In this issue:
• New Waters Charted for Blockchain in Marine Insurance
• Cyber-hacks Continue to Plague Cryptocurrency Industry
• New Enforcement Actions in the U.S. and Abroad
New Waters Charted for Blockchain in Marine Insurance
By: John C. McIlwee
In a first-of-its-kind blockchain-enabled solution for the marine hull insurance industry, Insurwave promises to automate manual processes and alleviate inefficiencies for the world’s largest shipping company, A.P. Møller-Maersk. The platform was created as a joint venture between consultant EY and blockchain developer Guardtime. It is hosted on the Microsoft Azure cloud infrastructure and is driven largely by Maersk’s collaboration with broker Willis Towers Watson, specialty insurers XL Catlin and MS Amlin, and ACORD, a nonprofit that provides global insurance industry standards. Following a 20-week proof-of-concept, Insurwave is now available for commercial use. According to an EY news release, Insurwave will support more than half a million transactions and service over 1,000 commercial vessels in its first year. Among its many benefits, Insurwave convenes all stakeholders in the insurance value chain on a single technology platform to provide real-time asset information, standardized data, and an immutable audit trail that reduces friction and inefficiencies in current systems.
Insurwave is the latest example of how blockchain establishes trust and reliability in high-volume transactions among multiple parties with a shared interest in the same data set. The benefits of blockchain technology and industry collaboration are now evident for insureds and insurers alike, and anticipated uses in commercial and specialty lines of business will only further expand the opportunities. The tech is not without risks, however. For marine insurance or any other complex insurance product, each player must understand the jurisdictions in which they operate, how data ownership is determined and what governance measures apply, in order to ensure ongoing maintenance of the shared platform.
To read more about the A.P. Møller-Maersk blockchain pilot, see the following:
- Insurwave, a new near-real-time, blockchain-enabled platform to secure and streamline the marine insurance process is now live.
- First Blockchain for Marine Insurance Now Running
- Block chain platform Insurwave for marine insurance goes live with Maersk onboard
Cyberhacks Continue to Plague Cryptocurrency Industry
Cyberhacking continues to plague companies worldwide, and hackers continue to use, demand and trade in cryptocurrency. One week ago, the Anti-Phishing Working Group (APWG) published an estimate that criminals have stolen about $1.2 billion in cryptocurrencies since the beginning of 2017, including reported and unreported theft. APWG estimated that only 20 percent of this amount has been recovered.
This week it was also reported that hackers breached two Canadian banks, the Bank of Montreal and Simplii Financial of CIBC, accessing personal information from 90,000 accounts. The hackers threatened to release the information unless they received a ransom of $1 million in XRP by May 28. It is unclear if the financial institutions paid the ransom, although the Bank of Montreal publicly stated that “our practice is not to make payments to fraudsters.”
In London, police were successful in seizing $667,000 worth of bitcoin from another hacker, Grant West, 26, who had attacked companies worldwide. West obtained personal financial data, including usernames and passwords, through phishing schemes, and sold this information on the dark web. West was sentenced to 10 years and eight months in prison.
To read more about cryptocurrency and cyberhacking, see the following:
- About $1.2 billion in cryptocurrency stolen since 2017: cybercrime group
- Hackers demand $1 million in XRP after bank data theft
- London police seize bitcoin worth $667,000 from hacker
New Enforcement Actions in the U.S. and Abroad
As fast as the blockchain industry is moving, regulators in the U.S. and abroad are chasing close behind. In late May, the U.S. Department of Justice (DoJ) opened a criminal probe into whether some traders are manipulating crypto prices, prompted by bitcoin’s wild price fluctuations since last year. The DoJ is collaborating with the Commodity Futures and Trading Commission, which has dealt with these types of schemes in the futures markets, including spoofing and wash trading. Separately, on May 29, the U.S. Securities and Exchange Commission (SEC) announced it obtained a court order halting what it has deemed to be an ICO fraud perpetrated by Titanium Blockchain Infrastructure Services Inc. (Titanium) that brought in over $20 million from investors around the world. The SEC alleged that Titanium and its president, Michael Stollaire, used a “create and inflate” scheme to boost Titanium’s value before and after the ICO by falsely claiming the Federal Reserve and 30 well-known companies were Titanium’s customers.
In South Africa, authorities opened an investigation into an alleged fraud scheme involving a company named BTC Global. The company offered investments in bitcoin and is alleged to have defrauded investors of $80 million. Another recent investigation in South Africa involves kidnappers demanding a ransom of approximately $120,000 to be paid in bitcoin for the release of a teenage boy.
German news recently reported that German prosecutors seized and sold $14 million in bitcoin in connection with two Bavarian cybercrime agency investigations. German authorities appear attuned to crypto price movements; they held off ordering the sale until bitcoin rebounded from a low of about $6,000 to about $10,000. This follows the seizure and sale of bitcoin by German authorities during one of bitcoin’s all-time price highs in December 2017, netting $2.3 million. Along with the DoJ’s investigation discussed above, these events suggest that authorities appear to be becoming more focused on crypto price movements.
To read more about this week’s enforcement actions, see the following:
- S. Launches Criminal Probe into Bitcoin Price Manipulation
- Justice Dept. Opens Criminal Bitcoin Trading Investigation
- SEC Obtains Emergency Order Halting Fraudulent Coin Offering Scheme
- German Authorities Sold $14 Million in Seized Cryptos Over Price Fears
- South Africa investigates $80 million bitcoin scam