UK dealer charged in US over multimillion-dollar fake Bitcoin site scam

Renwick Haddow created trendy companies and duped investors into thinking they were big successes, authorities in New York allege

US authorities on Friday charged a British businessman with securities fraud, accusing him of deceiving investors over what turned out to be a fake trading platform for the cryptocurrency Bitcoin.

The Securities and Exchange Commission (SEC) alleged the clandestine Renwick Haddow, a UK citizen living in New York, diverted funds invested in a phoney Bitcoin site as well as from a flexible workspace firm Bar Works into accounts in Mauritius and Morocco, totalling $5m.

It said he touted experienced senior executives as behind the operations who turned out to be phantoms, and misrepresented the details and success of both companies.

Andrew Calamari, director of the SECs New York office, said: Haddow created two trendy companies and misled investors into believing that highly qualified executives were leading them to quick profitability.

In reality, Haddow controlled the companies from behind the scenes and they were far from profitable.

Bitcoin Store claimed to be an easy-to-use and secure way of holding and trading Bitcoin that had generated several million dollars in gross sales. The SEC alleged that in fact it never had any operations nor generated the gross sales it touted.

In 2015, Bitcoin Stores bank accounts allegedly received less than $250,000 in incoming transfers, none of which appear to reflect revenue from customers, the SEC said.

Haddows investors pumped more than $37m into Bar Works, which claimed to provide workspaces in old bars and restaurants, but in fact primarily sold leases coupled with sub-leases that together functioned like investment notes, the SEC said in a statement.

The commission alleged that throughout Haddow was hiding his connection to the companies given his checkered past with regulators in the UK, where he has faced similar charges for investment schemes.

According to a report in Crains, 27 investors from China filed suit in the state supreme court on 16 June seeking repayment of more than $3m invested in Bar Works, which they called a Ponzi scheme.

Another investment group filed a similar case against Bar Works in Florida in recent weeks.

Read more: www.theguardian.com

Singapore Startup Takes Bitcoin Into Real World With Visa

A recurring challenge for bitcoin and other cryptocurrencies is how to make them work in the real world. A Singapore-based startup says the answer is its Visa card.

TenX is pitching its debit card as an instant converter of multiple digital currencies into fiat money: the dollars, yen and euros that power most everyday commerce. The company said it takes a 2 percent cut from each transaction and has received orders for more than 10,000 cards. While transactions are capped at $2,000 a year, users can apply to increase the limit if they undergo identify verification procedures. 

TenX debit card.

Source: TenX via Bloomberg

Tenx’s bid to make digital currencies easier to spend comes amid massive volatility and infighting within the cryptocurrency community. Bitcoin, the most popular, slumped after reaching a record in June amid concerns about a split in two, only to recover as fears faded. The company has built an app that serves as a digital wallet connected to the Visa card so that when it’s swiped at a cafe or restaurant, the merchant is paid in local currency and the users’ crypto account is debited.

Julian Hosp.

Source: TenX via Bloomberg

“You’re mixing two worlds that are night and day,” co-founder Julian Hosp said in an interview. “When the user spends the cryptocurrency, we have to instantly switch these currencies to fiat and pay to Visa straight away. It’s a lot of pathways."

Hosp said transactions are processed immediately and it doesn’t impose any charges on top of the conversion fee that is set by cryptocurrency exchanges, which typically is 0.15 to 0.2 percent. The card now supports eight digital currencies, including the lesser-known dash and augur, and aims to offer about 11 of them by the end of the year.

TenX currently processes about $100,000 of transactions a month. By the end of 2018, it’s targeting $100 million in monthly transactions and a million users. 

TenX has an advantage in moving early, but the startup can expect competition in the future from major financial institutions and venture capitalists with deeper pockets and direct access to clients and databases, said Mati Greenspan, a Tel Aviv, Israel-based analyst at social trading platform eToro.

“It’s an incredible concept,” said Greenspan. “At the end of the day, it’s going to depend a lot on customer relations. Are they meeting the customers’ expectations? Can somebody else do it better?”

TenX’s efforts to make digital currencies spendable come as it joined the many blockchain-based startups taking advantage of initial coin offerings. ICOs are a cross between crowdfunding and an initial public offering that firms use to raise funds by issuing digital tokens rather than stock.

In its token sale last month, TenX raised $80 million with about half to be used to expand operations while the rest will provide liquidity for a cryptocurrency exchange in the works, said Hosp.

The company had previously raised $120,000 from angel investors and $1 million in a seed round led by venture capital firm Fenbushi Capital, which lists Ethereum’s co-founder, Vitalik Buterin, as a general partner. TenX isn’t expecting to become profitable in the next two years as it focuses on expanding services.

“One thing we want to offer in the end, is that you can switch cryptocurrencies within the app,” said Hosp. “If we do this, we can become the market maker, which can bring in a lot of revenue.”

    Read more: www.bloomberg.com

    Is block power about to revolutionise banking? | John Naughton

    Blockchain technology has the potential to bring the world of finance into the modern world. And it cant come soon enough

    Science advances, said the great German physicist Max Planck, one funeral at a time. Actually, this is a paraphrase of what he really said, which was: A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it. But you get the drift.

    I always think of Plancks aphorism whenever moral panic breaks out over the supposedly dizzying pace of technological change. Which happens all the time nowadays, even though the data says otherwise. If you take as your measure of speed how long it takes a new technology to be adopted by 50% of US households, for example, then radios (eight years) and black-and-white TVs (nine) reached that threshold faster than PCs (17) or mobile phones (15).

    So when we talk about the pace of change, it makes sense to distinguish between different kinds of innovation. If the change requires the building of infrastructure the electricity grid or the internet, say then the pace of change can be very slow. But if it just involves innovations that harness existing infrastructure new TV formats or smartphone apps the pace can indeed be dizzying, because they just piggyback on existing infrastructure. This is why Uber and Airbnb took so long to materialise: they needed smartphones, GPS and ubiquitous wireless networking before they became viable, whereas Facebook only needed the web. And the web itself spread like wildfire only because the infrastructure it needed the wired internet was already in place. No digging required.

    Where the trope about accelerating technology-driven change really breaks down, though, is when you try to apply it to governmental, legal and commercial institutions. What you then find is a chaotic spectrum that runs from astonishingly rapid change in some areas to glacial inertia in others. On the governmental/regulation front, for example, data protection legislation is fighting a losing battle against the proliferating ambiguities of big data. Yet at the same time, we learn from Edward Snowden how far the NSA and GCHQ have been ahead of the technological curve while being at the same time supposedly answerable to government bureaucracies running the last but one version of Microsoft Windows (or even XP, for Gods sake).

    Or take the finance industry. On the one hand, its banks are global institutions apparently able to move trillions of dollars between continents at the speed of light. High-speed traders spent billions of dollars digging a straight-line trench from Chicago to New York to shave nanoseconds off the time that it takes a buy-or-sell instruction to traverse a strand of glass fibre. On the other hand, it takes five working days to clear a cheque.

    Illustration
    Illustration by Matt Murphy.

    In a fascinating article in the Financial Times last week, the veteran commentator Martin Wolf turned his gaze on the banks. Information technology, he wrote, has disrupted the entertainment, media and retail businesses and, most recently, the supply of hotel rooms and taxis. Is it going to do the same to finance? My first response is: please. My second response is: yes.

    Wolfs reasoning is that banks and insurance companies are our core financial institutions because they do three essential things: enable payments, act as intermediaries between saving and investment and provide insurance. But they dont do any of these things well and mostly they do them with staggering inefficiency. Even today, Wolf says, 40% of the global revenues of the banking system thats $1.7tn come from payments and settlement can take still take hours or days.

    So here we have a global industry that, in one of its core competencies, is operating at a pace that Mayer Rothschild, the founder of the great banking dynasty in the 1760s, might have recognised. Could digital technology help? Yes, says Wolf. It could, for example, transform payments using some variant of the blockchain technology that underpins cryptocurrencies such as bitcoin.

    Hes right: blockchain technology could make payments nearly instantaneous and at very low cost. Which is presumably why the Bank of England has encouraged some UCL computer scientists to design a cryptocurrency that would combine the affordances of a blockchain system with the control over monetary policy that a central bank would expect to retain. And its also why the governments chief scientific adviser recently published a report extolling the potential of blockchains for streamlining government services.

    So here we have an interesting conundrum: with astonishing speed, computer scientists have come up with a truly revolutionary technology that could transform both banking and the provision of public services. I said could. But we will have to wait until we can make blockchain payments every day before we know what the real pace of change is. One funeral at a time, remember.

    Read more: www.theguardian.com

    What Could Kill the Bitcoin Boom

    If you bought a Bitcoin in early 2017, when one cost less than $900, you could have a profit of more than 1,200 percent now. But you almost certainly didn’t do that. Perhaps you dipped in a toe in November or December, as the price hit headline-grabbing records—$10,000, then $15,000, then higher. If you were very unlucky and bought at the peak of about $20,000 on Dec. 17, you’d have lost more than 40 percent of your money as of Jan. 16, when the price was $11,200. More than $2,000 of that decline came in about 24 hours, after South Korean Finance Minister Kim Dong-yeon indicated the country may crack down on cryptocurrency trading to discourage speculation. It’s not every asset that can feel like it’s in a bubble and a crash at the same time.

    But based on no other valuation metric than what it cost a year ago, the price of Bitcoin is still dizzyingly high. For the many doubters who can’t believe things have come this far—and for Bitcoin owners who can see how much they might lose—the big question is what it would take to knock the price back further.

    In past episodes, “Bitcoin and digital currencies have been incredibly resilient to bad news,” says Meltem Demirors, director of development at Digital Currency Group, which invests in Bitcoin and related technologies. Cryptocurrency exchanges such as Mt. Gox, Bitfinex, and BTC-e have been hacked over the years, with hundreds of millions of dollars’ worth of Bitcoin stolen. China in September moved to shut down exchange trading of the cryptocurrency. None of these permanently stopped Bitcoin’s rise up the price charts, especially after it drew the attention of hedge fund traders and futures markets.

    One doomsday scenario would be a successful hack of the blockchain. That’s the underlying technology that records and verifies every transaction, using exact copies of a database spread on computers all over the world. Those host computers, called miners, are rewarded with new Bitcoin for doing the work of verifying transactions. An attacker might be able to alter the blockchain’s history by marshaling more than half the computing power on the network. But that would be monumentally difficult; someone with the technology to do it could instead “opt into the game” and get paid to mine Bitcoin, says Tyler Winklevoss, co-founder of the Gemini digital asset exchange and one of the largest Bitcoin holders.

    The likelier risks are far more pedestrian. The first is that while plenty of investors and speculators have piled into Bitcoin, it’s a difficult currency to use in the real world. The network is slow and expensive for small transactions. And who wants to spend $4 in Bitcoin for a coffee if next week that could be worth $8? “My big concern as a company is that digital currency doesn’t find its quote-unquote killer use cases, where people are saying, ‘Wow, we now have tens of millions of daily active users that are using it for payments,’ ” says Adam White, who runs GDAX, the exchange for institutional investors run by Coinbase. “That’s one of the largest existential threats to the company.”

    BitPay's Singh Calls Bitcoin Selloff an Overreaction

    There’s been a very public civil war among Bitcoin developers: One group favors changes to the network, the other doesn’t. “It’s got to have the developer community come together and figure out how to scale it properly and continuously,” says Sheri Kaiserman, a managing director at Wedbush Securities and an early Wall Street believer in Bitcoin’s potential. Meanwhile, Bitcoin faces competition from other digital currencies, from Bitcoin Cash to Litecoin to Ether, which have also seen big gains and wild swings.

    You could spend weeks learning about the nuances of the various cryptocurrencies. But the main risk to Bitcoin is actually the easiest to understand. “The biggest factor in what’s driving the price up is potentially what will drive it down—a reversal of animal spirits,” says Adam Ludwin, chief executive officer of blockchain startup Chain. “There is essentially a belief this will continue to go up. If people believe it will continue to go down, that’s self-reinforcing.”

    To explain that psychology, Ludwin invokes John Maynard Keynes. The economist likened investing to a newspaper contest where readers were asked to pick the picture of the person the majority of other people would find most attractive. To win, a reader would have to discard his own judgment and bet purely on a guess of what the average person would find beautiful. Or, maddeningly, even on what the other players would think the average player would like. Cryptocurrency in general is “really one of the most beautiful distillations of the Keynesian beauty contest that’s ever existed,” says Ludwin. All investments have some of this speculative element, but unlike, say, a stock, Bitcoin isn’t a claim on future earnings to which investors can hitch a valuation. To bet on Bitcoin is to believe simply that others will want it.

    One read on the psychology of the Bitcoin boom is that it’s part of a broad bull market in all kinds of assets. Despite anxieties about politics, North Korea, and rising equity valuations, investors seem to be in a mood to embrace risk and are fearful of missing out on big gains. Or perhaps Bitcoin is the shadow side of that optimism: Many are drawn to cryptocurrency because they see it as a palliative to the system that came crashing down in 2008, and their belief in Bitcoin has been hard to shake. Market psychology is difficult to pin down—the one thing that’s reliable about it is its volatility.

      BOTTOM LINE – Despite its meteoric rise in the past few years, Bitcoin remains a wildly volatile investment, dropping more than $2,000 in a day when bad news hits.

      Read more: www.bloomberg.com

      Bitcoin Plunges After Plans for Split Called Off

      Bitcoin continued its retreat from a record high after traders weighed in on the cancellation of a technology upgrade that threatened to disrupt the biggest cryptocurrency.

      Investors who were expecting the extra coins stemming from a split of the chain may be taking profits, while others who are disappointed the update was scrapped earlier this week may be switching to alternative coins, according to Charlie Lee, founder of litecoin, the fifth-largest cryptocurrency by market value.

      While bitcoin soared to a record $7,882 within minutes of news that it would avoid another split on Wednesday, the gains have evaporated. Bitcoin is now trading more than $1,000 below where it was after a faction of the community scrapped plans for a so-called hard fork. Bitcoin was down 8 percent to $6,575 at 2:19 p.m. in New York.

      Some speculators are disappointed they won’t get the additional coins that would have been created by a hard fork. While bitcoin splits are potentially disruptive, they’ve so far amounted to free money for holders of the cryptocurrency. Bitcoin Cash, the result of a hard fork in August, has climbed to about $900 from as low as $565 on the day the split was canceled, while bitcoin has slipped almost 10 percent after touching a record right after the news.
      The main architects behind a change to its underlying software, known as SegWit2x, canceled their controversial plans Wednesday, saying they wanted to avoid deepening divides in the developer community.

      Bitcoin developers, users and miners — those running computers that crunch the complex math required to verify transactions — have been trying to agree on ways to make transactions faster, as the network’s growing popularity has led to congestion. After an initial upgrade in August known as SegWit, short for Segregated Witness, a group in the bitcoin community was calling for SegWit2x. The second upgrade hadn’t gained as much support and was only a week away from confronting bitcoin with one of its hardest tests ever.

      Bitcoin had climbed from about $6,00O since CME Group Inc., the world’s largest exchange owner, said on Oct. 31 that it wants to offer bitcoin futures by the end of the year, only a month after dismissing such a plan. Cboe Global Markets Inc. said in August that it wants to sell futures. Both need approval from the U.S. Commodity Futures Trading Commission.

      Skeptics of the digital currency ranging from billionaire Warren Buffett to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon have warned that the unregulated asset is a speculative bubble in danger of bursting after its almost sevenfold increase this year.

        Read more: www.bloomberg.com

        Heres What the World’s Central Banks Really Think About Bitcoin

        Eight years since the birth of bitcoin, central banks around the world are increasingly recognizing the potential upsides and downsides of digital currencies.

        The guardians of the global economy have two sets of issues to address. First is what to do, if anything, about emergence and growth of the private cryptocurrencies that are grabbing more and more attention — with bitcoin now surging toward $10,000. The second question is whether to issue official versions.

        Following is an overview of how the world’s largest central banks (and some smaller ones) are approaching the subject:

        U.S.: Privacy Worry

        The Federal Reserve’s investigation into cryptocurrencies is in its early days, and it hasn’t been overtly enthusiastic about the idea of a central-bank issued answer to bitcoin. Jerome Powell, a board member and the chairman nominee, said earlier this year that technical issues remain with the technology and "governance and risk management will be critical." Powell said there are "meaningful" challenges to a central bank cryptocurrency, that privacy issues could be a problem, and private-sector alternatives may do the job.

        Euro Area: Tulip-Like

        The European Central Bank has repeatedly warned about the dangers of investing in digital currencies. Vice President Vitor Constancio said in September that bitcoin isn’t a currency, but a “tulip” — alluding to the 17th-century bubble in the Netherlands. Colleague Benoit Coeure has warned bitcoin’s unstable value and links to tax evasion and crime create major risks. President Mario Draghi said this month the impact of digital currencies on the euro-area economy was limited and they posed no threat to central banks’ monopoly on money. 

        China: Conditions ‘Ripe’

        China has made it clear: the central bank has full control over cryptocurrencies. With a research team set up in 2014 to develop digital fiat money, the People’s Bank of China believes "conditions are ripe" for it to embrace the technology. But it has cracked down on private digital issuers, banning exchange trading of bitcoin and others. While there’s no formal start date for introducing digital currencies, authorities say going digital could help improve payment efficiency and allow more accurate control of currencies.

        Japan: Study Mode

        Bank of Japan Governor Haruhiko Kuroda said in an October speech that the BOJ has no imminent plan to issue digital currencies, though it’s important to deepen knowledge about them. “Issuing CBDC (central bank digital currency) to the general public is as if a central bank extends the access to its accounts to anyone,” Kuroda said. “As such, discussion about CBDC revisits fundamental issues of central banking.”

        Germany: ‘Speculative Plaything’

        In a country where lot of citizens still prefer to pay in cash, the Bundesbank has been particularly wary of the emergence of bitcoin and other virtual currencies. Board member Carl-Ludwig Thiele said in September bitcoin was “more of a speculative plaything than a form of payment.” A shift of deposits into blockchain would disrupt banks’ business models and could upend monetary policy, Thiele said. At the same time, the Bundesbank has been actively studying the application of the technology in payment systems.

        U.K.: Potential ‘Revolution’

        Bank of England Governor Mark Carney has cited cryptocurrencies as part of a potential “revolution” in finance. The central bank started a financial technology accelerator last year, a Silicon Valley practice to incubate young companies. Carney says technology based on blockchain, the distributed accounting database, shows “great promise” in enabling central banks to strengthen their defenses against cyber attack and overhaul the way payments are made between institutions and consumers. He has nevertheless cautioned the BOE is still a long way from from creating a digital version of sterling.

        France: ‘Great Caution’

        Bank of France Governor Francois Villeroy de Galhau said in June that French officials "advise great caution with respect to bitcoin because there is no public institution behind it to provide confidence. In history all examples of private currencies ended badly. Bitcoin even has a dark side — there were this data attacks." He said "those who use Bitcoin today do so at their own risk."

        India: Not Allowed

        India’s central bank is opposed to cryptocurrencies given that they can be a channel for money laundering and terrorist financing. Nevertheless, the Reserve Bank of India has a group studying whether digital currencies backed by global central banks can be used as legal tender. Currently, the use of cryptocurrencies is a violation of foreign-exchange rules.

        Brazil: Support Innovation

        The Banco Central do Brasil sees “no immediate risk for the Brazilian financial system" but remains alert to the developments of the usage of those currencies, it said in a statement this month. The bank pledged “to support financial innovation, including new technologies that make the financial system safer and more efficient.”

        Canada: Asset-Like

        The Bank of Canada’s senior deputy governor, Carolyn Wilkins, who is leading research on cryptocurrencies, said in an interview this month that cryptocurrencies aren’t true forms of money. “This is really an asset, or a security, and so it should be treated that way,” Wilkins said. As others, she viewed distributed ledger technology as promising for making the financial system more efficient.

        South Korea: Crime Watch

        The Bank of Korea’s focus has been protecting consumers and preventing cryptocurrencies from being used as a tool of crime. Deputy Governor Shin Ho-soon said this month that more research and monitoring was needed.

        Russia: ‘Pyramid Schemes’

        Russia’s central bank has expressed concerns about potential risks from digital currencies, with Governor Elvira Nabiullina saying “we don’t legalize pyramid schemes” and “we are totally opposed to private money, no matter if it is in physical or virtual form.” For the moment, the Bank of Russia prefers to delay a decision on regulating the financial instruments unless President Vladimir Putin pushes for action sooner. The central bank will work with prosecutors to block websites that allow retail investors access to bitcoin exchanges, according to Sergey Shvetsov, a deputy governor.

        Australia: Monitoring Closely

        The Reserve Bank is closely monitoring the rise of digital currencies and recognizes the technology underpinning bitcoin has the "potential for widespread use in the financial sector and many other parts of the economy," head of payments policy Tony Richards said last month.

        Turkey: Important Element

        Digital currencies may contribute to financial stability if designed well, Turkish Central Bank Governor Murat Cetinkaya said in Istanbul earlier this month. Digital currencies pose new risks to central banks, including their control of money supply and price stability, and the transmission of monetary policy, Cetinkaya said. Even so, the Turkish central banker said that digital currencies may be an important element for a cashless economy, and the technologies used can help speed up and make payment systems more efficient.

        Netherlands: Most Daring

        The Dutch have been among the most daring when it comes to experimenting with digital currencies. Two years ago the central bank created its own cryptocurrency called DNBcoin — for internal circulation only — to better understand how it works. Presenting the results last year, Ron Berndsen, who was in charge of the project, said blockchain may be “naturally applicable” in the settlement of complex financial transactions.

        Scandinavia: Exploring Options

        Like the Dutch, some Nordic authorities have been at the forefront of exploring the idea of digital cash. Sweden’s Riksbank, the world’s oldest central bank, is probing options including a digital register-based e-krona, with balances in central-database accounts or with values stored in an app or on a card. The bank says the introduction of an e-krona poses "no major obstacles" to monetary policy.

        In an environment of decreasing use of cash, Norway’s Norges Bank is looking at  possibilities such as individual accounts at the central bank or plastic cards or an app to use for payments, it said in a May report. Denmark has backtracked somewhat from initial enthusiasm, with Deputy Governor Per Callesen last month cautioning against central banks offering digital currencies directly to consumers. One argument is that such direct access to central bank liquidity could contribute to runs on commercial banks in times of crisis.

        New Zealand: Considering Future

        The Reserve Bank of New Zealand, once a pioneer on the global stage with its early introduction of an inflation target, said Wednesday it’s considering its future plans for currency issuance, and how digital units may fit into those strategies. “Work is currently underway to assess the future demand for New Zealand fiat currency and to consider whether it would be feasible for the reserve bank to replace the physical currency that currently circulates with a digital alternative,” the RBNZ said in what it termed an analytical note.

        Morocco: Violating Law

        Representing one of the more stringent reactions, the country has deemed that all transactions involving virtual currencies as violating exchange regulations and punishable by law. Cryptocurrencies amount to a hidden payment system, not backed by any institution and involving significant risks for their users, authorities said in a statement this month.

        Bank for International Settlements: Can’t Ignore

        The central bank for central banks has said that policy makers can’t ignore the growth of cryptocurrencies and will likely have to consider whether it makes sense for them to issue their own digital currencies at some point. “Bitcoin has gone from being an obscure curiosity to a household name,” the BIS said in September. One option is a currency available to the public, with only the central bank able to issue units that would be directly convertible to cash and reserves. There might be a greater risk of bank runs, however, and commercial lenders might face a shortage of deposits. Privacy could also be a concern.

          Read more: www.bloomberg.com

          Your next car will be hacked. Will autonomous vehicles be worth it?

          Self-driving cars could cut road deaths by 80%, but without better security they put us at risk of car hacking and even ransoms, experts at SXSW say

          Youre about to drive to work. You turn on the ignition and a message on the dash lights up. Weve hacked your car! Pay 10 bitcoin to get it back.

          Hacking into software and then demanding a ransom to release it whats known as ransomware is not new. Finnish security expert Mikko Hypponen fully expects it to become a reality as self-driving or autonomous cars start to become more commonplace.

          Already, one hacker claims to have taken control of some systems on board a passenger plane he was on, getting as far as issuing a climb command that he accessed through the entertainment system. Another pair of hackers caused a Jeep to crash in July 2015 by accessing some of the cars software through another poorly protected entertainment system. At the Defcon hacking conference, as far back as 2011, hackers were asking if they could write a virus that would be transmitted car to car.

          Hypponen, chief research officer at the Finnish security firm F-Secure, told an audience at SXSW that in the 25 years he had worked in Cybersecurity, he had seen a big shift in the type of people who do the hacking, as well their motivations. When I entered this field, the hackers had no real motive they were doing it because they could.

          He says there are now generally five types of hackers:

          Good white hat hackers, who break security so that a weakness can be found, fixed and ultimately improved

          Activist hackers, like Anonymous, who are politically but not perennially motivated

          Nation-states and foreign intelligence agencies, a growing issue over the past ten years

          Supporters of extremism of which Isis is the only really credible threat thus far

          Criminals, who Hypponen says now make as much as 95% of all malware, using hacking to make millions of dollars

          It is the criminals motivated by money that present the biggest threat and are likely to increasingly target self-driving cars; the multiple components in cars and lack of rigour by carmakers has made this a pressing issue. Legacy manufacturers who build cars have a long history of safety but not of security, and thats why they are starting learn the hard way. Now they take it seriously and last year was a wake-up call, he said of the Jeep hack.

          Robert Hartwig, president of the Insurance Information Institute (III), says the US market for cyber insurance is growing massively, from $2bn in 2015 to a predicted $7.5bn in 2020. This is America, and if you have a breach of personal data, you are absolutely positively going to be sued. The legal fees and settlement costs will be more than the cost of the attack.

          The III estimates that by 2030, 25% of all cars sold will be autonomous, marking a slightly slower pace than Google et al might have you believe. Hartwig also said that there will be an estimated 80% fewer traffic accidents because of the increased safety of autonomous cars. Data will be critical to this, allowing policies to be based on precise driving habits, safety and how many miles people actually drive not just what they say they do.

          Jonathan Matus, CEO of the company behind the Zendrive app, explained how it uses the built-in motion and positioning sensors in smartphones to monitor driving, including rapid acceleration, sharp turns, stop signal compliance and phone use, which is a major factor in the number of global road deaths each year. Despite car ownership peaking, the number of deaths is actually increasing, he said.

          New cars already have complex electrical diagnostic systems that include various monitoring systems so dont tell a cop you havent been speeding, because your car wont back you up, said Hartwig.

          He pointed out that the road might actually be the last place to be overhauled for autonomous vehicles; Norway is already exploring an autonomous ferry, while planes are already so automated, even for takeoff and landing, that the skills of pilots are atrophying, Hartwig said.

          Human-controlled cars will eventually be forbidden to drive on the road, Hypponen said, except for on race tracks. Matus said the same was certainly true of horses, suggesting yet another future threat to electronically controlled cars that could be harder to detect. If you wanted to slow US GDP, all you would have to do is increase the commute time in every urban environment by 15 minutes. Just tweak a few cars, or get one to put on the brake even if these things happen a few times, it will affect the confidence of consumers.

          Even though he sees bad things happen all the time, Hypponen remains positive about self-driving cars, he said. The internet has brought us more good than bad. Overall, technology improves our lives and business, even with the risks. And Ill be able to watch cat videos on YouTube while Im driving.

          Read more: www.theguardian.com

          ‘Accidental hero’ halts ransomware attack and warns: this is not over

          Expert who stopped spread of attack by activating softwares kill switch says criminals will change the code and start again

          The accidental hero who halted the global spread of an unprecedented ransomware attack by registering a garbled domain name hidden in the malware has warned the attack could be rebooted.

          The ransomware used in Fridays attack wreaked havoc on organisations including FedEx and Telefnica, as well as the UKs National Health Service (NHS), where operations were cancelled, X-rays, test results and patient records became unavailable and phones did not work.

          But the spread of the attack was brought to a sudden halt when one UK cybersecurity researcher tweeting as @malwaretechblog, with the help of Darien Huss from security firm Proofpoint, found and inadvertently activated a kill switch in the malicious software.

          The researcher, who identified himself only as MalwareTech, is a 22-year-old from south-west England who works for Kryptos logic, an LA-based threat intelligence company.

          I was out having lunch with a friend and got back about 3pm and saw an influx of news articles about the NHS and various UK organisations being hit, he told the Guardian. I had a bit of a look into that and then I found a sample of the malware behind it, and saw that it was connecting out to a specific domain, which was not registered. So I picked it up not knowing what it did at the time.

          The kill switch was hardcoded into the malware in case the creator wanted to stop it spreading. This involved a very long nonsensical domain name that the malware makes a request to just as if it was looking up any website and if the request comes back and shows that the domain is live, the kill switch takes effect and the malware stops spreading. The domain cost $10.69 and was immediately registering thousands of connections every second.

          MalwareTech explained that he bought the domain because his company tracks botnets, and by registering these domains they can get an insight into how the botnet is spreading. The intent was to just monitor the spread and see if we could do anything about it later on. But we actually stopped the spread just by registering the domain, he said. But the following hours were an emotional rollercoaster.

          Initially someone had reported the wrong way round that we had caused the infection by registering the domain, so I had a mini freakout until I realised it was actually the other way around and we had stopped it, he said.

          MalwareTech said he preferred to stay anonymous because it just doesnt make sense to give out my personal information, obviously were working against bad guys and theyre not going to be happy about this.

          He also said he planned to hold onto the URL, and he and colleagues were collecting the IPs and sending them off to law enforcement agencies so they can notify the infected victims, not all of whom are aware that they have been affected.

          He warned people to patch their systems, adding: This is not over. The attackers will realise how we stopped it, theyll change the code and then theyll start again. Enable windows update, update and then reboot.

          He said he got his first job out of school without any real qualifications, having skipped university to start up a tech blog and write software.

          Its always been a hobby to me, Im self-taught. I ended up getting a job out of my first botnet tracker, which the company I now work for saw and contacted me about, asking if I wanted a job. Ive been working there a year and two months now.

          But the dark knight of the dark web still lives at home with his parents, which he joked was so stereotypical. His mum, he said, was aware of what had happened and was excited, but his dad hadnt been home yet. Im sure my mother will inform him, he said.

          Its not going to be a lifestyle change, its just a five-minutes of fame sort of thing. It is quite crazy, Ive not been able to check into my Twitter feed all day because its just been going too fast to read. Every time I refresh it its another 99 notifications.

          Proofpoints Ryan Kalember said the British researcher gets the accidental hero award of the day. They didnt realise how much it probably slowed down the spread of this ransomware.

          The time that @malwaretechblog registered the domain was too late to help Europe and Asia, where many organisations were affected. But it gave people in the US more time to develop immunity to the attack by patching their systems before they were infected, said Kalember.

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          Theresa May: ‘This is not targeted at the NHS, its an international attack’ video

          The kill switch wont help anyone whose computer is already infected with the ransomware, and its possible that there are other variants of the malware with different kill switches that will continue to spread.

          The malware was made available online on 14 April through a dump by a group called Shadow Brokers, which claimed last year to have stolen a cache of cyber weapons from the National Security Agency (NSA).

          Ransomware is a type of malware that encrypts a users data, then demands payment in exchange for unlocking the data. This attack used a piece of malicious software called WanaCrypt0r 2.0 or WannaCry, that exploits a vulnerability in Windows. Microsoft released a patch (a software update that fixes the problem) for the flaw in March, but computers that have not installed the security update remain vulnerable.

          MalwareTech (@MalwareTechBlog)

          I will confess that I was unaware registering the domain would stop the malware until after i registered it, so initially it was accidental.

          May 13, 2017

          The ransomware demands users pay $300 worth of cryptocurrency Bitcoin to retrieve their files, though it warns that the payment will be raised after a certain amount of time. Translations of the ransom message in 28 languages are included. The malware spreads through email.

          This was eminently predictable in lots of ways, said Kalember. As soon as the Shadow Brokers dump came out everyone [in the security industry] realised that a lot of people wouldnt be able to install a patch, especially if they used an operating system like Windows XP [which many NHS computers still use], for which there is no patch.

          Security researchers with Kaspersky Lab have recorded more than 45,000 attacks in 74 countries, including the UK, Russia, Ukraine, India, China, Italy, and Egypt. In Spain, major companies including telecommunications firm Telefnica were infected.

          By Friday evening, the ransomware had spread to the United States and South America, though Europe and Russia remained the hardest hit, according to security researchers Malware Hunter Team. The Russian interior ministry says about 1,000 computers have been affected.

          Read more: www.theguardian.com

          How to Make Money Off Bitcoin Without Actually Owning It

          It’s the equity investor’s conundrum: how to get access to the skyrocketing returns of bitcoin and blockchain without actually owning the tokens.

          To Thomas Lee, a major bitcoin bull who heads research for Fundstrat Global Advisors, a dozen stocks should do the trick.

          “We believe investors should have exposure to blockchain, particularly given bitcoin has essentially zero correlation to equities, bonds and commodities —- hence, as a portfolio strategy, bitcoin is a good diversification tool,” Lee wrote in a note to clients Friday. “But this is impractical for many equity managers, given the parameters of their mandate or because of practical issues (custody of tokens, etc.).”

          Investors recently have sought ways to participate in the eye-popping bitcoin rally without having to purchase the cryptocurrency on the unregulated exchanges that have proven susceptible to hacks. Absent from Lee’s list are bitcoin futures, regulated derivative products that will debut on Cboe Global Markets Sunday and CME Group Dec. 18.

          Lee has long been one of Wall Street’s biggest advocates of the cryptocurrency. Two weeks ago he doubled his price target on bitcoin to $11,500 by the middle of 2018. It went for $15,552 as of 10:31 a.m. in New York on Friday, according to Bloomberg composite pricing.

          He suggests equity managers look to these ideas to leverage blockchain in their portfolios:

          • Bitcoin Investment Trust (GBTC)
          • MGT Capital Investments Inc. (MGTI)
          • HIVE Blockchain Technologies Ltd. (HIVE)
          • U.S. Global Investors Inc. (GROW)
          • DigitalX Ltd. (DCC)
          • NVIDIA Corp. (NVDA)
          • Advanced Micro Devices Inc. (AMD)
          • CME Group Inc. (CME)
          • Cboe Global Markets Inc. (CBOE)
          • Overstock.com Inc. (OSTK)
          • Goldman Sachs Group Inc. (GS)
          • Square Inc. (SQ)

          The looming availability of futures weighed on these equity proxies this week, as speculators may be shifting away from stocks of companies that have benefited as bitcoin’s price rose more than 15-fold this year. Both HIVE Blockchain Technologies and U.S. Global Investors are down near 10 percent this week. Nvidia and Advanced Micro Devices have also suffered losses in the five days ending Dec. 8.

          As for the totality of Lee’s picks, an equal weighted basket of these stocks is up 136 percent this year, according to the note. But as impressive as that may seem, he points out that it still lags bitcoin’s 1,685 rise in 2017.

            Read more: www.bloomberg.com