fraud Archives -
North Carolina’s elections board Thursday ordered a new election in the nation’s last undecided congressional race after the Republican candidate conceded his lead was tainted by evidence of ballot-tampering by political operatives working for him. The State Board of Elections voted 5-0 in favor of a do-over in the mostly…
U.S. presidential candidate John McAfee announced on Tuesday that he has fled the country. According to McAfee’s recent Twitter video he’s “living in exile” on a boat because he’s been charged with felonies handed down by the Internal Revenue Service (IRS).
Crypto Figurehead John McAfee Is on the Run
The former antivirus tycoon and cryptocurrency advocate John McAfee says he’s got problems with the U.S. tax agency the IRS. McAfee recently explained in a video that he was charged for “using cryptocurrencies in criminal acts” by Tennessee court officials. McAfee also detailed that four members of his 2020 presidential campaign have also been charged with “unspecified charges of a felonious nature” and his wife as well. “I have not paid taxes for eight years and I have made no secret of it,” McAfee emphasized while sitting on a rocking boat.
“They want to silence me and I will not allow that,” McAfee continued. “I am running my campaign in exile on this boat for the duration — I will not allow them to imprison me and shut my voice down, which they will do immediately — Why? I am a flight risk. Obviously, I am in flight,” McAfee remarked.
Today, crypto community, we are at war, and I am on the frontlines.
McAfee’s Recent Anti-Taxation Statements May Have Made Him a Target
The infamous cryptocurrency proponent has been known for being brutally honest and makes statements about digital currencies nearly every day. McAfee’s video also refers to prior statements concerning taxation such as the first week of January when he told his 890,000 Twitter followers that he refuses to pay taxes to the government. The candidate also said he was a prime target for the IRS and seemingly dared the agency to come after him by saying “here I am.” McAfee further stated that taxation is illegal and he’s “paid tens of millions already and received jack shit in services.”
“I’m done making money and I live off of cash from McAfee Incorporated — My net income is negative,” McAfee detailed.
The tweet storm continued:
I’m challenging the agency responsible for fueling our Government’s madness — the IRS. The IRS will not sit idly by. I know this. But I have prepared my entire life for this battle.
In the video published on Jan. 22, McAfee said he will continue to be on the run on his boat and he plans to release campaign videos every day while in exile. He says as long as he’s on the run he cannot be officially charged by the tax agency. In another tweet that followed the first announcement, McAfee explained his situation a touch further and said: “Today a grand jury was convened by the IRS to indict Janice and myself and four various unnamed campaign workers for various tax fraud issues.” McAfee again told his fans that digital currencies and specifically privacy-enhanced coins will circumvent the state.
“Every so often and very rarely a clash of old and new cultures brought about by technology changes civilization,” McAfee concluded. “Cryptocurrencies is one of these technologies and probably the most dramatic to have occurred in human history since the invention of fire — Because cryptocurrencies free the individual from the yoke of currency controlled by governments.”
Governments will not be able to collect taxes when everyone is using privacy coins.
It seems from prior statements and photos on Twitter earlier this week that McAfee may be on his way to Venezuela. However, McAfee will not reveal his geographic location and intends on staying on the boat for “two years.” The businessman believes he can obtain enough fuel and has the fishing skills to stick it out for quite some time on the run.
What do you think about John McAfee claiming to be in exile on a boat due to unpaid taxes? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, and Twitter.
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A Georgia Republican gubernatorial candidate who campaigned in a “deportation bus” has pleaded not guilty to fraud charges, the AP reports. Ex-state Sen. Michael Williams was indicted last month in Hall County northeast of Atlanta on charges of insurance fraud and lying to investigators. The Atlanta Journal-Constitution reports Williams requested…
Gift cards remain among the top gifts each holiday season — 56% of consumers said they planned to give them this year, according to a National Retail Federation survey — making them excellent (and frequent) targets for fraudsters. Here’s what card givers and recipients need to do to protect their…
Officials at South Korea’s largest cryptocurrency exchange, Upbit, have been indicted for fraud. They allegedly made bogus crypto orders worth approximately $ 226 billion and sold 11,550 BTC to around 26,000 investors. Upbit has denied the charges and insisted that it did not commit fraud, engage in wash trades, or trade cryptocurrencies it did not own.
Three officials at South Korea’s largest cryptocurrency exchange, Upbit, have been “indicted for offering fraudulent transactions and swindling money from investors,” Yonhap reported Friday.
According to the Southern Seoul District Prosecutors’ Office, a board chairman, a financial director and a working-level official of the exchange “allegedly opened a fake account around September last year,” the news outlet conveyed. The prosecutors said the officials “made bogus orders worth 254 trillion won (US$ 226.2 billion) over a period of about two months to inflate the currency transactions and lure more customers,” the publication detailed, adding:
While rigging transactions, they actually sold 11,550 bitcoins to around 26,000 customers and pocketed 150 billion won.
Upbit is currently the largest cryptocurrency exchange in the country, with over 50 percent domestic market share. With an adjusted 24-hour trading volume of almost $ 1.1 billion at the time of this writing, the exchange currently ranks as the world’s third-largest crypto exchange, according to Coinmarketcap.
Upbit Denies Allegations
Yonhap also reported that Upbit “strongly denies the allegations.” The investigation into the exchange’s operations started eight months ago.
On Friday, the Kakao-backed exchange released a detailed explanation of what happened. “First of all, we would like to express our deepest regrets for causing much anxiety aroused by the indictment,” the exchange began. “The case is related to some transactions during a three-month period [last year], from Sept. 24 to Dec. 31.” Noting that its exchange was launched on Oct. 24, Upbit explained that all transactions in question were from “when our company was preparing for and had just launched Upbit service. All transactions which took place in Upbit after that period are not related to the case.” The exchange wrote:
Upbit did not commit wash trading (cross trading), imaginary orders (provision of liquidity), or fraudulent trading. The company did not trade cryptocurrencies which it didn’t own, or have its staff and employees benefit from such trading.
Upbit continued to explain that “Liquidity has been provided through a corporate account, and no one was swindled out of benefits or engaged in fake trading during the process.” Upbit, however, admitted that “For about two months after launching the service, some cross trading took place for marketing purposes.” Nonetheless, the exchange claims that “such trading had no influence on the market price, and the volume of such trading took up about 3% of the total trade volume at that time.”
The exchange also noted that its auditor has confirmed three times — on Jan. 19, June 28, and Oct. 8 — that its combined cash and cryptocurrency balance exceeds the amount owed to customers. “As of Oct. 8 when the most recent audit took place, Upbit held about 103% of the cryptocurrencies payable to customers. Also, Upbit’s bank balance is 165% of the cash payable to customers,” claimed the company’s statement released on Friday.
Do you think Upbit is guilty? Let us know in the comments section below.
Images courtesy of Shutterstock and Upbit.
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The Satoshi Revolution: A Revolution of Rising Expectations
Section 5: Saving the World Through Anarchism
Chapter 11, Part 8
Avoiding Fraud By Going Crypto-Anarchist
A transfer on the blockchain is a simplistic peer-to-peer contract, which memorializes the terms for those involved and is seen to be valid by the surrounding community through transparency. It is a voluntary exchange. The blockchain is also an instrument of enforcement that embodies the terms of execution, such as irreversibility, to which both parties have agreed; their agreement is expressed through the willingness to use the blockchain. Thus the blockchain expresses both requirements of libertarian law; it facilitates voluntary interaction and it acts as an instrument of enforcement.
–Wendy McElroy, “Don’t Smash the State, Bypass the State”
The late Samuel E. Konkin III (SEK3), the father of agorism and an old drinking buddy of mine, used to answer his telephone with the salutation “Smash the State.” And, yet, his lifestyle did not include direct confrontations with authority. Whenever possible, SEK3 avoided or replaced the state in his daily life, because he knew that the most effective way to smash the state was to render it irrelevant. His lasting legacy to anarchist theory: Agorism is a peaceful revolution that is achieved by counter-economics, which SEK3 defined as “the study or practice of all peaceful human action which is forbidden by the State.” Counter-economics is a black market version of Ludwig von Mises’s praxeology—the study of human action that flaunts the state.
SEK3 would have reveled in the audacity of cryptocurrency, which both avoids and replaces state fiat because being a better currency is the surest way to destroy fiat. He would have declared crypto to be the “counter-economic currency”–the currency of agorism. But more than this. In a flash, SEK3 would have recognized crypto’s implications for justice, because it also avoids and replaces state law as the default position for contracts. The default position becomes the free market or agorism. I can see SEK3 take a swig of black beer and a drag on his constantly present pipe, before announcing that anarchy had arrived.
The message of anarchism never should have been “smash the state” or “convince everyone to become an anarchist.” Those are impossible ends. The message should be “free yourself” by decentralizing the power expressed by every decision into your own hands. To the extent you can act as though the state does not exist, it does not.
The Basis of a Free Society
The contract is the basis of anarchist law because it is tangible evidence of the consent of individuals, upon which a free society rests. That’s why it is essential to decentralize contracts under the direct control of participants. The blockchain is a self-executing transfer, with immutable and transparent terms that are dictated by the users rather than by the jurisdiction of a state; it can become a self-executing agreement through the addition of a smart contract. (Note: smart contracts are still a developing technology, but proof of principle is definitely there.) The blockchain is its own defense against fraud and theft, largely because it bypasses trusted third parties, who are the overwhelming causes of corruption.
A Brookings Institute article asks, “Can Cryptocurrencies and Blockchain help Fight Corruption?” Pointing to accountability and transparency, it presents a practical example of how the blockchain prevents fraud. “If a government decides to construct a road, it can now track how each dollar is being spent, identify all the users of the funds, and ensure that only those authorized to spend money do so on originally intended expenses within the permitted time. Fraud and corruption investigations that now take on average 15 months could be performed at the touch of a button and at a fraction of the cost.”
The blockchain is part of a growing push to minimize the need for lawyers and courtrooms. An article in Futurism, entitled “An AI Law Firm Wants to Automate the Entire Legal World,” explains another aspect of the trend—an automated service called LawGeex. “On LawGeex, users upload a contract and, within a short period of time (an hour on average), they receive a report that states which clauses don’t meet common legal standards. The report also details any vital clauses that could be missing, and where existing clauses might require revision. All of this is calculated by algorithms.” For a modest fee, algorithms can detect clauses that enable fraud or provide inadequate protection. It can vet smart contracts before they are coded.
The Lingering Reality of Fraud
Fraud is like violence. Both will always be present because some people will always choose them as options. As with violence, the goal in countering fraud is not to eliminate it, because that is Utopian. The goal is to drastically reduce it and keep it away from your life.
What is fraud? It is not merely “dishonesty”–a word that is sometimes used as a synonym. Nor is it a breach of contract, which can occur between well-meaning people who then usually come to a settlement. In an anarchist framework, aggression is defined as the usurpation of property—whether it is a person’s body or goods—without the owner’s consent. In crypto, the aggression is committed against goods or wealth. If it is taken through violence, such as in a mugging or a burglary, then it is straightforward theft. If it is taken through deception or stealth, then it is the type of theft called fraud. In fraud facilitated by a contract, there may be a bogus exchange of value; a person is assured that an expensive watch is a Rolex, for example, when it is a cheap knock-off. Or the exchange may happen on falsely-stated terms; the genuine Rolex is stolen property to which the seller has no title. The seller lies; the buyer believes; the contract of sale—explicit or implicit–is invalid because the values or terms were not agreed upon by both parties.
Before discussing fraud in crypto, it is important to note that the phenomenon may not be as common as many assume. The Australian Competition & Consumer Commission released a report on the level and types of scams that happened in 2017. Crypto-related fraud constituted 0.6% of the total. Each instance seems to draw media attention, however, because powerful forces use the accusation of fraud to call for regulation. Or, as a headline at Panda Security recently stated, “Cryptocurrency fraud is the exception, not the rule.”
I also know that for every scam, there are countless examples of cryptocurrency and blockchain technology being used responsibly to create opportunities, grow economies, and do good in the world. We need to remember that cryptocurrency fraud is the exception, not the rule.
The attention to fraud is warranted, but the conclusion of a need for state involvement is not. Inviting in the state—the greatest trusted third party scam in existence—is dangerous folly. Instead, people need to focus on the correcting the unsafe user practices that are revealed by every scam. They should stop opening their wallets and crypto to thieves, statist or private.
Consider the 2017 “mybtgwallet.com” scam. The website claimed to be an online web wallet for Bitcoin Gold, which was considered to be legitimate. Mybtgwallet.com offered users free Bitcoin Gold wallets through which they could check their balances, and use the website for one day for free transactions. The scam link was lent credibility by appearing briefly on the official Bitcoin Gold site—an act of incredible carelessness on the site’s part, to say the least. To take mybtgwallet.com up on its offer, users had to submit their private keys or recovery seeds. Of course, after they did so, the crypto in their wallets was forwarded to other addresses.
No one should have fallen for this scam but even some crypto veterans did. Coindesk reported that “more than $ 3.3 million has been stolen as part of an elaborate scam that took advantage of bitcoin users seeking to claim their share of the newly created cryptocurrency bitcoin gold. At least $ 30,000 in ethereum,$ 72,000 in litecoin, $ 107,000 in bitcoin gold and more than $ 3 million in bitcoin were confiscated.”
What are the lessons of the mybtgwallet.com debacle?
- Always assume a strange site might be trying to steal crypto. Extend trust only after due diligence.
- Due diligence or not, never trust anyone with private keys or recovery seeds. This is equivalent to disclosing the combination of a safe or handing over title to your wealth. The keys and recovery seeds are the proof and control of ownership.
- Immediately distrust anyone who asks for keys or recovery seeds.
- Never enter your keys or seeds anywhere that is vulnerable to being copied or stored.
- Always keep a paper version of both in a secure place.
- In essence, maintain privacy. Thieves require personal data in order to loot.
If the preceding lessons are repetitive, it is because they bear repetition. Remember: when crypto leaves your wallet, it is gone forever. That should at least be the assumption. The transaction cannot be reversed, and there is no insurance company to make you whole (although the crypto community should sell this service). As it is, victims rarely receive back even cents on the dollar, as the Mt. Gox victims did after years and years of strenuous effort.
The Biggest Message of mybtgwallet.com
Avoid trusted third parties, however convenient or alluring they may seem. They are the major point of vulnerability for fraud and other theft.
Third parties may be necessary for some purposes, such as converting between cryptos. If so, use exchanges or other services that require as little trust as possible. Many decentralized exchanges do not require keys or personal information beyond the absolute minimum of an email address and user name; prefer them over centralized exchanges that strip away all privacy. In your account, keep the least amount of crypto possible for as short a period as necessary to accomplish your goal.
The trusted third party to avoid the most is the state. Unfortunately, when massive fraud occurs, even people who should assume some responsibility for the theft call, instead, for government regulation. There is an irony here. One reason fraud happens is because of the statist mindset with which people approach investing and all things monetary. They are accustomed to guarantees of safety from the state, and many believe the guarantees are real. Fiat money is backed by the state and, by law, it must be accepted as payment. Bank deposits are insured; in the U.S., the Federal Deposit Insurance Corporation insures up to $ 250,000. Law enforcement operates fraud divisions that record reports of theft. In short, the state makes people feel safer than they should, and they neglect the due diligence that is the responsibility of every individual. Protecting your property is part of self-defense. The world’s most fraudulent trusted third party—the state–is not a remedy. It is not a reason to relinquish self-defense. It is a reason to learn how to be comfortable and skilled in exercising it.
[To be continued next week.]
Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters
Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.
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Michael Lynch, a British entrepreneur and former chief executive of Autonomy Corp., was criminally charged with fraud by the United States tied to the British software maker’s 2011 acquisition by Hewlett-Packard Co.
Prosecutors had long identified Lynch, 53, as a co-conspirator with his chief financial…
Boxing superstar Floyd Mayweather and rap producer DJ Khaled face a legal battle for serving as celebrity endorsers to an initial coin offering (ICO) accused of fraud. The founders of the allegedly fraudulent ICO were arrested by American criminal authorities back in April.
ICO Promotion Blowback
Celebrity gossip tabloid TMZ reports that Floyd Mayweather and DJ Khaled have been slapped with a lawsuit from investors who accuse them of participating in a multi-million dollar scam. The lawsuit revolves around the Centra Tech ICO that raised more than $ 32 million from thousands of investors last year, supposedly to build a suite of financial products including a cryptocurrency-backed debit card supported by Visa and Mastercard.
According to the class action lawsuit, Floyd and Khaled were influential in promoting the virtual currency on social media. The investors are targeting the celebrity endorsers, in addition to the company’s founders, with the aim of recouping their lost money plus damages. They complain that the value of the token crashed by over 98%, from about $ 1 per CTR in February to bellow $ 0.02 per token in April.
In early April we reported that the Securities and Exchange Commission (SEC) charged two co-founders of Centra Tech with orchestrating a fraud and criminal authorities arrested them both. Robert Farkas and Sohrah Sharma are alleged to have “masterminded a fraudulent ICO in which Centra offered and sold unregistered investments through a CTR Token.” The two are accused of lying about the relationships with Visa and Mastercard, creating fake biographies, and publishing false or misleading marketing materials to Centra’s website.
Later in April, the SEC charged a third co-founder, Raymond Trapani, with violating the anti-fraud and registration provisions of U.S. federal securities laws. The SEC released text messages between Farkas, Trapani and Sharma showing that, in response to a cease-and-desist letter from a bank demanding that Centra remove all references to it from their marketing materials, Sharma said “We gotta get that shit removed everywhere and blame freelancers lol.”
Should celebrity ICO endorsers be held to account for supporting these projects? Share your thoughts in the comments section below.
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An embattled Democratic mayor from Massachusetts who was arrested last week on suspicion of fraud and tax cheat charges is refusing to step down, calling his arrest “politically motivated” hours before city councilors pushed back a debate on how to handle the matter.
President Trump, a self-made man? Not according to a New York Times report that he received at least $ 413 million in today’s dollars from father Fred Trump’s business empire, often by dodging taxes in the 1990s—and sometimes by committing flat-out fraud. Trump has long said his dad only lent…