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Forbes, SIM-Swapping Scams, Digital Wills – Recent News in Fintech

Blockchain and Crypto Presence down on Forbes Fintech top 50

Forbes, a leading American business and finance outlet, has become well known for publishing lists acknowledging the who’s who of various industries. On February 4, Forbes listed the top 50 most innovative Fintech companies for 2019. Interestingly, the list only contains 5 companies categorized as “crypto and blockchain”. This is less than half the amount listed in the 2018 edition, which listed 11 crypto and blockchain companies. Forbes states that while “crypto prices and ICO’s collapsed, overall investment in fintech surged in 2018, hitting $55 billion worldwide, double the year before.” Furthermore, 20 of the top 50 are startups, and make their first appearance on the list.

The crypto and blockchain companies present on the 2019 top 50 list are Bitfury, Circle, Coinbase, Gemini, and Ripple, with Coinbase, Gemini, Ripple making repeat appearances.

Two areas which provided notable additions to the 2019 list are companies involved in payments technology and those targeting the underserved.

US SIM-swapping Investigation Heats up with Two more Individuals Indicted

On February 4 a press release from the Northern District of California Attorney’s Office confirmed the indictments of Ahmad Wagaafe Hared and Matthew Gene Ditman with conspiracy to commit computer fraud and abuse, conspiracy to commit access device fraud, extortion, and aggravated identity theft. Harad and Ditman are the latest to be indicted on an increasingly popular scam called SIM-swapping. SIM-swapping involves the scammers manipulating staff of cellphone operators to transfer cell phone numbers from victim’s devices for the purpose of hacking crypto exchange and bank accounts.

The indictment states that after Hared and Ditman gained control of the victim’s cellphone numbers, they used “additional deceptive techniques to gain access to email, electronic storage, and other accounts of victims and ultimately to cryptocurrency accounts of victims”.

Hared and Ditman were released on bond pending two trials set for Feb. 6 and 19. Based on the charges, the pair could face maximum penalties including prison of not more than five years and extensive fines.

US Federal District Court Declares Bitcoin is Legal Money

The US District Court for the Eastern District of Michigan has ruled Bitcoin to be legal money and funds during a trial involving a money laundering scheme. The scheme involved hundreds of thousands of dollars’ worth of Bitcoin being traded on localbitcoin. The defendant’s position was that Bitcoin does not qualify as money and thus the statutes which apply to money transmitting do not apply to Bitcoin.

The court followed similar decisions made by other Federal District courts, particularly United States v, Murgio, 209 F. Supp. 3d 698, 707 (S.D.N.Y. 2016) in finding that bitcoin constitutes “money” and “funds” within the meaning of 18 U.S.C. Code § 1960 Prohibition of unlicensed money transmitting businesses, because they “can be easily purchased in exchange for ordinary currency, act as a denominator of value, and [are] used to conduct financial transactions.”

The court also relied on the Financial Crimes Enforcement Network (FinCEN) interpretive guide for the definition of Bitcoin. FinCEN is a bureau of the United States Treasury, its mission being to “safeguard the financial system from illicit use, combat money laundering, and promote national security through the strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.”

While Bitcoin qualified as money in this circumstances, that is in relation to money transmitting registration requirements, certain other US government agencies view Bitcoin not as money, but as a commodity, security, or token (among others).  These differing views no doubt cause uncertainty and confusion for businesses and individuals operating in this space.

Lawyer Stephen D Palley stated via Twitter that if “2017/18 was the year crypto learned a lot about the SEC, 2019/20 may be the year it learns a lot about FinCEN and the OFC [the Office of Foreign Assets Control].”

First End-to-End Digital Will Signed off in the United States

Cory McCormick, a Las Vegas police officer, became the United States’ first to sign an end-to-end digital will, through Trust & Will, a San Diego startup, that aims to streamline the estate planning process. To complete this historic event, Trust and Will partnered with Boston-based Notarize, a platform which allows individuals or businesses to legally notarize their documents online.  Currently, Nevada is the only state in which legislation permits electronic wills.

“It was pretty cool to have completed the entire Will process online from start to finish,” said McCormick. “Serving in the line of duty presents a lot of unknowns, but having a Will now gives me peace of mind to support my family and loved ones.”

Interestingly, the Trust and Will founders have determined that new mothers are a key demographic for their business. Setting up legal guardian status for children is, like making a will, typically a paper-based process. To address the challenges this presents, Trust and Will has launched a new product that allows parents to quickly prepare guardianship documents online.

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