Cybercriminals reportedly laundered over $8 billion last year, turning to high-tech protocols for illicit activity
Money laundering using cryptocurrencies surged 30% last year against 2020, with at least $8.6 billion in digital tokens lost in various illicit schemes, according to a new report from crypto analysis firm Chainalysis, released on Wednesday. Money laundering is a process in which the source of stolen funds is disguised by transferring it to a legitimate business.
Overall, over $33 billion worth of crypto has been laundered since 2017, the firm estimated. Most of that money was moved through centralized exchanges – however, in 2021, cybercriminals turned to more technologically advanced decentralized finance (DeFi) applications which facilitate crypto-denominated transactions outside of traditional banks – 17% of the total was laundered through DeFi in 2021, up from only 2% in 2020.
Analysts say the surge in money laundering cases did not come as a surprise amid the notable growth of both legitimate and illegal crypto activity in 2021. According to the report, crypto mining pools, high-risk exchanges, and mixers also reported a rise in funds received from wallets tied to criminal activity last year. Mixers, for instance, are used to mix illegally obtained crypto funds with others, which helps hide the funds’ original source.
Analysts noted, however, that the figures they gave for 2021 represent only the funds laundered from “crypto-native” crime, like sales on the darknet or ransomware attacks. Payments there are made in crypto, not exchanged from fiat currencies. However, the real figures involving criminal payments laundered in crypto could be much greater.
“It’s more difficult to measure how much fiat currency derived from off-line crime – traditional drug trafficking, for example – is converted into [crypto] to be laundered. However, we know anecdotally this is happening,” Chainalysis said.
Analysts expect a further rise in crypto crimes this year. According to Kim Grauer, Chainalysis’ director of research, 2022 “is already off to a big start for NFT (non-fungible tokens)” crimes.
Businesses may soon be able to accept contactless payments directly on their iPhones
Apple is working on a new feature that will allow businesses to accept payments on their iPhones without extra hardware, Bloomberg reported on Thursday, citing sources.
Small businesses, like cafes or flower shops, that don’t use traditional payment terminals but use their Apple smartphones as such, currently require external hardware to accept payments, such as Square’s.
This may no longer be the case. Apple has reportedly been working on a new feature that would let its smartphones accept payments with the tap of a credit card since around 2020, when the company acquired a Canadian startup called Mobeewave.
The startup made headlines when it worked with Samsung on a similar feature, called Samsung POS. The system launched worldwide in 2019, allowing Samsung smartphones to accept payments directly from physical cards, digital wallets, and even smartwatches.
Like Samsung POS, Apple’s new feature is likely to use existing technology – the near field communications (NFC) chip, which enables digital wallets like Apple Pay.
If this is the case, the new service will be made available via a mere software update on all iPhone models that have the chip (iPhone 6 and all newer versions).
Bloomberg sources say the feature is coming in a matter of months, perhaps even with the next iOS 15.4 update.
However, there is no information on whether Apple will use its own payment network to service the system or partner with an outside provider.
It was a dismal year for the British auto industry, with the worst production numbers since 1956
Fewer than 860,000 vehicles rolled off British production lines last year, the lowest level in 65 years, as factories slowed down or stopped work due to a severe shortage of semiconductors. Other factors affecting production included widespread staff absences as workers were forced to go into isolation, the Society of Motor Manufacturers and Traders (SMTT) said.
According to the SMTT, total car production was 6.7% lower than in 2020 and 34% below pre-pandemic levels. Covid-19 disruptions triggered a global shortage of semiconductor chips, leading to an even worse 2021, it said. Semiconductors are a vital part of modern cars, with each vehicle typically having between 1,500 and 3,000 chips to operate.
The trade group’s chief executive Mike Hawes described 2021 as “a dismal year,” adding that “there’s no hiding it.” However, he suggested that despite the miserable year there is optimism, largely because of almost £5 billion in planned new investments by the automotive industry, many of them in electric vehicles or technology.
Hawes said the industry had managed to cope with the extra costs of Brexit, but warned that it still faces a growing challenge from a spike in energy costs of up to 70%. According to him, the industry urgently needed “measures to mitigate the escalating energy costs which are threatening viability,” because higher costs “will flow through to prices,” adding to pressure on consumers.
Europe will need to find alternative natural gas supplies to avoid crisis if Russian energy is sanctioned
The US and the European Union are threatening Russia with sweeping sanctions in the event of a military conflict with Ukraine. These could include Russian exports of oil, natural gas, and raw materials. However, experts warn that such measures would backfire on Europe, depriving the continent of Russia’s natural gas supplies and other commodities. With gas prices already sky-high, storages at multiple year-lows, and spring warmth still weeks away, Europeans might have to seek alternative suppliers to heat and light their homes.
What could halt Russian gas supplies to Europe? Washington has threatened Russian businesses, energy companies, and even President Vladimir Putin personally with sanctions if Russia makes an offensive move against its neighbor. The Biden administration has also been pressuring EU partners to block the certification of the newly built Nord Stream 2 gas pipeline, which could have remedied the starving European gas market with its 50 billion cubic meters of gas annually. Moscow has not made any declarations regarding closing the taps on Europe, and major energy exporter Gazprom has been pumping gas in accordance with existing contracts. Russian gas flows have shrunk in recent months, prompting some Western analysts to claim that Russia could use its gas as leverage in response to sanctions.
Would Russia cut off gas supplies to Europe? This is highly unlikely, unless new sanctions target Russia’s ability to get paid for its exports. Europe remains the most profitable market for Russian gas. In 2020, Russia delivered 175 billion cubic meters of gas to the continent, much more than to its second-largest market, Asia-Pacific. Russia would not put its key source of revenue at risk. Gas flows from Russia to Europe were not interrupted even at the height of the Cold War. In fact, historically, energy supplies stopped only once – during Hitler’s invasion of the Soviet Union during WWII. However, supplies could be stopped by Western sanctions themselves – for instance, if Russia is cut off from the SWIFT payment system.
Why is SWIFT so critical? SWIFT is the main global provider of secure payments and bank transfers. Think of it as a credit card for individuals and countries. Without SWIFT, most countries which use the payments network cannot pay for Russian energy supplies, and Russia has no way of receiving the funds. Since we are talking about multibillion-dollar transactions, and containers of cash are out of the question, it is very difficult to find an alternative way to do business. Western banks would have to send money to Russia’s neighbors, and then the funds would have to be transferred to Russia through the Russian payment system SPFS. This would deal a huge blow to the entire global economy and make large transactions with Russia virtually impossible to carry out. However, disconnecting Moscow from SWIFT would not only hurt Russia, but Europe and other countries as well, since it would effectively cut off the West from Russian energy supplies.
How badly does Russia need the European market? Although, as previously noted, Europe is a key source of revenue, the country could survive without it. Russia could find other suitors for its gas in Asia. As of November 2021, shipments through the Russian gas pipeline to China, the Power of Siberia, exceeded 13 billion cubic meters, which is over three times their volume in 2020. Japan and South Korea also purchase significant amounts of Russian liquefied natural gas (LNG) from the Arctic. In the future, India could become a potentially huge market for Russian gas.
Why does Europe need Russian gas supplies? More than half of the EU’s energy needs (61%) are met by imports, according to Europe’s statistics agency. Russia is the main EU supplier of natural gas, accounting for over 46% of gas imports as of the first half of 2021. Most of the gas comes via the Yamal-Europe pipeline, which connects the EU with Russian gas fields through Ukrainian territory. If Russia closes the taps due to sanctions, or if the gas flow is disrupted due to some infrastructure damage resulting from a hypothetical conflict in Ukraine, Europe would lose the bulk of gas supplies – which are difficult, if not impossible to replace on short notice. This would propel gas prices, which nearly doubled last year, to new record highs.
What other gas suppliers does Europe have? According to Eurostat, apart from Russia, the EU gets its gas from Norway (20.5%), Algeria (11.6%), the United States (6.3%) and Qatar (4.3%), as well as some other states whose combined share is a little over 10%. However, Norway has been unable to meet the demand throughout 2021, with North Sea fields undergoing heavy maintenance after pandemic-induced delays, while other suppliers have too small a share in the European gas market at their current volumes to make a difference in case of a flow disruption.
Can other suppliers cover the shortfall in Russian gas supplies? The US administration has reportedly been in talks with Qatar on the possibility of increasing LNG shipments to Europe, but so far to no avail. Experts cited by Bloomberg say Qatar is already producing at full capacity, and most of its cargoes are sent to Asia under long-term contracts, which it can hardly break for fear of losing the valuable market. Even if the US finds a way to boost LNG deliveries to Europe, energy prices would jump nonetheless, as US LNG is more expensive than Russian natural gas. Algeria may have spare production and pipeline capacity to boost supplies to Europe if called upon, a government source, who spoke on condition of anonymity, told S&P Global Platts on Tuesday. Those could be delivered as LNG or via Algeria’s direct pipelines to Spain and Italy, the source said. However, no official reports regarding the matter have been issued, while Algeria’s major pipeline linking it to Europe via Morocco was shut down last year.
What are Europe’s alternatives to gas as an energy source? Europe has a number of alternative energy sources, but none of them could be called upon to substitute for natural gas. The EU’s decision to turn to weather-dependent sources of energy like wind and solar power over ‘dirty’ fossil fuels has already, at least in part, led to the current energy crisis. Coal has also soared in price, as Europe, China, and others have been looking for alternatives to gas amid the global pandemic crisis in recent months. Finally, Europe (with the exclusion of France) has been shutting down another crucial source of energy – nuclear power plants – amid its push to phase out atomic energy after the Fukushima nuclear disaster in 2011. The plants can still be salvaged if the recently proposed draft bill to label nuclear energy as ‘green’ comes through, but both the bill and the revival of the closed plants, as well as the construction of new ones, will take time, which Europe does not have.
Economist suggests buying physical gold as the US dollar becomes worthless
Famed writer and economist Robert Kiyosaki has warned that the actions of governments – such as spending 16% of global GDP on the Covid pandemic and massive money printing – could lead to a crash so big that even the global reserve currency, the US dollar, becomes “worthless.”
In the latest episode of Live from the Vault, the businessman explained that when the “house of cards” starts coming down during unprecedented economic times, there’s a need to reconsider how people store their wealth. The big problem with fiat money is that it’s largely based on public faith in the issuer, he said.
According to Kiyosaki, there are a number of ways to store wealth that are independent of any central bank and can help to mitigate the impact of any pending economic crash. Those are primarily buying gold and silver, he said, adding that investing in real estate and crypto are also the right things to do.
“They (governments) now have to keep printing, or we crash,” said the author of ‘Rich Dad Poor Dad’, stressing: “That’s why I’ve been bullish on gold for all these years.”
Talking about the lack of trust in the paper markets, Kiyosaki advised that investors move away from any gold and silver derivatives, be they futures or ETFs, because those are open to manipulation. It’s important to buy physical gold – the favorite hedge against market turbulence – as well as silver in pounds and ounces, he said.
