Day: August 27, 2022

On 26 August, Forbes magazine asked can you trust what your crypto exchange or e-brokerage reports about trading in the most important digital currency?  It says that one of the most common criticisms of bitcoin is pervasive “wash trading” (a form of fake volume) and poor surveillance across exchanges.  It explains that wash trading benefits exchanges because it allows them to appear to have more volume than they actually do, potentially encouraging more legitimate trading.  Forbes undertook a study evaluated 157 crypto exchanges across the world, and the article presents its findings.

https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-half-of-all-bitcoin-trades-are-fake/?sh=3f51df666681

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On 25 August, an article from CNAS in Fortune magazine was concerned with Alexey Pertsev, a Netherlands resident, arrested and extradited to the US on suspicion of “involvement in concealing criminal financial flows and facilitating money laundering”.  It reports claims that he was formerly employed by a company linked to Russian security agency FSB.  He was arrested in connection with Tornado Cash, which the US Treasury sanctioned on 8 August, alleging that hacking groups including North Korea’s Lazarus Group have used the service to launder billions of dollars. 

https://fortune.com/2022/08/25/tornado-cash-developer-russian-fsb-linked-company/

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A post on the Lawfare blog on 25 August argues that, with Viktor Bout back in the news headlines amid talk of a potential prisoner swap, addressing the systemic gaps that allowed Bout to operate, many of which persist, should be the focus.  The debate over Bout’s release is a timely reminder that the modus operandi he used to conduct much of his activity, and many of the loopholes and opportunities he exploited, remain available to his less famous successors today.  It says that the heart of the problem is not so much Bout himself but, rather, the persistent failures by national governments to address the loopholes that allow traffickers to conduct their activities. While the risks posed by Bout are likely to be limited, the tried and tested modus operandi used by his networks endure.  Fundamentally, today’s proliferators and arms smugglers continue to rely on many of the same tricks of the trade and enforcement loopholes that Bout did 2 decades ago.

https://www.lawfareblog.com/it-player-mostly-game

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On 25 August, the Government Accountability Office issued a report saying that illegal financial activity can threaten safety and national security. Banks must report potentially illegal transactions to FinCEN, which makes the reports available to law enforcement agencies to help with investigations.  However, law enforcement agencies usually don’t track data on the usefulness of these reports, so FinCEN can’t provide feedback to banks about the reports’ effectiveness.  To facilitate this feedback, the DoJ is required to provide information about the usefulness of these reports, but it doesn’t collect adequate data to do so.  The report contains recommendations address these issues.

https://www.gao.gov/assets/gao-22-105242.pdf

https://www.gao.gov/assets/gao-22-105242-highlights.pdf

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