Banks

Suex Founder Loses Top Job Over US Sanctions, Major Exchange, Payment Provider Implicated

26/09/2021 by Idelto Editor

The scandal around sanctioned crypto broker Suex is growing in Russia where one of the co-founders of the OTC platform has been dismissed from his executive post at a bank. Meanwhile, an anti-drug organization has referred the case to the interior ministry and the central bank, asking authorities to investigate Suex’s connections with financial companies and a darknet market operating in the region.

Co-Founder of Suex Fired by MTS Bank, Another Quits Job at Chatex

Russian entrepreneur and financial executive Vasily Zhabykin, one of the founders of troubled crypto broker Suex, has been released from his managerial role at MTS Bank, where he headed the innovative Neo bank project, Kommersant reported. Quoting a source familiar with the matter, Russia’s leading business daily added that the dismissal was due to the U.S. sanctions imposed over the platform’s alleged money laundering operations.

The news comes after one of Zhabykin’s partners at Suex, co-owner Egor Petukhovsky, announced he is leaving crypto exchange bot Chatex, a company that has been linked to Suex. In a Facebook post published Friday, Petukhovsky reacted to what he called the “discredential campaign in the media,” stating that neither him, nor any affiliated business, has ever engaged in illegal activities.

“I intend to firmly defend my name in litigation in the United States of America,” the Suex co-founder revealed.

Besides Zhabykin and Petukhovsky, other individuals believed to be associated with the cryptocurrency broker include Ildar Zakirov, Maxim Subbotin, Maxim Kurbangaleev, who has denied direct involvement, and the Czech venture capitalist Tibor Bokor, said to be one Suex’s executives along with Zhabykin. The platform is incorporated in the Czech Republic as Suex OTC s.r.o. but reportedly operates from physical offices in the Russian Federation, including branches in the capital Moscow and Saint Petersburg.

Stopnarkotik Urges Russian Authorities to Investigate Suex’s Alleged Partners Exmo, Qiwi, Concord Bank

In the meantime, the All-Russian Public Movement Stopnarkotik has informed the Central Bank of Russia and the Ministry of Interior about alleged connections of Suex with Exmo, a major cryptocurrency exchange in Eastern Europe, financial services company Qiwi, a leading payment provider in Russia, the CIS countries, and the Ukraine-based Concord Bank.

An investigation conducted by the organization, which devotes its efforts to fight the spread of narcotics in the country, has also determined that Suex was involved in the laundering of funds for the region’s largest darknet market and drug trading platform, Hydra, which has an estimated annual turnover of at least $1.5 billion in the Russian Federation alone.

According to Kommersant, Stopnarkotik has asked Bank of Russia to check the operations of Suex, Exmo, and Qiwi in Russia and consider blocking payments from Russian residents to the Ukrainian bank. It has also called on the Ministry of Internal Affairs to verify all facts and hold all involved persons accountable. The newspaper has been acquainted with the official requests filed with the two institutions.

Exmo rejected claims of involvement in Seux’s activities and emphasized that Egor Petukhovsky is not a co-founder of the exchange and has never been part of its management. The company remarked that he has no family ties with Exmo’s founder, Ivan Petukhovsky, despite the coincidence of their last names. Speaking to Forklog earlier this week, Director of Development at Exmo Maria Stankevich confirmed Suex had made some of its first transactions through the exchange but insisted “there is nothing illegal in that.”

Qiwi has stated that the information about its connections with the other companies and the Ukrainian bank mentioned by Stopnarkotik does not correspond to reality. The financial services group, which represents platforms such as Qiwi Kiosks, Qiwi Wallet, and Qiwi Bank in Russia and the region, stressed that it operates within the framework of Russian law and does not carry out activities such as those described in the filings.

What are your thoughts on the latest developments in the Suex case? Let us know in the comments section below.

10 Crypto Exchanges File for Registration With Korean Regulators Ahead of Deadline

24/09/2021 by Idelto Editor

Cryptocurrency exchanges in South Korea have until midnight on Friday to register with financial authorities in order to continue operating legally. Only 10 digital asset trading platforms have already submitted their documents to the Korean anti-money laundering body.

Compliance Deadline for New Korean Crypto Regulations Expires Friday

Registering with Korea’s Financial Intelligence Unit (FIU) is a key requirement for both local and foreign crypto exchanges providing services to Korean investors under the tougher new regulations coming into force after Sept. 24. A total of 10 out of dozens of coin trading platforms have so far filed applications with FIU, the anti-money laundering division of the Financial Services Commission (FSC). The group includes Upbit, Bithumb, Coinone, Korbit, and Flybit, Yonhap reported, quoting the body on Friday.

South Korea’s revised Special Funds Act, which introduces the stricter rules, took effect on March 25 and will be enforced now, after a six-month grace period. According to its provisions, digital asset exchanges also need to obtain an Information Security Management System (ISMS) certificate from the Korea Internet and Security Agency. Financial officials have announced that 28 out of 66 exchanges have acquired the certificate up to this point.

Cryptocurrency exchanges are also required to partner with domestic banks on the issuance of real-name bank accounts. If they don’t do that, they will not be able to offer trading pairs with Korean fiat currency. Only the top four platforms – Bithumb, Upbit, Coinone, and Korbit – have secured real-name account deals with commercial banks as the financial institutions fear exposure to crypto-related risks like money laundering.

Mid-size exchanges such as Flybit, Coredax, and Foblgate are suspending Korean won pairs, the report notes. While the exact turnover on these and smaller platforms is hard to estimate, market observers quoted by the Korea Herald have said that they account for between 5% and 7% of the total amount of cryptocurrency traded in the Korean market. In light of the upcoming regulations, some exchanges have also delisted certain “high-risk” coins.

As Bitcoin.com News reported earlier this week, around 60 cryptocurrency exchanges are expected to discontinue all or some of their services targeting Korean investors. At the time, only Korea’s largest crypto trading platform, Upbit, had been licensed to conduct business in the country after the Financial Intelligence Unit accepted and reviewed the report filed by its operator, Dunamu Inc.

Cryptocurrency exchanges that don’t submit the necessary documents such as a written intent to do business by the end of the day will be forced to close down, the national public broadcaster KBS reported, quoting the FSC. Operators that fail to comply with the new rules but continue their activities without a license face up to five years in prison or fines of up to 50 million won (over $42,000).

Do you think more cryptocurrency exchanges will be able to meet the new Korean regulatory requirements in the future? Share your expectations in the comments section below.

JPMorgan, Deutsche Bank Oppose Strict Basel Rules For Banks Holding Bitcoin

21/09/2021 by Idelto Editor

The biggest U.S. and European banks oppose strict new rules that would require them to set aside a dollar in capital for every dollar of bitcoin they own.

Three months after global banking regulators proposed strict new rules for traditional financial institutions seeking bitcoin exposure, JPMorgan, Deutsche Bank, and other banking giants opposed what would require them to set aside one dollar in capital for each dollar of BTC they own.

The strict rules were proposed in June by the Basel Committee for Banking Supervision, a group of regulators from the world’s most prominent financial centers. However, the Global Financial Markets Association, a forum for banks that includes JPMorgan and Deutsche Bank, published together with five other industry associations a letter on Tuesday that pushed against the new regulation, The Wall Street Journal reported.

“We find the proposals in the consultation to be so overly conservative and simplistic that they, in effect, would preclude bank involvement in crypto asset markets,” the associations wrote in the letter to the Basel Committee, according to the report.

The committee’s proposed regulations indeed demonstrated an attempt of regulators to stop or at least disincentivize banking institutions from getting bitcoin exposure. While bank exposures to bitcoin are currently limited, the Swiss-based committee said in June, “their continued growth could increase risks to global financial stability if capital requirements are not introduced,” Reuters reported.

The proposal came amid strong pushback from developing countries against Bitcoin and cryptocurrencies. Central banks of major economies worldwide have been outspokenly negative about such assets while designing their own.

European Central Bank (ECB) chief Christine Lagarde recently came into the spotlight for saying that bitcoin and “cryptos are not currencies, full stop.” The head of the ECB later praised her own central bank digital currency (CBDC) in an attempt to drive investors away from Bitcoin and into her soon-to-be-developed digitized euro.

The markets are not buying such narratives, however. Besides retail investors, institutional investors, corporations, and banks have also demonstrated an increased appetite for bitcoin exposure in the past year. As global central banks’ monetary policies erode the purchasing power of those holding their currencies, investors gravitate towards harder assets.

In their latest rebuttal, the biggest banks in the U.S. and Europe have pushed back against increased regulatory scrutiny, which, in their view, would backlash. The Basel Committee, which includes the Federal Reserve, the ECB, and other major central banks, technically doesn’t enforce rules itself but sets minimum standards by which regulators worldwide are expected to abide.

“The committee said in June that banks should apply a 1,250% risk weight to bitcoin, which it said is ‘similar in effect to the deduction of the asset from capital,’” according to the WSJ report. “If a bank holds $100 of bitcoin exposure, it would give rise to risk-weighted assets of $1,250, which when multiplied by the minimum capital requirement of 8% results in setting aside at least $100.”

In response, the letter signed by the Financial Services Forum, the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association, the Chamber of Digital Commerce, and the Global Financial Markets Association said that such a high-risk weight wasn’t necessary for bitcoin.

IRS Agent Poses as Bitcoin Trader Called ‘Mr. Coins,’ Biden’s IRS Wants ‘Outflow and Inflow’ Data From Banks

02/09/2021 by Idelto Editor

Over the last few weeks, Americans have read about the U.S. Internal Revenue Service (IRS) upping its tax enforcement to catch cryptocurrency users who have not paid taxes. According to one report, the IRS may get access to bank inflows and outflows via Joe Biden’s American Families Plan. On top of this, another story explains how an IRS agent posed as a bitcoin trader called “Mr. Coins” on the peer-to-peer (P2P) marketplace Localcryptos.com in a $180K sting operation.

America’s Tax Agency Is Stepping Up Enforcement via Biden’s American Families Plan

The IRS has been stepping up enforcement against tax evaders and has recently been specifically focused on cryptocurrency transfers. This past April, Forbes contributor Guinevere Moore published a report on how U.S. President Biden’s “American Families Plan” aims to increase IRS enforcement. Essentially, Moore details that America’s financial institutions have always had to report capital gains to the IRS, but under Biden’s plan banks are required to “aggregate account outflows and inflows.”

Two days ago, Bitcoin.com News reported on how the Biden administration is pushing for global crypto data sharing rules in the $3.5 trillion budget bill. At the end of July, the IRS also modified the digital currency question as the tax agency is more focused on finding taxable crypto transfers.

IRS Agent Goes Undercover as ‘Mr. Coins’

Additionally, the IRS has been actively engaged in sting operations and Forbes associate editor, Thomas Brewster, explained on September 1, how an IRS agent went undercover in a $180K sting operation last year.

Brewster said the publication reviewed a search warrant that shows an IRS agent called himself “Mr. Coins” on the P2P marketplace Localcryptos.com. According to the report, Mr. Coins went undercover to bust a darknet market (DNM) drug dealer and conned him into trading $180K in cash for digital assets. Mr. Coins communicated with people via Whatsapp and Wickr and Brewster details that Mr. Coins had a 100% positive feedback rating on the P2P trading platform.

The DNM dealer was arrested in July and the report details that no plea has been filed to-date. The suspect’s lawyer, Localcryptos.com, and the IRS all declined to comment on the matter, Brewster said. The charges were filed in the Eastern District of New York and allegedly the suspect was involved with cocaine, cannabis, and “pills and opioids.”

What do you think about the IRS upping its enforcement against tax evaders and the Mr. Coins sting operation? Let us know what you think about this subject in the comments section below.

Homeowners Offered Crypto-Backed Loans to Finance Home Improvement Projects

15/08/2021 by Idelto Editor

As buying a home is by itself a serious investment, homeowners often lack the cash to fund further improvements to their property. While traditional bank loans are not as easily available, a new partnership now offers crypto holders to use their digital assets as collateral and instantly borrow money for a kitchen remodeling or some other renovation.

Crypto Lending Platform Partners With Construction Company

Many homeowners find it hard to finance home improvement projects that would raise their living standards as they are stuck with the low liquidity of their properties. Applying for a home equity line of credit (HELOC) or other bank loans involves credit checks and approval takes a long time.

Crypto-asset lending firm Pledge has joined forces with 247pro.com, a construction estimate and management platform, to offer cryptocurrency holders among homeowners quick access to home improvement loans they can take against their digital coins. The two companies have recently signed a partnership agreement.

Pledge emphasized the deal will allow it to provide clients with an opportunity to use their crypto assets as collateral to finance their home improvement projects. “Typically homeowners will take months to get a HELOC or home improvement loans from banks. There are long loan applications to be filled out, banks run credit checks against all borrowers,” the company CEO Tony Y. Chan noted, further elaborating:

For Pledge, loans can be funded in less than 30 seconds. Borrowers do not have to fill out any loan applications, we won’t be doing any credit check or underwriting. Everything is automatic with smart contracts.

Homeowners to Finance Home Improvement Projects Without Selling Their Crypto

“Pledge is a great crypto lending protocol, and with their service, hundreds of our customers (construction companies) can roll out programs like ‘Remodel your kitchen with 0 down’ to their clients,” added George H. Lee, founder and chief executive of 247pro.com, which specializes in providing software services for construction and remodeling companies working for thousands of homeowners. Lee, who believes there’s a huge demand for this kind of offering, stressed:

It can really speed up their decision making process, because most homeowners are house rich, but cash poor.

Pledge and 247pro.com also pointed out that their partnership will connect point of service (POS) loans to blockchain technology. The companies aim to create a “one-stop shop” for those that are interested in both real estate construction and the blockchain space as cryptocurrency investors would be able to borrow without selling their crypto assets to finance their POS loans for home improvement projects.

Although, Pledge and 247pro.com are not the only crypto lenders on the block, as the firms Blockfi and Smartfi also offer loans based on cryptocurrency backing. While Blockfi lets people leverage crypto to borrow money at rates as low as 4.5% APR, Smartfi allows borrowers to obtain fiat or stablecoins for as low as 5.5% APR.

Do you expect homeowners’ demand for crypto-baked loans to grow? Share your thoughts on the subject in the comments section below.