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In this issue:
• <a href="#Payments">Payments Evolve: USD Stablecoin Accounts for Latin America and Crypto Debit Cards</a>
• <a href="#Blockchain">Blockchain Initiatives Launch for Food Supply Chain and Intercompany Transactions</a>
• <a href="#Crypto">Crypto Trade Group Meets With SEC, FinCEN Director Addresses Cryptocurrencies</a>
• <a href="#Private">Private Litigants Continue to Target Major Blockchain Industry Companies</a>
• <a href="#Reports">Reports Detail Major Crypto-Mining Malware Attack, Cold Storage Vulnerabilities</a>
<a id="Payments"></a>Payments Evolve: USD Stablecoin Accounts for Latin America and Crypto Debit Cards

By: <a href="https://www.bakerlaw.com/JordanRSilversmith">Jordan R. Silversmith</a>

Last week, crypto startup Ledn announced the launch of a USDC savings account that will focus on Latin America. As Latin American foreign exchange rates continue to fluctuate, stablecoins have become increasingly popular across Latin America. Users of the Ledn USDC savings account will be able to convert their pesos into USDC and send those coins to the savings accounts, where they will accrue interest.

Crypto.com announced last week that it has begun shipping a Visa card to 31 European nations. These 31 countries, including the EU’s 27 member states, now have access to the company’s MCO Visa card, which can be used at traditional credit and debit card point-of-sale systems. The card works by exchanging users’ cryptocurrencies for local fiat currency when the user loads cryptocurrencies onto the card. The company followed up its entry into the European market by announcing this week that it has received the green light from regulators to introduce the MCO Visa to Canada.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.coindesk.com/ledn-launches-usdc-stablecoin-savings-accounts-with-focus-on-latin-america">Ledn Launches USDC Stablecoin Savings Accounts With Focus on Latin America</a></li>
 	<li><a href="https://www.coindesk.com/crypto-mco-visa-card-european-union">com Rolls Out Visa Card to 31 European Nations</a></li>
 	<li><a href="https://blog.crypto.com/crypto-com-card-program-canada-greenlight/">com Card Program Receives Green Light for Canada/ Crypto.com</a></li>
</ul>
<a id="Blockchain"></a>Blockchain Initiatives Launch for Food Supply Chain and Intercompany Transactions

By: <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

A California berry farm is the latest company to join the Food Trust blockchain network for tracking products along the food supply chain. According to recent reports, the berry farm said that joining the blockchain network will allow the company “to streamline and identify opportunities for improvement around operational efficiencies with a focus on freshness.”

In another development involving blockchain data management, a major global accounting and consulting firm has launched a blockchain-based system for tracking and managing intercompany transactions. According to a press release, the newly launched solution “delivers real-time data-analytics dashboards that monitor intercompany transactions, including transfer-pricing compliance and treasury management.” The press release notes that “[i]ntercompany transactions are the fifth most common cause of corporate financial restatements.”

This week, a major U.S.-based blockchain technology company published a report titled “The Complete Guide to Blockchain Business Networks.” According to a press release, the guide “is designed for enterprises that want to understand the proven benefits of decentralized networks for business use cases and how they compare to traditional business networks.” The guide includes “best practices for creating a successful blockchain business network.”

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.thepacker.com/article/california-giant-blockchain-use-boosts-freshness-food-safety">California Giant blockchain use boosts freshness, food safety</a></li>
 	<li><a href="https://www.grantthornton.com/library/press-releases/2020/april/GT-moves-intercompany-transactions-blockchain.aspx">Grant Thornton moves intercompany transactions to the blockchain</a></li>
 	<li><a href="https://media.consensys.net/the-complete-guide-to-blockchain-business-networks-d243057c99f8">The Complete Guide to Blockchain Business Networks</a></li>
</ul>
<a id="Crypto"></a>Crypto Trade Group Meets With SEC, FinCEN Director Addresses Cryptocurrencies

By: <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

According to recent reports, the Proof of Stake Alliance (POSA), a trade association whose members include several major cryptocurrency industry firms, recently met with the U.S. Securities and Exchange Commission (SEC) to advocate for the position that “entities using stake networks should be seen as service or infrastructure providers, rather than financial product providers.” The POSA is a trade association “representing companies working with proof-of-stake technology for blockchain mining” to address regulatory, tax and legislative issues.

Last week, the U.S. Financial Crimes Enforcement Network (FinCEN) released the prepared remarks of FinCEN director Kenneth A. Blanco that were delivered at a recent blockchain conference. In addressing the “Travel Rule,” Director Blanco said, “The United States has long maintained an expectation that financial institutions identify counterparties involved in transactions for a variety of purposes, including AML/CFT and sanctions, even for transactions in virtual currency.” Director Blanco also noted increasing concern that “businesses located outside the United States continue to try to do business with U.S. persons without … registering, maintaining a risk-based AML program, and reporting suspicious activity, among other requirements.”

Analytics firm Crystal Blockchain recently released a report on darknet activity involving cryptocurrencies. Among other findings, the report found that in Q1 2020, the amount of bitcoin sent from darknet entities to mixers increased, while there was a decrease in the amount of bitcoin sent from darknet entities to exchanges that require verification. According to a separate recent report from Elliptic, for the past few years bitcoin transactions linked to illicit activities have remained below 1% of the total number of bitcoin transactions.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.forbes.com/sites/jasonbrett/2020/05/14/proof-of-stake-alliance-posa-meets-with-sec-on-blockchain-consensus-designs/#29da7aa14ed8">Coinbase, Polychain And Tezos Meet With SEC On Blockchain</a></li>
 	<li><a href="https://www.law360.com/fintech/articles/1273779/proof-of-stake-group-shares-regulatory-recommendations?nl_pk=d839899d-0537-414a-b7cc-d6d00bb8e8ff&amp;utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=fintech">Proof-Of-Stake Group Shares Regulatory Recommendations</a></li>
 	<li><a href="https://www.fincen.gov/news/news-releases/director-blanco-addresses-consensus-blockchain-conference">Director Blanco Addresses Consensus Blockchain Conference</a></li>
 	<li><a href="https://crystalblockchain.com/articles/darknet-use-and-bitcoin-a-crypto-activity-report-by-crystal-blockchain">Darknet Use and Bitcoin — A Crypto Activity Report by Crystal Blockchain</a></li>
 	<li><a href="https://www-theblockcrypto-com.cdn.ampproject.org/c/s/www.theblockcrypto.com/amp/post/65238/illicit-bitcoin-transactions-remain-below-1-of-the-total-amount-says-elliptic">Illicit bitcoin transactions remain below 1% of the total amount, says Elliptic</a></li>
</ul>
<a id="Private"></a>Private Litigants Continue to Target Major Blockchain Industry Companies

By: <a href="https://www.bakerlaw.com/TeresaGoodyGuillen">Teresa Goody Guillén</a>

Investors have lodged a proposed securities class action against Block.one in New York federal court based on Block.one’s alleged 2017 unregistered offering of EOS tokens. The complaint alleges Block.one made misstatements about its ability to more fully decentralize EOS blockchain technology, which artificially inflated its value. The proposed class is investors who bought EOS coins between June 26, 2017, and the present. A Block.one spokesperson reportedly stated that the company plans to successfully defend the matter and said the “complaint is filled with false claims, and demonstrates a profound lack of understanding of blockchain technology and decentralized networks.” Block.one paid a $24 million penalty last year to the U.S. Securities and Exchange Commission based on the alleged unregistered offering without admitting or denying the allegations, and it is currently facing a similar proposed securities class action over the offering in the same New York federal court.

BitMEX derivatives exchange is also facing a civil lawsuit in a California federal court alleging that BitMex’s parent company, HDR Global Trading Limited, through U.S. entity ABS Global Trading Limited and its founders, engaged in a widespread illegal scheme of unregistered money transfers and market manipulation. The recently filed complaint lodges further allegations of money laundering, wire fraud, unlicensed money transmission, and Racketeer Influenced and Corrupt Organizations Act violations. BitMEX reportedly stated that it will vigorously defend itself in the action.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.law360.com/fintech/articles/1274576/investors-sue-block-one-over-unregistered-4b-ico?nl_pk=d839899d-0537-414a-b7cc-d6d00bb8e8ff&amp;utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=fintech">Investors Sue Block.one Over Unregistered $4B ICO</a></li>
 	<li><a href="https://www.law360.com/fintech/articles/1274839/bitmex-racketeering-and-manipulation-staggering-suit-says?nl_pk=d839899d-0537-414a-b7cc-d6d00bb8e8ff&amp;utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=fintech">BitMEX Racketeering And Manipulation 'Staggering,' Suit Say</a>s</li>
</ul>
<a id="Reports"></a>Reports Detail Major Crypto-Mining Malware Attack, Cold Storage Vulnerabilities

By: <a href="https://www.bakerlaw.com/TeresaGoodyGuillen">Teresa Goody Guillén</a>

According to reports, several supercomputers across Europe were recently hacked and infected with cryptocurrency mining malware. The incidents are reported to have occurred in the UK, Germany, Switzerland and Spain. It is reported that the Computer Security Incident Response Team for the European Grid Infrastructure, a pan-European organization that coordinates research on supercomputers across Europe, released malware samples and network compromise indicators from some of these incidents. A UK-based cybersecurity firm reviewed the malware samples and said the attackers appear to have accessed the supercomputer clusters via compromised SSH credentials.

New research has revealed that it is possible to hack cryptocurrency hardware wallets or cold storage. It is reported that vulnerabilities were identified in certain cold-storage options that would have revealed their PINs. In one instance, an analysis indicated that memory chips used in the hardware wallets give off different voltage outputs at different times, which would make it possible to establish a link between the power consumption fluctuations and the data the chip is processing. Monitoring voltage output changes may make it possible for an attacker to determine the PIN itself, if the attacker has physical access to the hardware wallet.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.zdnet.com/article/supercomputers-hacked-across-europe-to-mine-cryptocurrency/?ftag=COS-05-10aaa0g&amp;taid=5ec08c9170bced00012afefa&amp;utm_campaign=trueAnthem:+Trending+Content&amp;utm_medium=trueAnthem&amp;utm_source=twitter">Supercomputers hacked across Europe to mine cryptocurrency</a></li>
 	<li><a href="https://www.wired.com/story/cryptocurrency-hardware-wallets-can-get-hacked-too/">Cryptocurrency Hardware Wallets Can Get Hacked Too</a></li>
</ul>

core/freeform

Chicago

Partner

Robert A. Musiala Jr.

Crypto Payment Products Target Foreign Markets, Blockchain Enterprise Solutions Launch, Private Lawsuits Target Crypto Firms, Major Mining Malware Attack Detected