is the industry’s self-regulatory organization that oversees investment dealers in Canada’s debt and equity markets.

Comments are due by May 15, 2019.

Dow Flinches as China Yanks Key Trade War Concessions

China walked back major concessions that it had made amid ongoing trade war negotiations and could also cancel pending orders for Boeing orders. Unsurprisingly, the Dow did not take the news well, cratering more than 100 points after Bloomberg dropped the report.

Dow Plunges as China Yanks Trade Concessions

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Dow Jones dropped sharply after China allegedly walks back concessions. | Source: Yahoo Finance

The S&P 500 was also struck but retraced in ensuing minutes, as did the Dow. At last check, the DJIA was up 26 points or 0.1%.

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The move was clearly China-centric, as the Australian dollar was also hit, and Caterpillar stock is wobbling intra-day. The retracement is being aided by further information that some US officials believed these were routine developments in trade talks. Softness did start leaking back into markets, as the WSJ reported that Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer were flying to Beijing, suggesting that maybe there was a serious issue here.

Dow Jones Cushioned by Anticipated Fed Dovishness

The Dow shrugging off bad news is not a new trend, particularly given the recent recovery.

The market is currently bracing for the Federal Reserve’s rate meeting tomorrow, and this should limit the fallout as investor focus remains on what is likely to be another example of the Fed “pause.” Dovishness is likely, and this is deadening market fears to the China trade worries.  Tuesday’s price action indicates how much positive trade news is being baked into the stock market.

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Xi must tread carefully as concerns Donald Trump. | Source: Fred DUFOUR / AFP

US stock sensitivity to the trade war dialogue is perhaps contrary to the claims made by Donald Trump that they are easy to win. The real question in all of this is: what incentive does China have to make a deal?

China knows that doing positive things for Trump likely increases his reelection hopes. If Trump gets a second term, he will be entirely off the moderate leash. Xi Jinping will have a much bigger a problem on his hands should that happen. Xi has made it clear political pressure is a tool China has available with its assault on US soybeans.

Trump Must Worry About Reelection; Xi Does Not

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Xi Jinping is essentially ruler for life in China, as the nation’s ruling party has opted for stability over democracy in a period of heightened economic risk. The world’s second-largest economy is shifting from manufacturing to a service-based economy, but Xi is going nowhere.

This is where he has very different concerns than Trump. The US president uses the Dow Jones and other indices as the measure of his electability, and China knows this. Give the US president a blockbuster deal to take on the campaign trail, and the Dow could explode higher. In turn, his probability of reelection also soars. They also have no reason to trust that Trump wouldn’t take any concessions and come back for more.

No Smoke Without Fire as Mnuchin and Lighthizer Plan Beijing Trip

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Mnuchin and Lighthizer flying to China is clear evidence that the US is also concerned about China’s trustworthiness.

In a classic case right out of Sun Tzu, Xi appears to be leveraging the Boeing 737 MAX 8 crisis to retract some of the concessions it made.

The US stock market is taking a glass half full approach, expecting a resolution of some kind. Dow traders could be thinking that this latest setback in Beijing will boost the Federal Reserve’s dovishness.

Xi, meanwhile, must walk a tightrope, balancing a favorable deal for China with having to deal with the protectionist US for the next five years.

Report: Malware Targets Israeli Fintech Firms Working in Crypto, Forex Trading

Israeli fintech companies that work with forex and crypto trading are being targeted by malware, according to a blog post from threat research department Unit 42 of cybersecurity company Palo Alto Networks published on March 19.

Per the report, Unit 42 first encountered an older version of the malware in question, Cardinal RAT, in 2017. Since April 2017, Cardinal RAT has been identified when examining attacks against two Israel-based fintech companies engaged in developing forex and crypto trading software. The software is a Remote Access Trojan (RAT), which allows the attacker to remotely take control of the system.

The updates applied to the malware aim to evade detection and hinder its analysis. After explaining the obfuscation techniques employed by the malware, the researchers explain that the payload itself does not vary significantly compared to the original in terms of modus operandi or capabilities.

The software collects victim data, updates its settings, acts as a reverse proxy, executes commands, and uninstalls itself. It then recovers passwords, downloads and executes files, logs keypresses, captures screenshots, updates itself and cleans cookies from browsers. Unit 42 notes that it witnessed attacks employing this malware targeting fintech firms that engaged in forex and crypto trading, primarily based in Israel.

The report further claims that the threat research team discovered a possible correlation between Cardinal RAT and a JavaScript-based malware dubbed EVILNUM, which is used in attacks against similar organizations. When looking at files submitted by the same customer in a similar timeframe to the Cardinal RAT samples, Unit 42 reportedly also identified EVILNUM instances.

The post further notes that also this malware seems to only be used in attacks against fintech organizations. When researching the data, the company claims to have found another case where an organization submitted both EVILNUM and Cardinal RAT on the same day, which is particularly noteworthy since both those malware families are rare.

EVILNUM is reportedly capable of setting up to become persistent on the system, running arbitrary commands, downloading additional files and taking screenshots.

As Cointelegraph recently reported, a Google Chrome browser extension tricking users into participating in a fake airdrop from cryptocurrency exchange Huobi claimed over 200 victims.

Also, a report noted last week that cybercriminals are reportedly favoring unhurried approaches in attacks made for financial gains, with cryptojacking as a prime example of this shift.