Jan Marsalek, Wirecard’s C.O.O., who embezzled tens of millions of dollars from the company, rented a secret mansion near the Russian consulate in Munich, where he held meetings with spies and government officials.Illustrations by Harol Bustos
The tech company Wirecard was embraced by the German élite. But a reporter discovered that behind the façade of innovation were lies and links to Russian intelligence.
Late in the spring of 2020, Jan Marsalek, an Austrian bank executive, was a widely admired figure in the European business community—charismatic, trilingual, and well travelled. Even at his busiest, as the chief operating officer of Wirecard, Germany’s fastest-growing financial-technology company, he would assure subordinates who sought a minute of his time that he had one, just for them. “For you, always,” he used to say. But he would say that to almost everyone.
Marsalek’s identity was inextricable from that of the company, a global payment processor that was headquartered outside Munich and had a banking license. He had joined in 2000, on his twentieth birthday, when it was a startup. He had no formal qualifications or work experience, but he showed an inexhaustible devotion to Wirecard’s growth.
The company eventually earned the confidence of Germany’s political and financial élite, who considered it Europe’s answer to PayPal. When Wirecard wanted to acquire a Chinese company, Chancellor Angela Merkel personally took up the matter with President Xi Jinping.
Then, on June 18, 2020, Wirecard announced that nearly two billion euros was missing from the company’s accounts. The sum amounted to all the profits that Wirecard had ever reported as a public company. There were only two possibilities: the money had been stolen, or it had never existed.
The Wirecard board placed Marsalek on temporary leave. The missing funds had supposedly been parked in two banks in the Philippines, and Wirecard’s Asia operations were under Marsalek’s purview. Before leaving the office that day, he told people that he was going to Manila, to track down the money.
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
The head of the messaging app Signal has warned that it will quit the UK if the forthcoming online safety bill weakens end-to-end encryption.
Asked by the BBC if the bill could jeopardise Signal’s ability to operate in the UK, Meredith Whittaker said: “It could, and we would absolutely 100% walk rather than ever undermine the trust that people place in us to provide a truly private means of communication. We have never weakened our privacy promises, and we never would.” Whittaker:
it was “magical thinking” to believe we can have privacy “but only for the good guys”, adding that the bill was an example of this thinking. She said: “Encryption is either protecting everyone or it is broken for everyone.”
Also criticised a system called client-side scanning, where images are scanned before being encrypted. In 2021 Apple was forced to pause its client-side scanning plans, which would have involved the company scanning user photos before they are uploaded to its image-sharing service.
Whittaker said such a system would turn everyone’s phone into a “mass surveillance device that phones home to tech corporations and governments and private entities”. She added that technological “back doors” into encrypted services could be hijacked by “malignant state actors” and “create a way for criminals to access these systems”.
The bill has been criticised by privacy campaigners for a provision allowing Ofcom, the communications watchdog, to order a platform to use certain technologies to identify and take down child sexual exploitation and abuse material. It also requires tech firms to make their “best endeavours” to deploy new technology that identifies and removes such content.
Privacy advocates warn the bill could force encrypted messaging services such as Signal, WhatsApp and Apple’s iMessage to monitor users’ messages and create vulnerabilities in their platforms that could be exploited by rogue actors and governments.
On the other hand: A Home Office spokesperson said the online safety bill, which is due to become law this year, does not ban encryption. “The online safety bill does not represent a ban on end-to-end encryption but makes clear that technological changes should not be implemented in a way that diminishes public safety – especially the safety of children online. It is not a choice between privacy or child safety – we can and we must have both.”
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
The Bill makes significant amendments to the national security review regime under the Investment Canada Act(“ICA”), the federal legislation that provides for the federal government's review of foreign investments in Canada on criteria that include “net benefit” to the economy.
The last significant amendment to the ICA was in 2009, when the review thresholds for the acquisition of control of a Canadian business were progressively increased.
The Bill is “country agnostic,” as Minister François-Philippe Champagne called it, even as he readily admits it is the result of changing geopolitical realities (read: security threats from China and Russia by way of cyberattacks, transfer or acquisition of Canadian intellectual property, etc.).
Proposed key amendments to to the bill:
Requirement to notify certain investments prior to their implementation in prescribed business sectors
New powers for the Minister of Innovation, Science and Industry (“Minister”)
Increased penalties for non-compliance with the ICA
New rules for the protection of information during the course of judicial review
Impact to tech industry: There are already concerns that the Bill could stifle foreign capital for technology startups and discourage innovators from setting up shop in Canada. The Bill aligns Canada's national security review process with similar regulatory beef-ups in Australia, United Kingdom and the United States for similar reasons.
With the new requirement to notify certain investments prior to implementation, the worry that the timelines for closing transactions can be further stretched is not without merit. The average time taken for national security reviews currently is 133 days with the possibility to extend. Companies, particularly technology startups that are looking at expedited capital inflows, should plan for these contingencies of time.
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
US financial regulators have charged failed South Korean cryptocurrency boss Do Kwon and his company Terraform Labs with "orchestrating a multi-billion dollar crypto asset securities fraud".
According to the SEC, Mr Kwon and his company raised billions of dollars from investors by selling them "an interconnected suite of crypto asset securities" with many transactions being unregistered.
The SEC also alleged Mr Kwon and Terraform claimed repeatedly that the tokens would increase in value, and misled investors about the stability of TerraUSD.
The Singapore-based firm created the Terra Luna and TerraUSD tokens, which collapsed spectacularly last year estimated to have cost investors more than $40bn (£33.5bn).
The SEC complaint, which included other allegations, did not state where Mr Kwon was located. In December, South Korean authorities, who have issued an arrest warrant for Mr Kwon, said they believed he was in Serbia.
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
Commissioner Paul Rouleau said today the federal government met the "very high" threshold needed to invoke the Emergencies Act last winter, citing "a failure in policing and federalism."
The law defines a national emergency as a situation that "cannot be effectively dealt with under any other law of Canada." Further, a public order emergency can only be invoked when there is "a threat to the security of Canada" as defined by the Canadian Security Intelligence Service Act.
Rouleau: "In my view, there was credible and compelling information supporting a reasonable belief that the definition of a threat to the security of Canada was met," Rouleau wrote in his executive summary, which runs to more than 200 pages. I have concluded that cabinet was reasonably concerned that the situation it was facing was worsening and at risk of becoming dangerous and unmanageable. The Ontario appeal court justice said he reached this conclusion with some reluctance.
"I do not come to this conclusion easily, as I do not consider the factual basis for it to be overwhelming," he said in statements he gave after his report was made public. Reasonable and informed people could reach a different conclusion than the one I have arrived at."
While Rouleau's report largely exonerates Trudeau regarding his decision to invoke the Emergencies Act, the government does not escape criticism.
The Canadian Civil Liberties Association, which had standing during the commission hearings, said it will proceed with its judicial review of the government's decision to invoke the act, which is before the Federal Court.
"It is significant that in his statement today, the factual basis underlying his conclusion was not overwhelming and that reasonable and informed people would come to a different conclusion than the one he did," said lawyer Cara Zwibel
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
Banks are missing basic online and app protections, which are exposing users to a greater risk of fraud, a consumer watchdog has revealed.
Consumer champion Which? and Red Maple Technologies, a security firm, tested the customer-facing security systems of 13 bank account providers at the end of last year. Banks were assessed based on the login, navigation and logout, account management and encryption, across both their online banking and apps.
Virgin Money was the worst performer, scoring just 52% for its online banking and 54% for its app banking. It scored two stars out of five for navigation and logout, as well as account management, for online banking, with the same score for the encryption on its app.
The study found that the bank did not adequately block insecure passwords or remove phone numbers from notifications, while there were also no security checks should you want to pay someone new, change an email address or adapt the details of a payee.
Starling came top for online banking security at 82%, while its app scored 80%. The bank scored the full five stars in almost every category in the Which? study.
It was followed by HSBC, which was the top scorer for online banking security last year. It scored 80% for online banking, while its app was the best in the study with a score of 82%.
Banks must raise their game: banking industry needs to do a better job in boosting its cyber defences against scammers, who it suggested are becoming increasingly sophisticated. It called for further measures like blocking weak passwords and removing sending sensitive data through SMS text messages since they can be intercepted.
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
The recent collapse of the FTX exchange has rocked the cryptocurrency world and those involved in it to its core. Since the world’s third-largest crypto exchange declared itself bankrupt, it has sent a ripple effect across the entire cryptocurrency market.
However, amongst the many people who have suffered due to the FTX scandal are some rather unlikely characters in a dark and mysterious corner of Asia. Yep, we’re talking about North Korea.
Did you know North Korea’s infamous nuclear program has largely been funded by stolen crypto? Well, it is, and many people are now keen to know what effect the collapse of FTX will have upon the notorious dictatorship.
The Democratic People’s Republic of Korea & Cryptocurrency
Largely isolated from the outside world, the Democratic People’s Republic of Korea or simply North Korea, has been under brutal sanctions from the West for decades. Nevertheless, one of the main aims of the DPRK regime is to develop a formidable arsenal of nuclear weaponry.
However, nuclear arsenals aren’t cheap, so the regime has always sought innovative and crafty ways to fund its ambitions. Most recently, the theft of people’s crypto has become a reliable way for North Korea to do so.
Despite its everyday citizens being cut off from the internet, although they have a local intranet system, the regime has a team of elite hackers who are set loose on the internet with the mission to steal as many cryptocurrencies as possible. The bulk of the proceeds of crime goes straight towards funding the country’s nuclear weapons. This has been a tried and tested tactic the DPRK government has used for years.
However, it’s no secret that these are troublesome times for the cryptocurrency market. Not only have cryptocurrency prices dipped drastically in recent months, the collapse of the FTX exchange and a series of other high-profile incidents bringing negative attention to crypto means the stolen crypto vaults of North Korea have been devalued enormously.
Naturally, this means that many government analysts expect North Korea’s nuclear weapons program to cease operations or, at the very least, begin to slow down and lose momentum. But is it true, or is it just wishful thinking?
Inside the World of North Korean Crypto Hackers
Within North Korea, it’s hard to get a solid number of just how many state-sponsored hackers there are due to the intensely secretive nature of the country. However, it’s thought that the country could have anywhere up to 7,000 local hackers who are either based in the DPRK or dispatched abroad with permission from the country’s regime.
Plus, it’s said that the DPRK government are also providing financial backing to a series of international hacking organisations, such as:
Lazarus Group (also known as the Guardian of Peace and Whois Team)
Advanced Persistent Threat 38 (APT38)
North Korea identified the effect of cyber warfare several years ago and invested heavily in its hacking arsenal for over a decade. Although we’re led to believe that the DPRK is technologically inferior, nobody wants a cyber army of this calibre knocking on their virtual door. Put simply, the average crypto owner can’t stop.
For example, just take one of Lazarus’ previous hacking missions that took place in 2016. The infamous hacking group targeted the national bank of Bangladesh to steal over $1 billion. However, due to a type in the computer code that the hackers used, they could only steal $81 million. Nevertheless, it was an exceptionally brutal heist and sowed fear into people worldwide, bolstering the group’s reputation.
Following their notorious 2016 heist, Lazarus began to shift its attention to decentralised currencies. Between January 2017 and September 2018, it’s believed that the group have successfully stolen billions of dollars worth of crypto from various exchanges, such as:
$571 million between January 2017 and September 2018
$316 million from 2019 to November 2020
$840 million in the first five months of 2022 alone
It’s said that the DPRK has successfully pulled off various crypto heists that have bagged the regime more than $1 billion worth of crypto this year alone. A sizeable part of this haul originates from another infamous but lucrative attack pulled off by Lazarus when they launched a targeted attack upon Axie Infinity, an NFT-focused game that saw over $620 million stolen from the online game.
When discussing global governments with a state budget, a couple of billion might not seem a lot. However, this is North Korea. To put all these stolen funds into context, it’s estimated that the DPRK only earned about $142 million from its total trade exports in 2020.
These statistics show that cryptocurrency-related crime is no joke. These days, it’s increasingly vital to opt for a platform with solid security protocols that actively try their best to protect their users. Many experts and only publications advise crypto users to check xBitcoin Capex app to stay ahead of increasingly advanced hacking techniques plaguing the market since this specific platform has proven itself over time.
How Much Has the DPRK Lost in the Current Crypto Market?
Again, due to the secretive nature of North Korea combined with the extremely cloak-and-dagger nature of hacking groups in general, guessing how much crypto has actually been stolen and utilised by the regime in the DPRK is exceptionally difficult, as is finding out how much they have left. However, we can draw upon the experts of various opinions to get a basic idea.
For example, let’s consider what Nick Carlsen said about the situation. A former FBI analyst turned blockchain analyst, Carsten recently stated that he believed the DPRK’s vaults of stolen crypto had suffered dramatically in the currency crypto market and could have lost up to 85% of its total value, leaving the regime with a balance of under $10 million which, naturally, doesn’t go far in the world of nuclear weapons.
Following the dramatic collapse of the FTX exchange, it’s expected that the cryptocurrency stash of North Korea will suffer even more. Recent reports have claimed that the DPRK owned more than $170 million in stolen crypto, which stems from a series of hacking events between 2017 and 2021. In addition, reports also make the interesting claim that the native ETH token of the Ethereum blockchain is the most widely used crypto by the North Korean regime, making up well over 50% of combined crypto thefts carried out by the sanctioned state.
Ethereum and its native ETH is a powerhouse of crypto and is the second largest digital currency according to market cap. However, like almost all other cryptocurrencies, its value dipped dramatically after the collapse of FTX and still remains far from its all-time high.
This means that the regime in Pyongyang will be forced to sit on their stolen crypto and wait for an unpredictable amount of time before it rises once again. When that happens, market analysts will be waiting to try and get an accurate insight into how much crypto the DPRK government has and how much is left.
Why Is the DPRK Stealing So Much Crypto?
From human rights abuses to nuclear missile tests on the doorstep of neighbouring countries like Japan, North Korea has been heavily sanctioned by the West and other Asian countries. However, this hasn’t stopped the regime from conducting an increasing number of missile tests and taunting their many enemies.
The North Korean leader, Kim Jong-un, recently told the country’s state media that his ultimate mission is to develop the most powerful strategic missile force on earth, one that has never been seen before in the 21st century.
Plus, when you combine these intense sanctions from various countries with the severe effect of the COVID-19 pandemic (and subsequent shutdown of the North Korean border), things have been especially difficult for the DPRK to trade with their few friendly states and make money. Naturally, the theft of cryptocurrency and the lucrative rewards it often brings the regime has become one of its few attractive options.
After all, crypto is a largely unregulated industry worldwide, and many governments are currently scrambling to try and regulate it by any means but are struggling to do so. Plus, crypto transactions are faster, don’t require involvement from central banks, and are far more anonymous.
Plus, hacking a crypto exchange is significantly more straightforward than hacking a central bank which is fortified by high-tech security protocols and often requires clients to visit them in person.
Friends in Decentralised Places
And it’s not just theft that the DPRK is utilising to boost their crypto arsenal. The decentralised nature of the country means it is far easier to move it across international borders, whether a state is sanctioned or not. Incredibly, some of the crypto flooding into North Korea comes from very unlikely places.
For example, the arch nemesis of the DPRK, South Korea, has many pro-North Korean supporters living undercover throughout the country. Many of these people use cryptocurrency to discreetly fund the regime in Pyongyang and support the “Juche” ideology, the Marxist-Leninist political idea that dominates the DPRK.
And then there’s even support from North Korea’s second biggest enemy, the United States. Recently, Virgil Griffith, a cryptocurrency expert based in the U.S., was charged with assisting the regime in Pyongyang to dodge U.S. Government sanctions by utilising crypto.
How Will the Current Crypto Market Impact Missile Tests?
So, to sum up this article, it’s a given that the recent price dips across the cryptocurrency markets combined with the collapse of the FTX exchange will have certainly had a dramatically negative impact on the nuclear ambitions of the DPRK regime.
However, the threat is far from over. It’s expected that, despite the current market conditions, the various hackers and hacking techniques the North Korean government employs will continue to thrive and will become more advanced as the regime attempts to expand its methods of drawing income into the sanctioned nation.
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