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The Morning Risk Report: Lack of Banking Options a Problem for Crypto Businesses
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Cryptocurrency mining rigs operating inside a shipping container in Rodniki, Russia. PHOTO: ANDREY RUDAKOV/BLOOMBERG NEWS
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Good morning. Banks, wary of the drug dealers and scammers attracted to the anonymity of cryptocurrency, shun many of the firms behind the electronic money, leaving them to turn to shadowy middlemen for payment processing and other financial services.
In a recent high-profile example, $850 million in customer funds went missing after Bitfinex, the exchange behind the digital currency tether, handed it over to Panama-based Crypto Capital Corp. to process customer withdrawals, the New York attorney general said last month.
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The Wall Street Journal’s Paul Vigna reports that Bitfinex’s ill-fated arrangement with Crypto Capital highlights a persistent problem for companies in the young cryptocurrency business: lack of access to the financial system. Banks, still smarting from billions of dollars in fines tied to questionable transactions, are wary of getting tied up with digital currencies beloved by unsavory characters.
As a result, cryptocurrency firms forced to fend for themselves often end up calling on little-known processing firms such as Crypto Capital. “It’s a huge problem for them,” said Pamela Clegg-Garner, an investigator at cryptocurrency research firm CipherTrace.
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From Risk & Compliance Journal
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Roberto Sandoval Castañeda, the former governor of the Mexican state of Nayarit, in 2017. PHOTO: ULISES RUIZ BASURTO/ZUMA PRESS
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The U.S. imposed sanctions on a current and a former Mexican official who are alleged to have helped purported drug traffickers.
The Treasury Department’s Office of Foreign Assets Control said that Isidro Avelar Gutierrez, a magistrate judge, and Roberto Sandoval Castaneda, a former governor of the state of Nayarit, on Mexico’s west coast, received bribes and provided assistance to two cartels.
The announcement was the latest move by OFAC to ramp up pressure on the groups, identified by the U.S. as Cartel de Jalisco Nueva Generacion and Los Cuinis Drug Trafficking Organization, which were added to the U.S. sanctions list in 2015.
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The EU has suffered cyberattacks from outside the bloc in recent years. PHOTO: DOMINIC LIPINSKI/ZUMA PRESS
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European governments armed themselves with a new tool against cyberattackers, adopting a sanctions regime to allow them to penalize foreign individuals and entities as western countries seek fresh ways of deterring large-scale hacking of their computer networks. The introduction of sanctions was pushed by the Dutch and British, who have blamed Russia for some recent cyberattacks on the bloc.
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China’s anticorruption agencies are investigating a former top securities regulator for allegedly violating the law and flouting Communist Party regulations. Liu Shiyu, who stepped down as chairman of the China Securities Regulatory Commission in January, has turned himself in and is cooperating with investigators from the party’s disciplinary agency and the government’s anticorruption commission, according to a brief statement issued late Sunday by the party watchdog.
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Alphabet Inc.’s Google has agreed to refund advertisers for ads purchased through its ad marketplaces that ran on websites with fraudulent traffic, following a lawsuit claiming the tech giant was withholding those back-payments, according to court documents and people familiar with the situation.
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A national backlash is building against employers’ noncompete agreements, which increasingly have crept into contracts for lower-wage workers.
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Huawei, which last year surpassed Apple as the world’s No. 2 supplier of smartphones, relies on Google’s Android operating system to run its devices. PHOTO: ALY SONG/REUTERS
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Google is halting some services for smartphones made by Huawei Technologies Co., according to people familiar with the matter, in a sign that the U.S. decision to deny the Chinese tech giant access to U.S. technology will bite into its booming consumer-device business. Huawei, the world’s No. 2 supplier of smartphones, relies on Google’s Android operating system to run its devices. Analysts said the Trump administration’s decision to put Huawei on a trade blacklist is likely to hinder the company’s efforts to dominate the
next-generation 5G wireless industry by denying it vital U.S. technology.
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Spending on factories, equipment and other capital goods slowed in the first quarter among a broad cross-section of large, U.S.-listed firms, bolstering investor concerns that a key driver of economic growth is fading. Executives at several companies said lingering trade tensions with China were making them and their customers cautious, raising the prospect that slower business spending could hamper economic growth later in 2019 and in 2020. Meanwhile, the stalled trade talks between Beijing and Washington are exacerbating a slump in the U.S. Farm Belt. Many farmers don’t
believe an aid package being prepared by the Trump administration will be enough to compensate for the economic damage.
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Ryanair Holdings PLC, Europe’s largest budget airline and the region’s largest customer for Boeing Co.’s 737 MAX jets, warned its annual profit would be dented by the plane’s global grounding. Ryanair faces higher-than-expected costs this year from the suspension of 737 MAX deliveries after the jet suffered two fatal crashes in less than five months. The carrier was due to receive its first MAX planes this spring.
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Bayer’s market capitalization has plunged amid investor worries about its potential liabilities related to weedkiller Roundup. Above, a farmer sprays Roundup. PHOTO: JEAN-FRANCOIS MONIER/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Less than a year after Bayer AG acquired Monsanto Co. and its Roundup weedkiller, the German company is stuck at what could be one of its darkest hours. Plaintiffs claiming Roundup caused their cancer have won in three jury trials, lawsuits have multiplied and damage awards so far exceed $2 billion. Since the Monsanto deal closed, Bayer’s market capitalization has shrunk by more than 40% to about $59.13 billion. Worried that liabilities from the allegedly carcinogenic weedkiller are going to rise, investors have abandoned the stock.
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Nike Inc. said it is adding language to new contracts for female athletes that will protect their pay during pregnancy, after coming under fire for cutting compensation for some athletes. The company said it had adopted the policy last year but was now writing the terms into future endorsement deals. Previously, the contracts allowed Nike to reduce pay if runners failed to meet performance thresholds for any reason. The move comes days after one of its former runners, Alysia Montaño, criticized Nike and its rivals for their policies around pregnancy.
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The highest-paid CEO in a WSJ ranking was Discovery Inc.’s David Zaslav, whose pay tripled to $129 million. PHOTO: MARK SAGLIOCCO/GETTY IMAGES
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The mechanics of chief-executive pay have grown ever more complex, but the rules remain simple: Strong performers get a raise. So do most of the rest. For the fourth year straight, the biggest U.S. companies set CEO pay records in 2018, a Wall Street Journal analysis found, even as a majority delivered negative stock-market returns to their shareholders—a sign of the often-weak relationship between pay and performance.
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A technician works at the Marlin Steel plant in Baltimore. PHOTO: STEVEN RUARK FOR MARLIN STEEL WIRE PRODUCTS
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As automation changes the way factories operate, some U.S. companies are training workers in programming and robotics, letting machinists get a taste of coding. Reskilling requires that manufacturers have a better understanding of their employees.
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Lynas digs up ore in Australia’s arid western region and ships it to Malaysia for processing. Here, the company’s plant in Gebeng. PHOTO: SONALI PAUL/REUTERS
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An American chemicals company and an Australian miner want to build the first rare-earths separation plant in the U.S. in years, seeking to shore up supplies of important commodities caught up in the U.S.-China trade conflict.
The proposal by Blue Line Corp. and Lynas Corp. illustrates how companies are growing increasingly worried by the trade rhetoric out of Washington and Beijing, while looking for opportunities to profit from tit-for-tat tariffs if they aren’t short-lived. The companies aim to build the plant in Hondo, Texas, near where Blue Line is based.
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