GOLDMAN SACHS: Bitcoin is looking ‘heavy’

Bitcoin has had a blistering start to 2017. It’s up about 180% so far this year. However, its near-term outlook isn’t looking so hot, according to a note released on Monday by Goldman Sachs head of technical strategy Sheba Jafari.

“The market has come close (enough?) to reaching its extended (2.618) target for a 3rd of V-waves from the inception low at 3,134,” Jafari wrote. “It’s on track to forming a bearish key day reversal if today’s close settles below 2,749.”

Bitcoin hit a lifetime high of nearly $3,000 a coin on Monday, but was unable to hold onto those gains. The cryptocurrency finished the day at $2,599, well below the key technical threshold of $2,749 that was singled out by Jafari.

Now, traders should be paying close attention to $2,475 on a weekly basis, as a close below there would cause even more damage to the technical picture, according to Jafari. “Both daily/weekly oscillators are diverging negatively. All of this to say that the balance of signals are looking broadly heavy.”

Jafari isn’t alone in calling for at least a near-term top in the cryptocurrency. “I think it’s in a bubble,” tech billionaire Mark Cuban tweeted last Tuesday. “I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble.” Cuban did not say how far he thought bitcoin would fall.

So where will bitcoin go from here? “Wary of a near-term top ahead of 3,134, Jafari concludes. “Consider re-establishing bullish exposure between 2,330 and no lower than 1,915.”




US Army Guardsmen Convicted for Bitcoin Credit Card Fraud

Two members of the US Army National Guard have been convicted of running a credit card fraud scheme involving bitcoin.

According to the US Attorney’s Office in the District of Maryland, the two individuals, James Stewart and Vincent Grant, were indicted for using bitcoins to purchase stolen credit and debit card numbers of individuals and businesses from foreign websites. The two were first prosecuted last year, as previously reported by CoinDesk.

The defendants were accused of using magnetic strip re-encoding tools to apply stolen numbers to dummy cards, after which they would buy merchandise from Army and Air Force Exchange Service stores at US military bases, as well as other locations in Maryland and elsewhere.

The federal jury found Stewart guilty on charges of wire fraud, conspiracy to commit wire fraud and aggravated identity theft. Grant was also convicted for conspiracy to commit access device fraud and aggravated identity theft.

A total of five Army National Guard members were arrested and charged.

Of the other three in the case, Derrick Shelton and Quentin Stewart previously pleaded guilty for committing wire fraud and aggravated identity theft, while Jamal Moody pleaded guilty to conspiracy to commit access device fraud and aggravated identity theft.

Shelton and James and Quentin Stewart face a maximum sentence of 20 years in prison, while Grant and Moody are subject to a maximum seven-and-half year sentence. A mandatory minimum of two years in prison for aggravated identity theft, on top of any other sentence, also apply to all five involved.

Senators Call for Digital Currency Oversight in Anti-Money Laundering Bill

A pair of US senators have filed a new anti-money laundering bill aimed at beefing up oversight of digital currency activities.

The bill – the Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017 – was filed last week by Senator Chuck Grassley of Iowa and Senator Diane Feinstein of California.

Among the changes, according to a draft text of the bill, are additions to definitions for “financial institutions”, which, if the bill is passed, would include “any digital currency exchanger or tumbler”. Additionally, the bill clarifies that any “issuer, redeemer or cashier” of a “digital currency” is also covered.

While not explicitly spelled out as such, the bill moves bitcoin and other digital currencies closer to being defined as a “monetary instrument” under US anti-money laundering statutes, as it targets “funds stored in a digital format”, according to a summary published by Grassley’s office.

Beyond the regulatory adjustment, the bill seeks information from the US Department of Homeland Security’s Customs and Border Protection (CBP) agency about its policies on digital currencies.

Specifically, it calls for a report “detailing a strategy to detect prepaid access devices and digital currency at border crossings and ports of entry”. This report – which would be due 18 months after the ostensible passage of the bill – is also required to include details about how such a strategy would be implemented.

The bill’s release comes shortly after a member of the US House of Representatives called for a study into virtual currency use for terrorism financing.

Photo: CoinDesk


Florida criminals who use bitcoins could now face money-laundering charges

Criminals who use the virtual currency known as Bitcoin can be convicted of money laundering under a Florida measure passed by legislators late Friday.

Both the state House and Senate approved the bill, which now heads to the desk of Gov. Rick Scott for approval.

Lawmakers approved the measure after a Miami judge last year threw out the criminal case against a man accused of selling $1,500 worth of bitcoins he was told was to be used to purchase stolen credit-card numbers online.

“Cyber criminals have taken advantage of our antiquated laws for too long,” said House Rep. Jose Felix Diaz, R-Miami, who sponsored the bill. “Bitcoin bypasses the traditional banking system, and our state’s laws simply had not caught up to the upsurge in criminality in the world of cybercurrency.”

The bill was crafted with help from Miami-Dade cybercrime prosecutors.

 The measure, if signed into law by Scott, adds clarity to how police go after criminals who use virtual currencies to further illegal activities, or disguise ill-gotten money. Nevertheless, Bitcoin advocates said such a new law would have a chilling effect on the use of the virtual currency.

Charles Evans, a Barry University economist and virtual currency expert, has long maintained that Bitcoin — which is not backed by any government authority — is not actually money but nothing more than “poker chips” bought and sold by users, particularly in areas where banking systems are weak.

He criticized Friday’s passage of the bill.

“Before long, we might see coat checks, tickets to Disney World, and discount coupons regulated as money in Florida,” Evans said.

Authorities across the United States have struggled to figure out how laws apply to Bitcoin, which allows some users to spend money anonymously and can also be bought and sold on exchanges with U.S. dollars and other currencies.

Digital currencies allow people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit-card issuers or other third parties.

Regulated services such as CoinBase, which operates similarly to PayPal, allow people to buy, sell and use bitcoins. But law enforcement has raised concerns about the currency — which can be bought and sold through private users — being used in underworld markets.

Bitcoins can be used to buy legitimate goods and services through websites and even in brick-and-mortar shops and restaurants.

But the currency has also been used to traffic drugs, most notoriously through the Silk Road “dark web” online network. In another prominent example, a South Florida man was sentenced to 10 years in prison after using bitcoins to buy Chinese-made synthetic heroin.

Police say human traffickers and prostitutes have also used Bitcoin to buy ads on, the classified website known as a hub for the sex trade.

Under current Florida law, money laundering can apply to a host of financial transactions designed to hide funds earned through criminal activity, or further that activity. That includes bank deposits, wire transfers and even investments.

If the governor signs the bill into law, “virtual currency” will be added to the definition of “monetary instruments” covered under Florida’s Money Laundering Act, which would then be defined as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.”

Prosecutors believed the law was needed after a Miami-Dade judge threw out the case against Michel Espinoza, a website designer who was charged with illegally transmitting and laundering $1,500 worth of bitcoins.

His defense team challenged the prosecution, arguing that Bitcoin is not actually money under Florida law.

At a hearing in May 2016, defense lawyers told a judge that no central government or bank backs Bitcoin, like the United States does the dollar. Government regulation of Bitcoin remains a messy hodgepodge from state to state, country to country, and the IRS considers Bitcoin deals no more than bartering, Evans testified.

Evans, who was paid $3,000 worth of bitcoins for his testimony in Espinoza’s case, likened the currency to nothing more than “poker chips that people are willing to buy from you.”

Circuit Judge Teresa Mary Pooler agreed, saying “this court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning,” she wrote.

Photo: Dominic Lipinski AP

Florida Lawmakers Want Bitcoin Covered Under Money Laundering Law

Florida lawmakers want virtual currencies like bitcoin covered under the state’s money-laundering statute, a change that supporters claim would ensure criminals cannot use Internet-based currencies to conceal financial activities, according to The Miami Herald. Law enforcement officials support the measure but some bitcoin enthusiasts say it will undermine bitcoin.

The proposed law was crafted by Miami-Dade cybercrime prosecutors after a judge threw out charges against a man accused of selling $1,500 in bitcoins to buy stolen credit card numbers on the Internet.

Miami-Dade State Attorney Katherine Fernandez Rundle said high-tech criminals use virtual currencies to hide their illegal activities. The proposed law ensures fraudsters and traffickers cannot use Internet-based currencies to conceal and transfer illegal profits.

Some bitcoin supporters claim the law can undermine the cryptocurrency that could be helpful in promoting trade between Florida and nations like Venezuela that rely more on bitcoin since their own banking systems have crumbled.

Charles Evans, an economist at Barry University specializing in bitcoin, said the law sends the message that financial innovation is unwelcome in Florida. Governments in other countries and states that welcome bitcoin will be pleased with Florida’s law from a competitive standpoint.

A state house committee passed the bill, sponsored by Miami Rep. Jose Felix Diaz, unanimously last week. Two state senate subcommittees have also passed the bill, and a state senate appropriations committee will soon vote on it.

Money laundering applies to transactions that conceal funds earned from criminal activity under existing Florida law. Under the proposed law, “virtual currency” will be added to the list of “monetary instruments” covered under the state money laundering act. The law would define bitcoin as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.”

Prosecutors will still have to prove intent under the law, according to Andrew Hinkes, a South Florida lawyer. Prosecutors would have to show that the accused changed money for bitcoin or vice versa to conceal funds or further a future illegal transaction.

Hinkes said he did not believe the law would impact daily bitcoin users or investors. He said it could impact those exchanging bitcoin for dollars. The path to prosecution of traders for money laundering is currently clearer in Florida.

Russia Caves In on Bitcoin to Open Front on Money Laundering

Only a year ago Russia’s Finance Ministry was threatening jail time to anyone using digital currencies.

In a major U-turn, it’s now edging closer to their acceptance as a legitimate financial instrument to open a new line of attack on money laundering.

The authorities hope to recognize bitcoin and other cryptocurrencies in 2018 as they seek to enforce rules against illegal transfers, Deputy Finance Minister Alexey Moiseev said in an interview. The central bank is developing a joint position together with the government on digital currencies, according to its press service.

“The state needs to know who at every moment of time stands on both sides of the financial chain,” Moiseev said. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

While bitcoin isn’t regulated by any government, it has come under increasing scrutiny in some countries as a way to shelter assets from the authorities or launder ill-gotten gains. In China, which has occupied a central role in trading and mining bitcoin in recent years, the three largest exchanges imposed a moratorium on all coin withdrawals in March as the central bank issued new guidelines on their use.

Bank of Russia Deputy Governor Olga Skorobogatova said in February that the authorities would decide if digital currencies can be considered as asset, cash or security by mid-2017.
Photo: Chris Ratcliffe/Bloomberg

Why Bitcoin Remittance Companies Are Still Shrugging Off Swift

It could be said that Swift is under attack.

In a changing global payments community, Swift – one of the world’s largest financial transaction messaging mediums – has faced new criticisms from those who say it has failed to keep up with the needs of the global financial market.

Specifically, some believe Swift is proving to be inefficient in the settlement of cross-border payments, due to its inability to manage real-time settlement for any transaction amount and its lack of transparency in settlement risk and payment status.

To address this, Swift has introduced its Global Payments Innovation (GPI) Initiative, which – according to Swift – will allow for same-day availability of funds for business-to-business transfers within the same time zone, payment tracking end-to-end, protected remittance information and improved transparency of fees.

The first phase, which went live in January 2017 and is in use with 12 banks – including the Bank of China, Citi, Danske Bank and ING – will focus exclusively on business-to-business payments. Swift has also promised further enhancements to its cross-border payments system, possibly including the incorporation of a distributed ledger technology proof of concept, in future rollouts.

This move to reform its global messaging service, however, may be too little, too late, in its attempt to catch up toward resolving the global payment clearance, settlement and payment bottleneck, particularly for non-bank customers.

Bitcoin price rises higher than gold, but don’t read too much into it.

The price of bitcoin continues to rise, setting a fresh record high. The price for one bitcoin is now worth more than one ounce of gold, but this is less significant than it may seem, say experts.

Gold and bitcoin prices crossed overnight. The crypto currency has set a fresh record high of $1,290.13, while a gold ounce currently trades around $1,228.

Part of the reason for the switch is that gold has had a rough week. The price for the precious metal has fallen more than 2 percent this week, due to the strengthening dollar and several indications from members of the Federal Reserve hinting towards a potential interest rate hike in March.

 Meanwhile, the price for the digital currency is up more than 7 percent this week. A recent regulatory clamp down by the People’s Bank of China has proven beneficial for bitcoin. Speculation around an imminent decision by the U.S. Securities and Exchange Commission on whether it will approve a bitcoin-based ETF (exchange traded fund) has also created heavy buying pressure.
Photo: Karen Bleier/AFP/ Getty Images

Virtual Currencies Included In Amendments To EU Anti-Money Laundering Directive

The amendments approved by the Economic and Monetary Affairs and Civil Liberties committees are designed to eliminate gaps in the EU’s laws to prevent money laundering and terrorism financing. The law would also include stricter rules to prevent tax evasion.

Citizens To Gain Access To Trusts

EU citizens will be able to access beneficial ownership registers of companies without demonstrating a legitimate interest in the information. The law presently restricts access to journalists and lobbyists.

Trusts and other legal arrangements similar to trusts will have to meet the same transparency rules as companies, including identifying beneficial owners.

Judith Sargentini of the Greens/EFA, NL said shelf companies and complex structures have made it easy for people to conceal money. A public register for trusts and companies will provide transparency for such structures.

Banks Turn to Bitcoin Tracking in Fight Against Human Trafficking

A shift occurred in the summer of 2015 that sent modern-day slavers flocking to bitcoin.

Following pressure from Illinois law enforcement, Visa and MasterCard ceased doing business with BackPage, an online classified ads service that has been accused of being a thinly veiled front for prostitution and human trafficking.

As some positioned the move as the kind of “moral policing” for which bitcoin was a perfect workaround, the decision had an unintended side effect that may have actually helped make the job of modern day slave traders even easier.

The tried-and-true investigative techniques that had been until that moment employed by law enforcement and banks to help prevent human trafficking were largely rendered null and void as the pedlars of human cargo embraced bitcoin.

Then, in December 2015, a victim of human trafficking and sexual slavery, Timea Nagy, addressed a room filled with financial executives from some of the largest banks in Canada and made a plea for help.

At the meeting, organised by the founder of social enterprise startup Timea’s Cause as part of its process of training law enforcement and others to identify human trafficking victims, Nagy made a call to the room filled with financial executives, asking them to modernize the way they track the financial transactions that power human trafficking.