Do Not Help U.S. Cops Seize Your Assets – Bitcoin News

Civil Asset Forfeiture

Do Not Help U.S. Cops Seize Your Assets

A new Department of Justice (DOJ) directive from Attorney General Jeff Sessions makes it more important than ever to own cryptocurrency and to do so outside of digital exchanges which function like traditional banks; translation, they will rush to obey law enforcement agencies. The new directive expands the power of civil asset forfeiture for federal agents, allowing them to sidestep laws in the 20 states that currently restrict the practice.

Also read: Bitcoin’s Relationship With the ‘Mark of the Beast’ Theories

Do Not Carry Unnecessary Cash With You

Civil asset forfeiture allows federal or local law enforcement to confiscate property and wealth from anyone suspected of committing a crime or of being connected to one. The targeted person doesn’t need to be charged or arrested. No crime needs to be proven.

Even in the presence of a crime, the person’s property may have been used without their knowledge. For example, Russ Caswell fought for years to retain ownership of his motel in Massachusetts which was worth $2 million. Federal and local law enforcement claimed the motel was theirs because drug deals had happened without Caswell’s knowledge. He ultimately prevailed but it required backing from the powerful Institute for Justice and an intense media campaign. Success in contesting the seizures is rare.

Because the process is a civil and not a criminal one, there are no due process protections and law enforcement has a free hand. The evidentiary standard reduces to a police officer’s alleged suspicions; for example, cash is always suspected drug money. There is no “innocent

Do Not Help U.S. Cops Seize Your Assetsuntil proven guilty” which means the the burden falls on the victim to prove the cash is not related to drugs. It is possible to contest the seizure in court but the owner has no right of representation and bears the legal cost which can rival or surpass the amount stolen. (Guidelines in a 2000 law, the Civil Asset Forfeiture Reform Act, suggest that a successful claimant can recover some legal fees but most victims are not aware of the possibility. And they need to prevail.)

Law enforcement relies on innocent people giving up. According to a 2016 report from the Heritage Foundation,  “A vast majority of federal civil forfeiture cases—88 percent by some estimates—never see the inside of a courtroom.”

The rate of discouraged victims may be considerably higher…for several reasons. Federal thefts generally involve larger amounts than state or local ones and so the victims are more likely to pursue justice. On the state and local level, traffic stop confiscations are popular. A police officer pulls over a driver and, either through inquiry or a search, he discovers a wad of “drug money” which is seized on the spot. How many victims simply drive away? No one knows.

Another reason for a high rate of discouraged victims is that police seem to target those least able to fight back. Examples would be the poor, people with children in the car, immigrants, cars with out-of-state license plates, and minorities. A Reason magazine investigation found that poor people tend to be most victimized. It reported, “Law enforcement in Cook County, which includes Chicago, seized items from residents ranging from a cashier’s check for 34 cents to a 2010 Rolls Royce Ghost with an estimated value of more than $200,000. They also seized Xbox controllers, televisions, nunchucks, 12 cans of peas, a pair of rhinestone cufflinks, and a bayonet.”

A 2016 headline in the Huffington Post offered a more specific example of victims the police probably thought were ‘safe’: “Cops Take $50,000 From Manager Of Christian Band, Are Forced To Admit It Was Total BS.”  A Christian rock group from Burma was badly harassed for almost two months by authorities in Oklahoma who wanted to keep $53,000 and a car that had been confiscated on the basis of a drug connection; no drugs were ever found. Huffpo stated,

[T]he fact that police seized the cash and prosecutors considered pursuing the case has once again highlighted the corrupting power of…civil asset forfeiture.” If the $53,000 had been in a privately-held bitcoin wallet, it would have been safe.

Source: Do Not Help U.S. Cops Seize Your Assets – Bitcoin News

Monero Price Jumps 14% Amid Search for Anonymous Cryptocurrency Solutions

moneroCryptocurrency markets are always good for some degree of speculation. Although there is a very strong focus on the top 5 cryptocurrencies right now, it seems the big surprise of the day is none other than Monero. For some unknown reason, the anonymity-oriented cryptocurrency has risen over 14% in value these past 24 hours. That is rather remarkable, although there could be many different reasons for this sudden price movement.

MONERO PRICE SURPASSES US$45 ONCE AGAIN

There have always been a few cryptocurrencies which focus on the features Bitcoin can’t provide. Both privacy and anonymity are two traits often associated with Bitcoin, yet wrongfully so. The world’s leading cryptocurrency is pseudonymous, but offers no privacy or anonymity traits to speak of. While some people see this as a weakness, it is evident Bitcoin is designed with these “flaws” in mind.

Those who require more privacy and anonymity must look into different cryptocurrencies to achieve that goal.  Ethereum, Litecoin, and Ripple will not get you very far either. There are only two currencies in the top 10 which provide such features: Dash and Monero. However, Monero seems to have a leg up over Dash when it comes to anonymity, which is the aspect the vast majority of community members desire the most.  It is highly worth your time to check out the Monero website to see how its anonymity is achieved.

It is safe to say these are rather interesting times for anyone who values privacy and anonymity in the cryptocurrency world. Two major darknet markets have been shut down, both of which used Bitcoin as their main currency. BitMixer is also on the way out, as its operator had a sudden change of heart and feels “other currencies” are better suited to use for anonymity reasons. Monero now has a legitimate chance of overtaking Bitcoin in this regard, as people will have a tough time finding a trustworthy mixing service.

Source: Monero Price Jumps 14% Amid Search for Anonymous Cryptocurrency Solutions

The SEC Rules on ICO’s – Is the Party Over?

With over one billion dollars raised so far with ICO’s in a totally unregulated wild, wild,  west free for all so far this year it was inevitable that the SEC would enter into the mix and make some rulings. Here is their July 25th Investor Bulletin in its entirety:

Investor Bulletin: Initial Coin Offerings

July 25, 2017

Developers, businesses, and individuals increasingly are using initial coin offerings, also called ICOs or token sales, to raise capital.  These activities may provide fair and lawful investment opportunities.  However, new technologies and financial products, such as those associated with ICOs, can be used improperly to entice investors with the promise of high returns in a new investment space. The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to make investors aware of potential risks of participating in ICOs.

Background – Initial Coin Offerings

Virtual coins or tokens are created and disseminated using distributed ledger or blockchain technology.  Recently promoters have been selling virtual coins or tokens in ICOs.  Purchasers may use fiat currency (e.g., U.S. dollars) or virtual currencies to buy these virtual coins or tokens.  Promoters may tell purchasers that the capital raised from the sales will be used to fund development of a digital platform, software, or other projects and that the virtual tokens or coins may be used to access the platform, use the software, or otherwise participate in the project.  Some promoters and initial sellers may lead buyers of the virtual coins or tokens to expect a return on their investment or to participate in a share of the returns provided by the project. After they are issued, the virtual coins or tokens may be resold to others in a secondary market on virtual currency exchanges or other platforms.

Depending on the facts and circumstances of each individual ICO, the virtual coins or tokens that are offered or sold may be securities.  If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to the federal securities laws.

On July 25, 2017, the SEC issued a Report of Investigation under Section 21(a) of the Securities Exchange Act of 1934 describing an SEC investigation of The DAO, a virtual organization, and its use of distributed ledger or blockchain technology to facilitate the offer and sale of DAO Tokens to raise capital. The Commission applied existing U.S. federal securities laws to this new paradigm, determining that DAO Tokens were securities.  The Commission stressed that those who offer and sell securities in the U.S. are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.

To facilitate understanding of this new and complex area, here are some basic concepts that you should understand before investing in virtual coins or tokens:

What is a blockchain?

A blockchain is an electronic distributed ledger or list of entries – much like a stock ledger – that is maintained by various participants in a network of computers.  Blockchains use cryptography to process and verify transactions on the ledger, providing comfort to users and potential users of the blockchain that entries are secure.  Some examples of blockchain are the Bitcoin and Ethereum blockchains, which are used to create and track transactions in bitcoin and ether, respectively.

What is a virtual currency or virtual token or coin?

A virtual currency is a digital representation of value that can be digitally traded and functions as a medium of exchange, unit of account, or store of value.  Virtual tokens or coins may represent other rights as well.  Accordingly, in certain cases, the tokens or coins will be securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration.

What is a virtual currency exchange?

A virtual currency exchange is a person or entity that exchanges virtual currency for fiat currency, funds, or other forms of virtual currency.  Virtual currency exchanges typically charge fees for these services.  Secondary market trading of virtual tokens or coins may also occur on an exchange.  These exchanges may not be registered securities exchanges or alternative trading systems regulated under the federal securities laws.  Accordingly, in purchasing and selling virtual coins and tokens, you may not have the same protections that would apply in the case of stocks listed on an exchange.

Who issues virtual tokens or coins?

Virtual tokens or coins may be issued by a virtual organization or other capital raising entity.  A virtual organization is an organization embodied in computer code and executed on a distributed ledger or blockchain.  The code, often called a “smart contract,” serves to automate certain functions of the organization, which may include the issuance of certain virtual coins or tokens.  The DAO, which was a decentralized autonomous organization, is an example of a virtual organization.

Some Key Points to Consider When Determining Whether to Participate in an ICO

If you are thinking about participating in an ICO, here are some things you should consider.

  • Depending on the facts and circumstances, the offering may involve the offer and sale of securities.  If that is the case, the offer and sale of virtual coins or tokens must itself be registered with the SEC, or be performed pursuant to an exemption from registration.  Before investing in an ICO, ask whether the virtual tokens or coins are securities and whether the persons selling them registered the offering with the SEC.  A few things to keep in mind about registration:
    • If an offering is registered, you can find information (such as a registration statement or “Form S-1”) on SEC.gov through EDGAR.
    • If a promoter states that an offering is exempt from registration, and you are not an accredited investor, you should be very careful – most exemptions have net worth or income requirements.
    • Although ICOs are sometimes described as crowdfunding contracts, it is possible that they are not being offered and sold in compliance with the requirements of Regulation Crowdfunding or with the federal securities laws generally.
  • Ask what your money will be used for and what rights the virtual coin or token provides to you.  The promoter should have a clear business plan that you can read and that you understand.  The rights the token or coin entitles you to should be clearly laid out, often in a white paper or development roadmap.  You should specifically ask about how and when you can get your money back in the event you wish to do so.  For example, do you have a right to give the token or coin back to the company or to receive a refund? Or can you resell the coin or token? Are there any limitations on your ability to resell the coin or token?
  • If the virtual token or coin is a security, federal and state securities laws require investment professionals and their firms who offer, transact in, or advise on investments to be licensed or registered.  You can visit Investor.gov to check the registration status and background of these investment professionals.
  • Ask whether the blockchain is open and public, whether the code has been published, and whether there has been an independent cybersecurity audit.
  • Fraudsters often use innovations and new technologies to perpetrate fraudulent investment schemes.  Fraudsters may entice investors by touting an ICO investment “opportunity” as a way to get into this cutting-edge space, promising or guaranteeing high investment returns.  Investors should always be suspicious of jargon-laden pitches, hard sells, and promises of outsized returns.  Also, it is relatively easy for anyone to use blockchain technology to create an ICO that looks impressive, even though it might actually be a scam.
  • Virtual currency exchanges and other entities holding virtual currencies, virtual tokens or coins may be susceptible to fraud, technical glitches, hacks, or malware.  Virtual tokens or virtual currency may be stolen by hackers.

Investing in an ICO may limit your recovery in the event of fraud or theft.  While you may have rights under the federal securities laws, your ability to recover may be significantly limited.

If fraud or theft results in you or the organization that issued the virtual tokens or coins losing virtual tokens, virtual currency, or fiat currency, you may have limited recovery options. Third-party wallet services, payment processors, and virtual currency exchanges that play important roles in the use of virtual currencies may be located overseas or be operating unlawfully.

Law enforcement officials may face particular challenges when investigating ICOs and, as a result, investor remedies may be limited. These challenges include:

  • Tracing money.  Traditional financial institutions (such as banks) often are not involved with ICOs or virtual currency transactions, making it more difficult to follow the flow of money.
  • International scope.  ICOs and virtual currency transactions and users span the globe. Although the SEC regularly obtains information from abroad (such as through cross-border agreements), there may be restrictions on how the SEC can use the information and it may take more time to get the information.  In some cases, the SEC may be unable to obtain information from persons or entities located overseas.
  • No central authority.  As there is no central authority that collects virtual currency user information, the SEC generally must rely on other sources for this type of information.
  • Freezing or securing virtual currency.  Law enforcement officials may have difficulty freezing or securing investor funds that are held in a virtual currency.  Virtual currency wallets are encrypted and unlike money held in a bank or brokerage account, virtual currencies may not be held by a third-party custodian.

Be careful if you spot any of these potential warning signs of investment fraud.

  • “Guaranteed” high investment returns.  There is no such thing as guaranteed high investment returns.  Be wary of anyone who promises that you will receive a high rate of return on your investment, with little or no risk.
  • Unsolicited offers.  An unsolicited sales pitch may be part of a fraudulent investment scheme.  Exercise extreme caution if you receive an unsolicited communication—meaning you didn’t ask for it and don’t know the sender—about an investment opportunity.
  • Sounds too good to be true.  If the investment sounds too good to be true, it probably is. Remember that investments providing higher returns typically involve more risk.
  • Pressure to buy RIGHT NOW.  Fraudsters may try to create a false sense of urgency to get in on the investment.  Take your time researching an investment opportunity before handing over your money.
  • Unlicensed sellers.  Many fraudulent investment schemes involve unlicensed individuals or unregistered firms.  Check license and registration status on Investor.gov.
  • No net worth or income requirements.  The federal securities laws require securities offerings to be registered with the SEC unless an exemption from registration applies. Many registration exemptions require that investors are accredited investors; some others have investment limits.  Be highly suspicious of private (i.e., unregistered) investment opportunities that do not ask about your net worth or income or whether investment limits apply.

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Before making any investment, carefully read any materials you are given and verify the truth of every statement you are told about the investment. For more information about how to research an investment, read our publication Ask Questions.  Investigate the individuals and firms offering the investment, and check out their backgrounds on Investor.gov and by contacting your state securities regulator .  Many fraudulent investment schemes involve unlicensed individuals or unregistered firms.

Additional Resources

SEC Investor Alert: Bitcoin and Other Virtual Currency-Related Investments

SEC Investor Alert: Ponzi Schemes Using Virtual Currencies

SEC Investor Alert: Social Media and Investing – Avoiding Fraud

The Office of Investor Education and Advocacy has provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities

sec.jpg

U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations

FOR IMMEDIATE RELEASE
2017-131

Washington D.C., July 25, 2017—

The Securities and Exchange Commission issued an investigative report today cautioning market participants that offers and sales of digital assets by “virtual” organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as “Initial Coin Offerings” or “Token Sales.” Whether a particular investment transaction involves the offer or sale of a security – regardless of the terminology or technology used – will depend on the facts and circumstances, including the economic realities of the transaction.

The SEC’s Report of Investigation found that tokens offered and sold by a “virtual” organization known as “The DAO” were securities and therefore subject to the federal securities laws. The Report confirms that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. Those participating in unregistered offerings also may be liable for violations of the securities laws. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt. The purpose of the registration provisions of the federal securities laws is to ensure that investors are sold investments that include all the proper disclosures and are subject to regulatory scrutiny for investors’ protection.

“The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us,” said SEC Chairman Jay Clayton. “We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected.”

“Investors need the essential facts behind any investment opportunity so they can make fully informed decisions, and today’s Report confirms that sponsors of offerings conducted through the use of distributed ledger or blockchain technology must comply with the securities laws,” said William Hinman, Director of the Division of Corporation Finance.

The SEC’s Report stems from an inquiry that the agency’s Enforcement Division launched into whether The DAO and associated entities and individuals violated federal securities laws with unregistered offers and sales of DAO Tokens in exchange for “Ether,” a virtual currency. The DAO has been described as a “crowdfunding contract” but it would not have met the requirements of the Regulation Crowdfunding exemption because, among other things, it was not a broker-dealer or a funding portal registered with the SEC and the Financial Industry Regulatory Authority.

“The innovative technology behind these virtual transactions does not exempt securities offerings and trading platforms from the regulatory framework designed to protect investors and the integrity of the markets,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.

Steven Peikin, Co-Director of the Enforcement Division added, “As the evolution of technology continues to influence how businesses operate and raise capital, market participants must remain cognizant of the application of the federal securities laws.”

In light of the facts and circumstances, the agency has decided not to bring charges in this instance, or make findings of violations in the Report, but rather to caution the industry and market participants:  the federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.

The SEC’s Office of Investor Education and Advocacy today issued an investor bulletin educating investors about ICOs. As discussed in the Report, virtual coins or tokens may be securities and subject to the federal securities laws. The federal securities laws provide disclosure requirements and other important protections of which investors should be aware. In addition, the bulletin reminds investors of red flags of investment fraud, and that new technologies may be used to perpetrate investment schemes that may not comply with the federal securities laws.

The SEC’s investigation in this matter was conducted in the New York office by members of the SEC’s Distributed Ledger Technology Working Group (DLTWG) — Pamela Sawhney, Daphna A. Waxman, and Valerie A. Szczepanik, who heads the DLTWG — with assistance from others in the agency’s Divisions of Corporation Finance, Trading and Markets, and Investment Management. The investigation was supervised by Lara Shalov Mehraban.

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Russia Prepares to Legalize ICOs – Bitcoin News

Russia is currently working on a regulatory framework to legalize Initial Coin Offerings (ICOs), local publications reported on Wednesday. This is in addition to a bill that is being finalized to recognize cryptocurrencies such as bitcoin and ether.

Also read: Russian President Vladimir Putin Discusses Using Ethereum with Vitalik Buterin

Amending Law to Recognize ICOs

Russia Prepares to Legalize ICOsRussian lawmakers are working on amendments to the civil law aimed at legalizing ICOs, according to Vedomosti, one of Russia’s largest newspapers. Discussion of the amendments has already begun by an interdepartmental working group under the State Duma, which has been assessing the risks of cryptocurrency use in the nation.

An associate criminal law professor at the Moscow State Institute of International Relations (MGIMO), Elina Sidorenko, heads the working group. “The group includes representatives from the Parliament, including the initiative’s originator Andrei Lugovoi. We also cooperate with other parliamentary committees,” she told Forklog in an interview published on Tuesday. “Aside from that, there are representatives from the central bank and the financial monitoring service.”

The Need to Regulate ICOs

According to Konstantin Vinogradov, Senior Associate at Runa Capital, there were more than 150 ICOs globally in the past year, which totaled more than $500 million.

Sidorenko explained that “legislative gaps exist which do not allow legal settlement of crowdfunding issues and ICO contracts,” according to Russian 360tv which also reported her saying:

The State Duma should undertake the development of legal mechanisms that would allow the verification of such contracts. They should also be designed to identify users and protect the rights of the holders of tokens to fulfill the obligations of issuing companies.

Source: Russia Prepares to Legalize ICOs – Bitcoin News

Alphabay Phisher Makes $1 Million in 14 Months Stealing Bitcoins

A deep web hacker operating under the pseudonym of ‘Phishkingz’ has recently claimed to have generated over $1 million from phishing Alphabay accounts during the last 14 months. In a recent interview with Deepdotweb, Phishkingz details the methods that he uses when stealing bitcoins.

Also Read: Law Enforcement Takes Down the Biggest Darknet Market on the Deep Web

Phishkingz Claims to Have Sold 500 Stolen Bitcoins in the Last 14 Months

Alphabay Phisher Makes $1 Million in 14 Months Stealing Bitcoins

Darknet phisher, Phishkingz, recently discussed methods that he claims allowed him to generate over $1 million in 12 months by stealing bitcoins. Phishkingz claims to have traded approximately 500 bitcoin on Localbitcoins in the last 14 months, the entirety of which was generated through phishing.

Phishkingz states that he is also a dark market vendor. His decision to start phishing to steal bitcoins was made following the discovery of an error on Alphabay’s forums “that allowed [Phishkingz] to see new members the second they joined.” The hacker would then directly contact new members, “send[ing[ them to my link with a verification process.” From them, Phishkingz is “able to obtain the login details syncing, and the mnemonic phrases, as well as any PGP private key and password and pin code.”

The hacker would then “save a bookmark using blockchain.info… [and] highlight 50 [addresses] at a time every 20 minutes checking for deposits”. The majority of the withdrawals would be processed manually, despite early experimentation with bots. Phishkingz claims that his operations expanded to a scale that required the assistance of employees, stating that at one point he “had 27 people working… running phishers” that were stealing bitcoins for him.

The Admins Didn’t Really Care About Their Customers

Alphabay Phisher Makes $1 Million in 14 Months Stealing Bitcoins

Phishkingz describes Alphabay’s moderators as providing little support to his victims. “The admins didn’t really care about their customers, and it only took opening a support ticket with a problem to learn this. BM (Big Muscles – an Alphabay moderator) especially is a stupid one. He would let me into accounts for 50% if I provided mnemonic phrase knowing I had phished the account in the first place.”

Following the recent removal of Alphabay, the bitcoin hacker claims to “have moved to Dream Market and already made 4 BTC since yesterday launching the new site.”

The number of phishers attempting to hack bitcoins outside of the deep web has also recently proliferated. The record breaking Tezos ICO has attracted the attention of phishers, seeing clone sites being hosted for the purposes of stealing bitcoins. Other creative hackers have recently started setting up websites for fake ICOs, infecting victims’ computers through downloading malicious software disguised as project whitepapers. With bitcoin and altcoins seeing unprecedented media exposure, a growing presence of bitcoin hackers and scammers operating in all corners of the internet appears to be an unfortunate and inevitable consequence of greater cryptocurrency adoption.

Source: Alphabay Phisher Makes $1 Million in 14 Months Stealing Bitcoins

Massive Security Breach Exposes 14 Million Verizon Subscribers’ Data

verizonMillions of Verizon customer records have been exposed by an Israeli technology company, a ZDNetreport claimed last night. According to the report, as many as 14 million Verizon customers who called the company’s customer service in the past six months may have their data exposed.

Verizon has now confirmed that 6 million records were compromised by Nice Systems – carrier’s partner company that handles customer service calls.

The data was found by a security researcher on an unprotected Amazon S3 storage server, which was controlled by an employee of Nice Systems. However, the data was accessible to anyone who knew the “easy-to-guess” web address. Speaking to CNN, Verizon claims that no other external party had access to this data and that there has been no loss of customer data. The company hasn’t explained how it’s certain that no one has had access to this data.

Read More at Source: Massive Security Breach Exposes 14 Million Verizon Subscribers’ Data

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