The International Organization of Securities Commissions (IOSCO) has 
Swiss Re says industry needs a different approach to cyber risk underwriting and reiterates calls for cyber insurance-linked securities (ILS) marketplace.
Alameda Research used prior knowledge of tokens that were scheduled to be listed on FTX to buy them ahead of the public announcements and then sold them for a profit, according to an analysis from crypto compliance firm Argus.
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
Big 6 Banks’ say ‘Hole in Financial System’ | Role in Freeland’s Convoy Plan
Canada Today | | Nov 25, 2022
Image: Pexels/Mohamed Almari
When Deputy Prime Minister Chrystia Freeland called the chief executive officers of Canada’s Big Six banks on Sunday in February before their government invoked the Emergencies Act, the CEOs stressed that the resources at their disposal were to support that to choke off the money pouring in from the convoy protests were limited.
- Accounts of at least three calls Ms Freeland made with bank CEOs over an eight-day period are contained in summaries dubbed “readouts” and in Ms Freeland’s handwritten notes from the meetings, which took place Thursday at the Investigating the Use of the Emergency Law.
- At that moment, banks needed court orders to freeze funds, CEOs said, which are slow to grant. To give banks the ability to freeze funds faster, the government needed to sanction protesters under the same financial crime laws it applies to terrorists, three [bank] CEOs said. They also called on the government to close loopholes in systems to monitor transactions by bringing a wider range of payment providers under stricter regulations.
- Ms Freeland’s first assignment was an attempt to involve the banks in ending the convoy protests and get the bankers’ help in assessing the severity of the damage to Canada’s economy. Subsequent calls focused on working out the complex mechanisms to stop the flow of money to the protesters.
- What the CEOs weren’t told on the first call on February 13 was that the government was preparing to use the emergency law to expand banks’ powers to freeze accounts.
See: NCFA Response to FINTRAC’s ‘Knee Jerk’ Regulations Requiring Donation Crowdfunding Platforms to Register and Comply with AML/ATF Legislation
- Bank CEOs:
- TD’s Mr. Masrani stressed that “Canada’s reputation is at risk,” and was echoed minutes later by Canadian Imperial Bank of Commerce CEO Victor Dodig
- BMO’s Mr White reportedly called the blockades “a national crisis”, urged Ms Freeland to “act immediately” and quoted a US investor who told him: “I will not invest another red cent in your banana republic in Canada”
- Banks urge government: Prior to the Feb. 13 conference call, TD TD-T, CIBC CM-T and Bank of Nova Scotia BNS-T had privately encouraged the government to bring non-bank payment providers “more clearly” under existing anti-money laundering laws.
- That day, Mr Masrani told Ms Freeland the “big hole” in the system was those payment providers, including crowdfunding platforms, and CIBC’s Mr Dodig was also pushing for measures that would cover “the entire financial system,” according to an ad. Another CEO added, “Let’s be clear, they will all eventually move to crypto.”
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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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Adapting IOSCO Principles to Digital Assets Markets
IOSCO | Nov 2, 2022
The International Organization of Securities Commissions (IOSCO) has published a speech by Tuang Lee, Chair of IOSCO Fintech Task Force, on applying and adapting IOSCO principles to digital asset markets.
- Digital assets: These refer to anything of value whose ownership is represented in a digital or computerised form, through a process called tokenisation. Broadly speaking, digital assets can refer to anything, including real assets like artwork and property, but today our primary focus is on crypto-assets and DeFi.
- International scrutiny: On a global level, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) are calling for more regulation of this sector. The FSB recently published, on 11 October 2022, two consultation papers on the international regulation, supervision and oversight of crypto-assets activities and markets – from a financial stability perspective.
See: Global Securities Wathdog IOSCO to Target Crypto Platforms
- IOSCO Fintech task force: As the global standard setter for the international capital markets, IOSCO sets the core Objectives and Principles,1 along with supporting recommendations and guidance, on how to regulate capital markets activities and associated risks (together, IOSCO’s principles). Our members adopt these principles, distilling them into detailed regulations domestically.
- IOSCO has the mandate and a clear roadmap to explore investor protection and market integrity issues in financial markets.
- We have established two workstreams under our roadmap. The first on “Crypto and Digital Assets” is led by the UK Financial Conduct Authority (UK FCA). The second, covering “DeFi Products and Services” is led by the US Securities and Exchange Commission (US SEC).
- Examples of key risks:
- We are seeing many instances of market manipulation, wash trading and insider trading. For instance, a platform employee may be aware of the potential listing of a certain coin and may use the information to invest in the coin and make a quick profit.
- Another key risk concerns conflicts of interest. Conflicts of interest are particularly egregious in the context of crypto-asset service providers. Many of these so-called exchanges perform multiple roles that give rise to conflicts of interest. For example, trading platforms often provide brokerage services, custody and proprietary trading under a single roof – they also engage in the issuance of tokens, lending activities and complex re-hypothecation arrangements with client assets.
See: CPMI and IOSCO publish final guidance for stablecoins
- Like my last example on insider trading, there are existing IOSCO principles that already apply. The challenge is in determining the right level of guidance to provide. For instance, whether platforms should continue to be able to perform their own proprietary trading. Some jurisdictions have already proposed to disallow this. In addition, should platforms be allowed to list tokens which they have active interest in, and if so, what they need to disclose to users of their platforms?
Download a PDF copy of the Speech --> here
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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DOJ Arrests Two Estonians in $575 Million Crypto Money Laundering Scheme
DOJ | Release | Nov 21, 2022
Image: Pexels/Kindel Media
Two Estonian citizens were arrested in Tallinn, Estonia, yesterday on an 18-count indictment for their alleged involvement in a $575 million cryptocurrency fraud and money laundering conspiracy.
- According to court documents, Sergei Potapenko and Ivan Turõgin, both 37, allegedly defrauded hundreds of thousands of victims through a multi-faceted scheme. They induced victims to enter into fraudulent equipment rental contracts with the defendants’ cryptocurrency mining service called HashFlare. They also caused victims to invest in a virtual currency bank called Polybius Bank. In reality, Polybius was never actually a bank, and never paid out the promised dividends.
- Victims paid more than $575 million to Potapenko and Turõgin’s companies. Potapenko and Turõgin then used shell companies to launder the fraud proceeds and to purchase real estate and luxury cars.
See: Digital Asset Classification vs Wire Fraud: What’s the Most Powerful Law in Crypto Right Now
U.S. Attorney Nick Brown for the Western District of Washington:
The size and scope of the alleged scheme is truly astounding. These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme. They lured investors with false representations and then paid early investors off with money from those who invested later. They tried to hide their ill-gotten gain in Estonian properties, luxury cars, and bank accounts and virtual currency wallets around the world. U.S. and Estonian authorities are working to seize and restrain these assets and take the profit out of these crimes.
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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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FTX Fallout: Stephen Curry and Tom Brady Reportedly Under Investigation in Texas
Sports Illustrated | Madeline Coleman | Nov 22, 2022
Image: Unsplash/Mediamodifier
The Texas State Securities Board has reportedly expanded its investigation into cryptocurrency platform FTX’s operations and its subsequent bankruptcy to now include scrutinizing promotions by celebrities like Tom Brady and Stephen Curry.
- Bloomberg News first reported the development in the investigation, which is looking at possible securities-law violations. The Texas Tribune has confirmed it.
- This comes after news broke of a class-action lawsuit being filed last week that also names Curry and Brady, among a slew of other celebrities as well as the Warriors. It was filed in Florida and also names the platform’s former CEO, Sam Bankman-Fried.
See: CB Insights: FTX ‘Bagholders’ — Investments and M&A Portfolio Map
“Anyone who renders investment advice in Texas typically needs to be registered and they typically have to truthfully disclose all known material facts,” said Joe Rotunda, director of enforcement at the Texas State Securities Board, to the Tribune. “In Texas, there is not a different system of justice or regulation for people who are celebrities.”
CBC News | Nov 22, 2022
FTX bought Bahamas properties worth $300M US, some in name of Bankman-Fried's parents
Image: Reteurs/Koh Gui Qing
- The collapse of FTX, one of the world's largest crypto currency exchanges, has left an estimated one million creditors facing losses totalling billions of dollars.
- Reuters earlier reported that Bankman-Fried's FTX, his parents and senior executives of the failed cryptocurrency exchange bought at least 19 properties worth nearly $121 million in the Bahamas over the past two years, official property records show.
- Old fort property shows founder's parents, who are Stanford law professors, as signatories
- "Since before the bankruptcy proceedings, Mr. Bankman and Ms. Fried have been seeking to return the deed to the company and are awaiting further instructions," the spokesperson said, declining to elaborate.
Continue to the full article --> here
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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Global Reinsurance Giant Calls for More Innovation, Capital, and an Insurance-Linked Securities (ILS) Marketplace
Artemis | Steve Evans | Nov 7, 2022
Swiss Re says industry needs a different approach to cyber risk underwriting and reiterates calls for cyber insurance-linked securities (ILS) marketplace.
- Problem: cyber risk models remain in their infancy and is holding back the ability of underwriters on cyber insurance and reinsurance, leading to a market that isn’t functioning as well as it could. Inability to quantify exposures accurately is a hindrance to the further development of the cyber insurance market and is a key factor holding back capacity from entering the sector as well.
See: How Reworded Insurance Can Help Your Business
- Enhancing insurability of cyber risks: Industry needs to evolve the cyber insurance product into something that capital is attracted to, so new capacity can enter the space and support this market’s growth. Three areas of key focus are:
- increasing contract consistency and clarity;
- using standardised data and better modelling; and
- identifying new sources of capital.
- Global cyber insurance premiums were around US $10 billion in 2021, while Swiss Re Institute forecasts 20% annual growth to 2025, with total premiums rising to US $23 billion by that time. This is still a small market compared to its potential, as estimates of annual global cyber losses are as high as US $945 billion, which Swiss Re suggests means that roughly 90% of the risk remains uninsured.
- Why? due to insurability limitations, because of the potential for catastrophic but not well-understood events to occur, the concerns over accumulation risk, the lack of robust modelling and insufficient data being available.
- “There is latent interest in growing alternative capital solutions for cyber risks to support a sustainable cyber market. To date, however, ILS investor interest has been limited, with aggregation risk and model uncertainty acting as main deterrents,” Swiss Re notes.
See: Insurance Industry Sitting on Treasure Trove of Big Data, As Regulators Wrestle Data Privacy
Jérôme Haegeli, Swiss Re Group Chief Economist:
As cyberattacks have increased, so has awareness of the risk – and with it, demand for cyber insurance is growing. However, due to the high degree of uncertainty regarding expected losses and the evolving nature of the risk, its insurability is limited. This in turn restrains market capacity, leading to a protection gap of around 90%.
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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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Was SBF’s Alameda Research Frontrunning Token Listings on FTX?
Decrypt | Stacy Elliott | Nov 14, 2022
Alameda Research used prior knowledge of tokens that were scheduled to be listed on FTX to buy them ahead of the public announcements and then sold them for a profit, according to an analysis from crypto compliance firm Argus.
- Between the start of 2021 and March of this year, Alameda held $60 million worth of 18 different tokens that were eventually listed on FTX. The analysis was first mentioned in a report on Monday from The Wall Street Journal.
- Argus co-founder Omar Amjad, told the WSJ. “It’s quite clear there’s something in the market telling them they should be buying things that they previously hadn’t.”
See: SBF Resigns and FTX Files for Bankruptcy
- FTX/SBF-Alameda Relationship: Alameda Research is a quantitative trading firm founded by Sam Bankman-Fried in 2017. He went on to found FTX, the now-bankrupt crypto exchange, in 2019 and then stepped away from day-to-day operations at Alameda in 2021.
- Bankman-Fried maintained that the two companies were separate entities, but the bank run that forced FTX's hand on suspending withdrawals last week, and ultimately filing for bankruptcy, stemmed from the fact that a large portion of Alameda's balance sheet was comprised of FTT, the FTX exchange token.
- It’s a pattern that’s shown up at other crypto firms, like NFT marketplace OpenSea and publicly traded crypto exchange Coinbase. Law enforcement hasn’t taken kindly to it.
Continue to the full article --> here
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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Opinion: The Financial Surveillance System May Be Less a Tool for Crime Prevention than a Means of Bureaucratic Ass Covering
Coindesk | David Z. Morris | Aug 31, 2022
Image: Unsplash/Christine Roy
Do anti-money laundering rules actually stop crime, and is it worth the costs to privacy and fairness?
- If a tree falls in the forest does anybody care?: In September 2020, a leaked set of documents from the U.S. Treasury’s Financial Crimes Enforcement Network, or FinCEN, showed a disturbing pattern of lax enforcement. When banks reported suspected money laundering to the very agency tasked with monitoring ill-gotten criminal funds, quite often, the authorities did nothing about it at all. This was at least a threefold failure:
- First and most obviously, transactions flagged by banks in Suspicious Activity Reports (SARs) to FinCEN weren’t actually being stopped.
- Second, filing the reports shielded the banks themselves from legal liability, allowing them to continue facilitating criminal transactions (and collecting fees on them).
- Third, it compromised the privacy and security of banking customers who had done nothing wrong.
See: Cullen Commission Money Laundering Report Estimates Billions Laundered in B.C. Every Year
- This buck-passing led to absurdities like HSBC (HSBC) moving money for the already-sanctioned WCM777 Ponzi scheme, and Standard Chartered (SCBFF) and Deutsche Bank (DB) indirectly facilitating transactions for the Taliban, all while reporting the transactions as clearly suspicious.
- As Buzzfeed concluded at the time, it seemed that “laws that were meant to stop financial crime have instead allowed it to flourish.”
- 'Ass covering' system ain't cheap: “A pretty sound estimate is that the financial surveillance regime we’ve got costs tens of billions of dollars annually globally. And it might be in the high tens of billions,” says Jim Harper, a privacy advocate and senior fellow at the American Enterprise Institute, a libertarian-leaning think tank. With that budget, banks were pretending to monitor suspicious financial transactions, and enforcement agencies were pretending to control them.
- This bit of Kabuki invaded the privacy of innocent customers and threatened the banking relationships of legitimate businesses, while drug lords and oligarchs continued doing business.
The entire system may be less a tool for crime prevention than a means of bureaucratic ass covering, with a rich dollop of authoritarian surveillance on top.
“It drives up the price of banking across the board,” Jim Harper says. “So the person who feels they can no longer afford a banking account, that’s because of the surveillance that makes it much more expensive.” While AML requirements may not be the only factor, there’s no denying the rising costs and declining services of conventional banking in recent years, which Lisa Servon documented in her excellent 2017 book “The Unbanking of America.”
- Perverse impact: “Regulators think we need to make sure every country has a similar set of standards,” says Collin. “As an economist, I think you want to go after countries that are hosting a lot of illicit finance. And if you look at where the money ends up, it’s countries that actually have good standards.” Specifically, Collin is referring to the United States – now the top global destination for laundered funds.
- But those countries don’t end up on the [FATF] blacklist,” Collin laments. “ Small African countries end up on the list.”
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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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