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.
Ripple, also known as XRP, peaks at more than $100bn and surpasses Ethereum to become second most valuable cryptocurrency after bitcoin
If 2017 was the year of bitcoin, the pioneering cryptocurrency that neared $20,000 in December, will 2018 be the year of Ripple?
The market value of Ripple, also known as XRP, rose more than 50% on Friday, to a record $85bn. Ripple continued to climb over the weekend, peaking at over $100bn, and now surpasses Ethereum ($72bn) as the second most valuable cryptocurrency after bitcoin ($237bn).
Friday’s sharp run-up puts the currency on track to have risen in value by more than 35,000% over the course of 2017. It began the year trading at around $0.006 and now sits at $2.25, according to coinmarketcap.com. Just three weeks ago, the currency was trading at 25¢.
According to Bloomberg, Ripple’s gains in 2017 have far outpaced the gains of Ethereum and bitcoin, which have gained roughly 9,000 and 1,400% year-to-date, respectively.
Ripple’s CEO, Brad Garlinghouse, said on Twitter on Sunday: “Proud to be ending 2017 with incredible momentum on a number of fronts! A huge, heartfelt thank you to the amazing @Ripple team, our great partners and an incredibly supportive $XRP community.”
The gains come as Ripple has made steps to establish itself as a coherent currency used by institutions. Established in 2012 and designed for interbank payments and settlements, Ripple has articulated a vision to ease the intense volatility experienced by other cryptocurrencies by establishing the structured sale and use of its currency.
The company has more than 100 banks signed on to its platform, RippleNet, and was recently accepted for testing by a consortium of Japanese banks. Global banks including Bank of America, RBC and UBS are also customers.
The company initially created 99bn XRP, and has released around 38bn. In May, Garlinghouse announced the company would place 55bn of its XRP into escrow and will unleash up to 1bn into the market each month.
Garlinghouse, formerly a senior executive at Yahoo and AOL, and CEO of the file transfer site Hightail (formerly YouSendIt), told the Wall Street Journal that the recent gains are a reflection of confidence in the coin’s development.
“We have real customers, really in production using this,” Garlinghouse, 46, said, “not science experiments. Science experiments are not a business model.”
Bought in 2009, currency's rise in value saw $27 turn into enough to buy an apartment in a wealthy area of Oslo. By Samuel Gibbs
The meteoric rise in bitcoin has meant that within the space of four years, one Norwegian mans $27 investment turned into a forgotten $886,000 windfall.
Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption. He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory.
Bitcoins are stored in encrypted wallets secured with a private key, something Koch had forgotten. After eventually working out what the password could be, Koch got a pleasant surprise:Â
“It said I had 5,000 bitcoins in there. Measuring that in today’s rates it’s about NOK5m ($886,000),” Koch told NRK.
Koch exchanged one fifth of his 5,000 bitcoins, generating enough kroner to buy an apartment in Toyen, one of the Norwegian capitals wealthier areas.
Two ways to acquire bitcoins
Typically bitcoins are bought using traditional currency from a bitcoin “exchanger”, although due to strict anti-money laundering controls, the process can can be tricky. A user can then withdraw those bitcoins by sending them back to an exchanger like Mt Gox, the best known bitcoin exchange, in return for cash.
However, bitcoin is gaining more and more traction within the physical world too. It is now possible to actually spend bitcoins without exchanging them for traditional currency first in a few British pubs, including the Pembury Tavern in Hackney, London, for instance. On 29 October, the world’s first bitcoin ATM also went online in Vancouver, Canada, which scans a user’s palm before letting them buy or sell bitcoins for cash.Â
A small group of hardcore users also generate extra bitcoins by “mining” for them a process that requires computers to perform the calculations needed to make the digital currency work, in exchange for a share of the built-in inflation.
Mining is a time-consuming and expensive endeavour due to the way the currency is designed. Each subsequent bitcoin mined is more complex than the previous one, requiring more computational time and therefore investment through the electricity and computer hardware required.
More than 45,000 attacks recorded in countries including the UK, Russia, India and China may have originated with theft of cyber weapons from the NSA
A ransomware cyber-attack that may have originated from the theft of cyber weapons linked to the US government has hobbled hospitals in England and spread to countries across the world.
Security researchers with Kaspersky Lab have recorded more than 45,000 attacks in 99 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.
Markus Jakobsson, chief scientist with security firm Agari, said that the attack was scattershot rather than targeted.
Its a very broad spread, Jakobsson said, noting that the ransom demand is relatively small.
This is not an attack that was meant for large institutions. It was meant for anyone who got it.
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). At the time, there was skepticism about whether the group was exaggerating the scale of its hack.
On Twitter, whistleblower Edward Snowden blamed the NSA.
If @NSAGov had privately disclosed the flaw used to attack hospitals when they *found* it, not when they lost it, this may not have happened, he said.
Its very easy for someone to say that, but the reality is the US government isnt the only one that has a stockpile of exploits they are leveraging to protect the nation, said Jay Kaplan, CEO of Synack, who formerly worked at the NSA.
Its this constant tug of war. Do you let intelligence agencies continue to take advantage of vulnerabilities to fight terrorists or do you give it to the vendors and fix them?
The NSA is among many government agencies around the world to collect cyber weapons and vulnerabilities in popular operating systems and software so they can use them to carry out intelligence gathering or engage in cyberwarfare. The agency did not immediately respond to a request for comment.
Ransomware is a type of malware that encrypts a users data, then demands payment in exchange for unlocking the data. This attack used 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.
This was eminently predictable in lots of ways, said Ryan Kalember from cybersecurity firm Proofpoint. As soon as the Shadow Brokers dump came out everyone [in the security industry] realized 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.
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.
Attacks with language support show a progressive increase of the threat level, Jakobsson said.
The attack hit Englands National Health Service (NHS) on Friday, locking staff out of their computers and forcing some hospitals to divert patients.
The attack against the NHS demonstrates that cyber-attacks can quite literally have life and death consequences, said Mike Viscuso, chief techology officer of security firm Carbon Black. When patients lives are at stake, there is no time for finger pointing but this attack serves as an additional clarion call that healthcare organizations must make cybersecurity a priority, lest they encounter a scenario where lives are risked.
Ransomware attacks are on the rise. Security company SonicWall, which studies cyberthreats, saw ransomware attacks rise 167 times in 2016 compared to 2015.
Ransomware attacks everyone, but industry verticals that rely on legacy systems are especially vulnerable, said Dmitriy Ayrapetov, executive director at SonicWall.
A Los Angeles hospital paid $17,000 in bitcoin to ransomware hackers last year, after a cyber-attack locked doctors and nurses out of their computer system for days.
Jakobsson said that the concentration of the attack in Russia suggested that the attack originated in Russia. Since the malware spreads by email, the level of penetration in Russia could be a sign that the criminals had access to a large database of Russian email addresses.
However, Jakobsson warned that the origin of the attack remains unconfirmed.
Rising price of the cryptocurrency, now worth four times as much as an ounce of gold, has led to warnings of a bubble
The price of bitcoin has smashed through $5,000 to an all-time high.
The cryptocurrency rose by more than 8% to $5,243 having started the year at $966. Bitcoin has soared by more than 750% in the past year and is worth four times as much as an ounce of gold.
But the price has been volatile. The digital currency plunged below $3,000 in mid-September after the Chinese authorities announced a crackdown. Beijing ordered cryptocurrency exchanges to stop trading and block new registrations, due to fears that increasing numbers of consumers piling into the bitcoin market could prompt wider financial problems.
Jordan Hiscott, the chief trader at Ayondo Markets, said: “The returns are truly remarkable, especially given the recent ban on bitcoin trading in China, where demand had previously accounted for at least 10% of all global volumes.”
Vladimir Putin, the Russian president, called this week for regulation of cryptocurrencies, saying their use “bears serious risks” such as money laundering, tax evasion and funding for terrorism. But he also warned against imposing “too many barriers,” which appears to have given bitcoin a boost.
Two weeks ago, Japan’s government implemented rules that recognise bitcoin as a payment method. Celebrities have also got involved, with the boxer Floyd Mayweather, the socialite Paris Hilton and the actor Jamie Foxx promoting coin offerings.
Using bitcoin allows people to bypass banks and traditional payment processes to pay for goods and services directly. Banks and other financial institutions have been concerned about bitcoin’s associations with money laundering and online crime because transactions take place anonymously.
The soaring value of bitcoin and other cryptocurrencies comes despite growing warnings over a price bubble.
The starkest warning came from the JP Morgan chief executive, Jamie Dimon, who said bitcoin was a fraud that would ultimately blow up. Speaking last month, he said there was a limited market for the digital currency, arguing that it was only fit for use by drug dealers, murderers and people living in countries such as North Korea. He pledged to sack any JP Morgan trader investing in Bitcoin, but also admitted he had not been able to dissuade his daughter from investing.
Dimon declined to comment on the surge in bitcoin during an earnings call on Thursday. “I’m not going to talk about bitcoin any more,” he said.
Kenneth Rogoff, a professor of economics and public policy at Harvard University and a former IMF chief economist, has predicted that the technology behind cryptocurrencies will thrive, but the price of bitcoin will collapse.
“It is folly to think that bitcoin will ever be allowed to supplant central bank-issued money,” he wrote in the Guardian this week.
“It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes or counter criminal activity.”
Daniel Murray, global head of research at EFG Asset Management, noted that in 2013, bitcoin soared twelvefold in just four months but within a month had lost a third of its value and four months after its peak had lost 60% of its value.
“Investors buy [an] asset because they are seduced by the prospect of further rapid gains without necessarily thinking about intrinsic value,” he said. He noted that historically currencies were backed by precious metals, and these days most currencies were based on macroeconomic fundamentals such as inflation, interest rates and growth, and were backed by a central bank and government. None of this applied to bitcoin, although the supply is carefully controlled.
“It is hard to argue that bitcoin does anything better than existing currency arrangements whilst it does some things to a lower standard,” Murray added. “Individuals are already able to transact electronically using a plastic card.”
The early days of the internet were full of hope: limitless information would make us wiser, kinder, less bigoted. So when did hate get a foothold?
Back in 1990, the American lawyer and author Mike Godwin proposed a law of early internet behaviour: “As an online discussion grows longer, the probability of a comparison involving the Nazis or Hitler approaches 1.”
In short, the more you talk online, the more likely you’ll be nasty. Godwin’s Law was in fact only half the story: it turns out talking online didn’t only make people think their opponents were Nazis. Some of them actually had become Nazis.
The apparent success of the “alt-right” and broader radical right movements in Europe and the US has plenty of analysts baffled. An incredulity that these nationalists are using the internet – supposedly the very essence of openness, progress and tolerance – to promote an agenda which agitates for the precise opposite. But the radical right has frequently been the most avid and enthusiastic adopters of shiny new technology, and have long found the internet a uniquely useful place.
Crowdfunded online publication from Jimmy Wales will pair paid journalists with army of volunteer contributors
Jimmy Wales, the co-founder of Wikipedia, is launching a new online publication which will aim to fight fake news by pairing professional journalists with an army of volunteer community contributors.
Wikitribune plans to pay for the reporters by raising money from a crowdfunding campaign.
Wales intends to cover general issues, such as US and UK politics, through to specialist science and technology.
Those who donate will become supporters, who in turn will have a say in which subjects and story threads the site focuses on. And Wales intends that the community of readers will fact-check and subedit published articles.
Describing Wikitribune as news by the people and for the people, Wales said: This will be the first time that professional journalists and citizen journalists will work side-by-side as equals writing stories as they happen, editing them live as they develop, and at all times backed by a community checking and rechecking all facts.
Although the site is launching at the beginning of the UK general election campaign, Wales said the impetus for the project came from the US.
Someone I know convinced me to give Trump 100 days before making my mind up, he said, but then on day one Kellyanne Conway came out and said her alternative facts line. That was when I really decided to move forward.
If the fundraising campaign goes well, Wales hopes to be able to hire the sites first journalists as soon as possible perhaps before 8 June, when Britons vote in the general election called by prime minister Theresa May.
Like Wikipedia, Waless new project will be free to access. The publication is launching on Tuesday 25 April with a crowdfunding campaign pre-selling monthly support packages to fund the initial journalists. The first issue will follow soon after.
The community contributors will play a key part in the new site, ensuring that the contents of the articles are always supported by as much extra information shared with the readers as possible.
They will be backed up by a presumption of transparency in the sites reporting, with journalists sharing full transcripts, video and audio of interviews.
He hopes that a combination of the distributed intelligence of Wikipedia and measured professional journalism driven by a business model thats not about chasing clicks will lead to a news organisation built from the ground up to combat fake news and political rabble-rousing.
There is a third way, he said, between the two models of he said, she said faux neutrality, or having a Paul Dacre [editor of the Daily Mail] agenda and ramming things down our throats.
He added: If you take a look at Wikipedia, its noisy and not a perfect place, but for true fake news, theres been almost no impact on the Wikipedia community.
The volunteers are experienced enough to know its nonsense, and have an ethos saying: No, were here for neutral facts: that community knows it from the ground up.
Those contributors who also support the site financially will eventually be able to advise on the topics they want Wikitribune to explore, Wales said.
If you take as an example the bitcoin community, theyre a very active and obsessed community.
Theres a lot of news that comes out in the field, and I think theyd love to be able to raise money to hire a journalist and put them on the bitcoin/blockchain beat.
The ideas behind Wikitribune are similar to other experiments with sustainable community journalism.
Dutch news website De Correspondent, for instance, was launched in 2013 after a 1m (850,000) crowdfunding campaign, with a goal of focusing on reporter-led in-depth coverage of a select few topics backed up by strong involvement from a community of financial backers.
But Wales thinks that such comparisons do Wikitribune down. Im not sure that anyones ever been as radical as I am, he said.
Realistically, in terms of saying the community can really have control, a lot of people from traditional newsrooms have really had trouble getting their head around that.
Wales, who sits on the board of Guardian Media Group, the Guardians parent company, founded Wikipedia with Larry Sanger in 2001, before donating the entire project to a non-profit organisation, the Wikimedia Foundation, that he set up in 2003.
He remains a board member of the Wikimedia Foundation, and is the president of Wikia, a Wikipedia spin-off that allows communities to make their own collaboratively-edited encyclopaedias on topics ranging from Top Gear to Harry Potter.