Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Cyber Security, Quantum, Hacks, Fraud Alerts, Risks, InsurTech
Statistics Canada: Internet Usage Survey Data and Cyber Hurdles
Analysis | Aug 15, 2023
Image: Unsplash/Marc Olivier Jodoin
The digital revolution has touched every corner of the globe, and Canada is no exception. Recent data reveals a nation increasingly connected and reliant on the internet.
As the world rapidly shifts towards digital platforms, Canada stands as a testament to this evolution. From the bustling streets of Toronto to the serene landscapes of Yukon, the digital footprint is unmistakable. Recent data paints a picture of a nation increasingly intertwined with the virtual realm. Younger generations, predictably, lead the charge with near-total internet adoption. However, it's the rising curve of older Canadians coming online that tells a more profound story of digital inclusivity.
Internet Usage in Canada by Age Category (2018-2022)
- 15 to 24 years: This age group consistently exhibits the highest internet usage, almost reaching saturation with rates nearing 100%. Their near-universal adoption reflects the digital native nature of this younger generation, who have grown up in an era where the internet is integral to daily life.
- 25 to 44 years: Not far behind the youngest cohort, this age bracket also boasts impressively high internet adoption rates. This demographic, which often includes working professionals, students, and young families, relies heavily on the internet for work, entertainment, and social connectivity.
- 45 to 64 years: This age group, which spans mid-life professionals and those approaching retirement, has shown stable and substantial internet usage rates. The adoption is slightly lower than the younger demographics but remains significant, indicating the widespread importance of the internet across varied life stages.
See: From Gaming to Gig Economy: How Canadians are Embracing New Payment Methods
- 65 years and over: The percentage of internet usage for this senior group increased from 71.2% in 2018 to 82.6% in 2022, showcasing a noticeable and commendable upward trajectory in internet adoption. This trend embodies the impact of COVID and an increasing interest and need for the internet among older Canadians, whether for staying connected with loved ones, accessing services, or exploring new learning avenues.
Internet Security and Privacy Incidents
However, with this increased connectivity comes a surge in digital vulnerabilities. The data paints a concerning picture:
- The Vulnerable Middle: The age bracket "25 to 44 years" consistently emerges as the most susceptible to cyber incidents. In 2022, a significant 64.1% of individuals within this group reported experiencing a cyber security incident. This could be attributed to this age group's active online footprint – encompassing work, online shopping, social media, and more.
- Elders Navigating the Cyber Landscape: The senior population, while having a lower overall internet usage rate, has not been spared from cyber threats. Their reported incidents have seen a marked increase from 2018 to 2022. This rise is indicative of the challenges they face as they familiarize themselves with the digital realm.
- Privacy at Risk: Unsolicited emails and privacy breaches remain prevalent across all age groups, emphasizing the persistent threats to personal data in the digital age.
Emerging Threats and Securing the Future
Several emerging threats are becoming increasingly prominent. Among these, sophisticated phishing attacks are on the rise. These malicious endeavors, often disguised as authentic communications from trusted entities, prey on unsuspecting individuals, leading them to divulge personal or financial information.
Further, the rise of ransomware cannot be understated. Across the nation, businesses, educational institutions, and even local municipalities find themselves at the mercy of cybercriminals who encrypt critical data, demanding hefty ransoms for its release. Such incidents not only disrupt services but also place immense financial strains on the affected entities.
See: Blakes: Cybersecurity Trends in Canada: A 2023 Perspective
As we advance towards smarter homes and cities, the proliferation of Internet of Things (IoT) devices introduces new vulnerabilities. These interconnected devices, from home thermostats to citywide surveillance systems, often lack robust security measures, making them potential weak links in the vast digital network. As we revel in the conveniences of an interconnected world, it becomes imperative to address these emerging threats, ensuring that our digital future remains secure and resilient.
Takeaways
Navigating Canada's digital journey brings forth key areas for discussion. The need for digital literacy programs is evident, especially for older Canadians venturing online. With businesses and institutions rapidly digitizing, the resilience of our digital infrastructure becomes critical. Collaboration emerges as a central theme. Policymakers, tech firms, and the public must unite to bolster cybersecurity. As we embrace technology, a balanced approach ensures we reap its benefits while safeguarding against potential threats.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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From Techie to Tech Leader with these 5 Hacks
Aug 15, 2023
Image: Unsplash/Campaign Creators
Being a tech leader in the modern world doesn’t necessarily mean you're the go-to office tech guru. Sure, your tech-savvy-ness is conducive, but being a leader involves an entirely different set of skills besides just technical knowledge. A personal software update, if you will.
Check out the following advice from top tech leaders on how to go from techie to tech leader with these five simple hacks.
1. Learning: The Never-Ending Download
If you’re not staying up to date, you’re already just a blurb in yesterday’s news. As both an expert in the technology industry and a successful leader, your ability to learn and refine your skills must always remain at the forefront. To be an effective leader, you have to be an effective learner.
Visualize the desired culture you want for your team. Do you want a team of ambitious go-getters with a never-ending eagerness to discover the latest technological advances?
Sounds great, right?
The good news is you can have just that, but remember, as a leader… the culture begins with you. You must constantly expand your knowledge and inspire your team to do the same. Some ways we recommend doing this are by:
- Reading relevant publications and arranging a team discussion;
- Attending industry conferences with your team;
- Collaborating with startups to gain insight into disruptive innovations;
- Regular “check-ins” with the team;
- Goal setting and development of appropriate project check-points & timelines;
- Researching successful leaders and implementing techniques.
2. Communication: The Motherboard of Your Team
A team without communication is like a computer without a motherboard, and not just any communication will do.
Clear, concise, and effective communication is the only way to lead a team to success. Communication has always remained in the top requirements of any healthy relationship, even outside of the work field.
In fact, a toxic workplace with long work hours and an unsafe psychological work culture is three times more likely to contribute to an employee’s risk of depression.
You simply cannot effectively lead a team without establishing open lines of communication and building trust. In fact, poor communication is the #1 reason even the most lucrative teams fall apart.
Here are some valuable suggestions to ensure your team doesn’t fall into that category.
- From the start, clearly define each member’s role within the team;
- Despite your hectic work schedule, always make time for a team member requesting to speak with you;
- Always keep an open line of communication;
- Never forget that as a team leader, you set the tone as a role model. You ultimately are showing your team what is acceptable and not acceptable behavior. If there’s an issue within your team - look to yourself first.
3. Culture Connection: The MVP
As a role model, you are the MVP. You set the tone. And the tone is best when in tune with your teammates.
Your actions serve as guideposts for your team members to follow. Use these top tips to set (and keep) the right tone within your team:
- Develop a mentoring program to connect junior developers with a senior developer (be sure the senior developer is briefed and on board prior);
- Organize events in which individual team members can showcase their personal projects;
- Whenever possible, involve the team in decision-making and project planning.
Make it your personal mission to pull the motivation from each and every team member and watch the momentum of your team take off. An inspired team is an unstoppable team.
4. Innovation: The Ultimate Network
When talking about “innovation,” the term network continuously comes to mind. Your team is your literal interweb to utilize and customize as needed to achieve your goals (which should also be your team’s goals).
Developing a team with dedicated players placed in their desired designated roles is a recipe for success. While it sounds easy, very few team leaders actually accomplish this.
The key is to analyze your team as a leader rather than as a friend. This is a part of the entrepreneurial mindset. You wouldn’t put your best pitcher out in the left field, so don’t fill a spot in software development with a senior data analyst just because you two get along well and you can show him the ropes.
The best teams in the world are full of diverse individuals who may otherwise never be connected but become connected through a shared common goal.
5. Protect Your Team: Prioritize Cybersecurity
Your team is crushing it; you’re breaking company-wide records and exceeding goals faster than you can set them.
The downfall to building an unstoppable team and being victorious is that everyone wants a slice of the pie.
As a techie, you know just how detrimental a lack of cybersecurity is, and this could very well be the destroyer of your newfound A-team.
After all, a team is only as good as its weakest link, and if an error is made and data is breached, all the work you’ve done building this empire could come crashing down.
Protect yourself, your team, and your success by:
- Conducting regular security training sessions;
- Developing a strategy for encryption, secure coding practices, and proper data handling;
- Performing security audits;
- Using a VPN to ensure safe online practices by all team members. Learn more about NordVPN and Surfshark to pick the one that suits your needs the most.
Conclusion
Whether you are currently a techie looking to become a leader in your department or are already in a place of management, one thing we can all agree on is the importance of the team surrounding us.
It is ultimately your responsibility to ensure that you have the right teammates with the ability to communicate effectively, a suitable culture that recognizes and utilizes each member's individual talents, and the proper protection to keep your team focused on crushing goals, not cyberattacks.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Sam Bankman-Fried Accused of Witness Tampering Now Awaits Trail Behind Bars – Lessons Learned
News | Aug 13, 2023
In a dramatic turn of events, Sam Bankman-Fried (SBF), the celebrated founder of cryptocurrency exchange FTX, has had his bail revoked and now awaits trial behind bars.
Sam Bankman-Fried, hailed as a titan in the cryptocurrency world, now finds himself facing serious legal challenges.
The Charges and Allegations
As reported by CBC, his bail was recently revoked due to allegations of witness tampering. The decision to jail Bankman-Fried has sent shockwaves through the fintech industry, raising questions about the implications for other high-profile figures in similar situations. With over 100 emails sent to the media and more than 1,000 phone calls made to members of the press, Bankman-Fried's interactions with journalists have been extensive. The defense argues that he was merely exercising his First Amendment rights, while prosecutors see it as a clear attempt at witness intimidation
See: Claw-back Risk: 1 in 3 Members of Congress Received ‘Cash Donation’ from FTX/SBF
Here are the ways in which he allegedly tampered with witnesses:
- SBF is alleged to have shown a journalist the private writings of a former girlfriend, who is also a key witness against him. This act was perceived as an attempt to influence the witness by sharing deeply personal information about her with the public.
- In January, after his arrest, SBF reached out to FTX's general counsel using encrypted communication. This act was seen as an attempt to ensure that their recollections of events were aligned or "on the same page."
- SBF shared excerpts of Caroline Ellison's communications with a reporter (his former girlfriend and the ex-CEO of Alameda Research) . The judge believed that the nature of the shared material was such that someone would only share it to "hurt, discredit, and frighten the subject of the material."
These actions led to the conclusion that there was probable cause to believe Bankman-Fried had tried to tamper with witnesses on multiple occasions. The judge's decision to revoke his bail was based on these allegations and the belief that he posed a risk to the community, including potential witnesses for the prosecution. This statement underscores the gravity of the allegations and the potential impact on the trial's outcome.
Judge Lewis Kaplan, as quoted in a CNBC article, stated:
"My conclusion is there is probable cause to believe the defendant tried to tamper with witnesses at least twice."
Media's Role A Double-Edged Sword
- The media's role in high-profile cases, as exemplified by the Sam Bankman-Fried (SBF) saga, is undeniably a double-edged sword.
- On one side, the media serves as a crucial watchdog, shedding light on complex issues and ensuring transparency in the justice system. Their coverage can amplify voices that might otherwise go unheard and hold powerful figures accountable.
- However, on the flip side, intense media scrutiny can risk prejudicing the public, potentially influencing the outcome of legal proceedings. The line between informative reporting and sensationalism can blur, leading to a media circus that detracts from the core issues at hand.
- In such high-stakes situations, it becomes imperative for the media to strike a delicate balance: to inform without bias and to respect the sanctity of the judicial process, allowing regulators and courts to operate without undue external pressure.
Broader Implications
The case against Bankman-Fried is more than just a legal battle; it's a reflection of the volatility and risks inherent in the fintech sector. As the founder of a major cryptocurrency exchange, his fall from grace serves as a cautionary tale for industry players. The intense media scrutiny also raises ethical considerations about the role of journalism in such high-stakes situations. The Sam Bankman-Fried (SBF) case presents several implications for the fintech industry:
See: Effective Altruism: SBF’s Downfall Endangers his Philanthropic Gifts
- High-profile legal battles, especially involving figures like SBF who were once celebrated in the fintech space, can erode public trust. This diminished trust can make it harder for new fintech startups to gain traction and for existing ones to retain their user base.
- Such cases can draw increased attention from regulators, leading to stricter regulations and oversight for fintech and cryptocurrency entities. This could mean more compliance hurdles and increased operational costs for businesses in the sector.
- Investors might become more cautious about where they put their money, seeking more transparency and assurance from fintech firms. This could lead to increased demands for audits, transparency reports, and other forms of verification.
- The allegations of witness tampering and the interactions with the media underscore the importance of ethical conduct and governance in business operations. Fintech firms might need to invest more in ethical training and establish clearer guidelines for their executives and employees.
- Fintech companies might need to bolster their legal teams and be better prepared for potential legal challenges, ensuring that they operate within the confines of the law at all times.
May Take Years to Unravel
In conclusion, the Sam Bankman-Fried case offers a multifaceted look into the complexities of legal proceedings in the age of media saturation. As the trial progresses, the fintech world will be watching closely, not just for the verdict, but for the broader implications for the industry as a whole.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Beyond the Blockchain 🔗 The Legal Implications of the Kirshenberg v. Schneider Dispute ⚖️
Digital Asset Litigation | Aug 11, 2023
Image: Unsplash/Traxer
The rapid ascent of cryptocurrencies has not only transformed global finance but has also ushered in a new era of legal challenges.
The landmark case of Kirshenberg v. Schneider in the Ontario Superior Court of Justice provides a captivating glimpse into the complexities of crypto-asset disputes. In a world where digital currencies blur geographical boundaries, this case underscores the pressing need for legal systems to adapt and evolve.
Background
- The Dispute
- U.S. resident Aaron Kirshenberg sold a non-fungible token (NFT) online for millions of dollars worth of Ether (ETH).
- He used Trustart Technologies Limited, operated by Daniel Schneider, to convert this ether into USD. However, after transferring a significant amount of Ether to Trustart, Kirshenberg did not receive the full amount in USD as expected.
See: Alleged US$16 million crypto theft case to test ‘Code is law’ defence in Canada
- The Legal Battle
- Kirshenberg approached the Ontario Superior Court of Justice seeking urgent relief to freeze the crypto-assets held by the defendants (Trustart and Schneider) as security for judgment.
- The court declined to grant a worldwide injunction but allowed a preservation order for a specific amount of cryptocurrency in the defendant's digital misappropriated crypto wallet. Additionally, an Anton Piller order was granted to seize evidence from the defendants.
- The Outcome
- The court's decisions raised questions about the effectiveness of Canadian courts in preserving stolen or-assets.
Legal Complexities and Increasing Disputes
- The Kirshenberg case is a testament to the increasing number of disputes related to crypto-assets. As more individuals and businesses venture into the world of digital currencies, the potential for disagreements and legal battles grows.
- The cross-border nature of these assets adds another layer of complexity. With digital transactions transcending geographical boundaries, jurisdictional barriers often come into play, making it challenging to determine which legal system should address a dispute.
- This rise in crypto disputes underscores the need for a global framework or set of guidelines that can provide clarity and direction. As digital currencies become more mainstream, it's crucial for legal systems worldwide to be prepared to handle the unique challenges they present.
Preserving Digital Assets in Legal Battles
- One of the significant challenges highlighted by the Kirshenberg case is the preservation of digital assets during litigation.
- While the court in this case granted a preservation order for a specific amount of cryptocurrency, it declined to provide a worldwide injunction. This decision raises questions about how courts can effectively ensure the protection of digital assets, especially when they can be easily transferred or dissipated.
See: The Federal Reserve Issues State Member Bank Guidance for ‘Dollar Tokens’ (Dollar-pegged Stablecoins)
- The nature of cryptocurrencies – their decentralization, anonymity, and ease of transfer – makes them inherently challenging to regulate and preserve. This case serves as a reminder of the need for innovative legal solutions that can address the unique characteristics of digital currencies.
Are Traditional Courts Prepared for the Age of Crypto?
- The decisions made by the Ontario Superior Court of Justice in the Kirshenberg v. Schneider case bring to the forefront the role of traditional courts in crypto disputes. Are our existing legal systems equipped to handle the nuances of digital currency litigation? The case suggests that there might be gaps in the current approach.
- The court's reluctance to grant a worldwide injunction, despite the evident risks associated with the dissipation of crypto-assets, indicates a potential need for courts to evolve and adapt. As the world becomes more digitized, legal systems must be prepared to address disputes in the digital realm effectively.
Conclusion
- The Kirshenberg v. Schneider case offers valuable insights into the world of crypto litigation. As digital currencies continue to gain prominence, it's clear that our legal systems must evolve to address the unique challenges they present. By understanding and learning from cases like this, we can pave the way for a more inclusive and effective legal framework for the digital age.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The Transformative Impact of Instant Payments on Financial Crime Mitigation
Payments | Jul 30 2023
Image: Unsplash/Blake Wisz
The advent of instant payments is revolutionizing the financial landscape, acting as a catalyst for speed and innovation in financial crime mitigation.
This article explores the insights shared by Adam Gable, Product Director of Financial Crime, Treasury, and Risk at Temenos, and Hani Hagras, Chief Science Officer at Temenos, during the Temenos Community Forum in Vienna.
Instant payments demand real-time processing
- This necessitates swift and precise security checks to prevent financial crime. Any inefficiency in this process can lead to interruptions in customer experience, loss of customer goodwill, and potential damage to brand reputation. For instance, a security check that ends up in a queue for manual review or inaccurate checks that lead to customer fraud can have serious repercussions.
- Impact for banks:
- Banks must ensure robust security protocols are in place.
- Gable emphasizes that as checks are conducted, some will invariably require investigation. This time-consuming process can negatively impact customer experience.
- There is a cost factor for banks transitioning to instant payments. They need to proactively consider the systems and processes required for this shift and others payment trends driving the future.
See: Future of Neobanking: Exploring the Landscape of AI-Powered Digital Banks
- Artificial Intelligence (AI) plays a pivotal role in mitigating crime in instant transactions.
- Hagras explains that AI can leverage automation to provide a seamless user experience, coupled with a solid audit trail, making it easier for banks to scale up.
- AI can combat financial crime through sanctions screening and anti-money laundering processes. It can automatically detect fraud while allowing false positives to be processed without interrupting the customer experience.
- AI is responsible for generating models that comply with various regulatory requirements, enabling banks and financial institutions to use AI with trust.
- The key is to use explainable AI, where generated models are easily understood, analyzed, and audited by business users and authorities.
The battle against fraud is ongoing
- Opaque [AI] box models, which do not sufficiently explain the decision-making processes, are not accepted by many regulators.
- Hagras concludes that explainable AI processes are a key focus for Temenos, and meeting current and future AI 'explainability' regulations will be essential.
See: FedNow Real-Time Payment Service Launches: A Game Changer in the U.S. Financial System
Conclusion
In conclusion, the introduction of instant payments is accelerating innovation in financial crime mitigation. With the right systems, processes, and the use of AI, banks can effectively combat financial crime, ensuring a secure and seamless customer experience.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Binance.US Refutes SEC’s Wash Trading Allegations
News | Jul 24, 2023
Image: Unsplash/Niranjan
Binance.US has vehemently denied allegations of wash trading brought forward by the United States Securities and Exchange Commission (SEC).
- On Jun 5, 2023, the SEC accused Binance entities of violating various securities laws, including allegations of wash trading, a manipulative market practice involving simultaneous buying and selling of the same asset to create an illusion of increased trading activity. The SEC claimed that Sigma Chain, a trading firm owned and controlled by Binance's CEO Changpeng 'CZ' Zhao, was a notable wash trader on the site.
See: Binance Withdraws from Canadian Market due to Tightened Crypto Regulations
- The allegations, which have sent ripples across the crypto industry, are part of a broader concern about market manipulation tactics in the sector.
- In response, Binance.US, the American arm of the crypto exchange, has strongly refuted these allegations. Binance.US Spokeswomen:
"We strongly believe that the SEC's allegations regarding wash trading are entirely unfounded, and based on a fundamental misunderstanding of the facts and a misapplication of the relevant law."
The Impact of Wash Trading on the Crypto Industry
Wash trading has long been a concern in the financial world due to its potential to mislead investors and artificially inflate trading volumes. A recent report revealed that wash trading accounted for over $6 trillion in artificial crypto trading volume in Q1 2020, suggesting that this practice remains a rampant issue in the crypto market.
The report also indicated that more than 70% of trading volume on crypto exchanges was derived from wash trading. If these figures are accurate, it suggests a significant level of market manipulation within the crypto industry, potentially undermining investor trust and market integrity.
The Future of Crypto Regulation
The allegations against Binance and the broader issue of wash trading highlight the need for increased regulation and oversight in the cryptocurrency industry. While blockchain technology's transparent nature and the availability of forensic tools make it increasingly difficult for exchanges to engage in illicit activities, regulators are still grappling with the unique challenges posed by the crypto industry.
Read: Court Rules XRP Sales Not Investment Contracts: How the SEC Case Could Reshape Crypto Landscape
As the crypto industry continues to evolve, it is crucial for exchanges to uphold high standards of market integrity and for regulators to adapt their oversight strategies to ensure a fair and transparent trading environment.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Law Firms Face Dual Threats: AI Data Leaks and Cyberattacks
Insight | Jul 24, 2023
Image: Unsplash/Giammarco Boscaro
In the digital age, law firms are grappling with two significant challenges: inadvertent data leaks through artificial intelligence (AI) tools and an unprecedented surge in cyberattacks.
Don't Feed AI Your Confidential Information (especially your clients)
The legal industry's increasing reliance on AI, such as OpenAI's ChatGPT, has inadvertently led to the exposure of confidential data. Many legal professionals, while appreciating the speed and efficiency of AI in legal research and document drafting, failed to realize that their interactions with these tools could be recalled and used for AI training.
See: AI Driven, Robot Lawyer Project Raises $10.5M Backed by Monzo and Wise Founders
OpenAI introduced an option to disable chat history for ChatGPT on April 25, 2023, to safeguard confidential data. However, many law firms were not aware of this development and continued to unknowingly feed their data to the AI. This situation has been exacerbated by the fact that many law firms have not prohibited the use of AI tools like ChatGPT, thereby increasing the risk of data exposure.
Majority of Law Firms Grappling with Cyberattacks
Simultaneously, law firms are experiencing a surge in cyberattacks, with a record number of data breaches reported in a short span. The UK's National Cyber Security Centre (NCSC) recently revealed that nearly 75% of the UK's top 100 law firms have been impacted by cyberattacks, a trend that is likely mirrored in the U.S.
The aftermath of these breaches has seen a rise in class action lawsuits against law firms. For instance, Bryan Cave Leighton Paisner faced a class action lawsuit following a data breach that compromised the data of over 51,000 current and former employees. The firm was accused of negligence, breach of implied contract, breach of contract, unjust enrichment, and invasion of privacy.
See: Signal Boss Warns The Company Will Leave the UK If Laws Weaken End-to-end Encryption
Robust Cybersecurity Strategy for Law Firms Needed
The combination of AI data leaks and cyberattacks necessitates a more robust cybersecurity strategy for law firms. Despite the escalating threats, a survey by PriceWaterHouseCoopers revealed that the top 1000 law firms spent less than 1% of their fee income on cybersecurity. As the legal industry navigates this complex landscape, it is crucial for law firms to invest more in cybersecurity measures to protect their confidential data and maintain client trust.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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