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The Morning Risk Report: Bitcoin Fraud Concerns Draw Scrutiny From Regulators
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A bitcoin ATM in a store in New York.
PHOTO: JUSTIN LANE/SHUTTERSTOCK
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Good morning. Regulators are signaling they want more control over an expanded cryptocurrency universe that has pushed further into Wall Street activities without the investor and consumer protections that apply to traditional securities and financial services.
The catch: No single regulator inspects crypto exchanges or brokers, unlike in the securities and derivatives markets. Regulators step in only when they believe U.S. law applies to a particular cryptocurrency or transaction, based on the way the asset was sold or traded.
[Continued below...]
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Once a quirky asset that required navigating special exchanges to buy, cryptocurrencies can now be easily purchased on mobile apps from PayPal Holdings Inc., Square Inc.’s Cash app and Robinhood Markets Inc.
“A lot more money is being put into it, there is a lot of trading and the uses seem to be expanding,” said Dan Berkovitz, a commissioner on the Commodity Futures Trading Commission. “I see a concern about whether we have a shadow financial system developing, and that should be a question for all of the regulators.”
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Russian Tycoon Oleg Deripaska Appeals U.S. Court’s Refusal to Lift U.S. Sanctions
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Russian industrial tycoon Oleg Deripaska is appealing a U.S. judge’s ruling that favored the U.S. government in his attempt to have the sanctions the U.S. imposed on him in 2018 removed, according to court documents.
Mr. Deripaska, through a U.S. attorney, has filed a notice of appeal in the U.S. Court of Appeals for the District of Columbia, challenging a ruling in June by Judge Amit Mehta that said his claims lacked evidence or standing, according to the document.
Mr. Deripaska sued the Treasury Department in 2019 challenging his inclusion in a Treasury report on Russian oligarchs, as well as the sanctions against him. The lawsuit claimed the Treasury Department made false allegations based on rumor and innuendo to support the sanctions. The U.S. removed sanctions on some of his companies after Mr. Deripaska reduced his stake in them, but the sanctions on him remain.
A spokeswoman for the Treasury Department declined to comment.
—Mengqi Sun
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A semiconductor plant in Nantong, China. Washington is increasingly concerned about maintaining the edge the U.S. and allies have in semiconductors over China.
PHOTO: STR/AGENCE FRANCE-PRESSE/GETTY IMAGES
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A low-profile government committee that reviews business deals for national security concerns is receiving expanded emphasis as part of the Biden administration’s plan to compete with China.
The Committee on Foreign Investment in the U.S., or Cfius, is looking to share information with similar review bodies set up by allies and is paying closer attention to Biden priorities, including securing supply chains. In June, Cfius ordered a hold on a Chinese investor’s planned acquisition of South Korean-based semiconductor maker Magnachip Semiconductor Corp. to review the deal.
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China said it would tighten rules for companies listed overseas or seeking to sell shares abroad, moves that could hinder attempts by homegrown firms to raise money in the U.S. The shift comes as Chinese regulators intensify scrutiny into technology companies, including Didi Global Inc., that recently listed in the U.S.
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T-shirt company Esquel Enterprises Ltd. sued the U.S. government Tuesday, alleging that it lost major U.S. customers over the accusation that one of its mills in the Xinjiang region in western China relies on forced labor, which the company denies. In its lawsuit, Esquel asked a federal judge to remove the mill from a Commerce Department export blacklist of businesses that pose a national security threat.
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Hong Kong’s chief executive tried to ease U.S. tech titans’ concerns about proposed changes to data-protection laws, saying new rules are needed to stop the malicious posting of people’s personal information online but that the government would listen to the companies. An industry group representing Facebook Inc., Twitter Inc., Alphabet Inc.’s Google and others sent a private letter June 25 to Hong Kong’s privacy commissioner for personal data outlining members’ worries about the planned rules to combat doxing.
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A federal judge said he can’t schedule a summer trial in the Justice Department’s antitrust lawsuit challenging insurance broker Aon PLC’s proposed acquisition of rival Willis Towers Watson PLC, a blow to Aon’s bid to save a deal that expires Sept. 9. The judge said he faced a huge backlog of cases because of the coronavirus pandemic.
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Fewer than 1,500 businesses in total were likely hit by the Kaseya attack, the company said.
PHOTO: ANDREW CABALLERO-REYNOLDS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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A group of Russian hackers calling themselves REvil is demanding $70 million to unlock computers swept up in a widespread ransomware attack that started to unfold July 2. It is the latest of such high-profile incidents that the U.S. government has been trying to stamp out, along with other cybercrimes.
Kaseya Ltd. is a Miami-based company that provides software to help other businesses manage their networks. The hackers targeted Kaseya’s virtual systems/server administrator (VSA), a type of software that large companies and technology-service providers use to manage and send out software updates to systems on computer networks. By targeting Kaseya’s VSA, the hackers were able to open the door to infect more computers in what is known as a supply-chain attack.
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SoftBank Group Corp. is leading an investment in AnyVision Interactive Technologies Ltd. that values the facial-recognition company at over $1 billion, according to a person familiar with the matter, underscoring its commitment to the technology despite pushback over privacy concerns.
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Tug boats took a semi-submersible drilling platform through Texas’ Port Aransas Channel into the Gulf of Mexico in December.
PHOTO: TOM PENNINGTON/GETTY IMAGES
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Some of the world’s largest oil companies have been ordered to pay part of a $7.2 billion tab to retire hundreds of aging wells in the Gulf of Mexico that they used to own, capping a case that legal experts say is a harbinger of future battles over cleanup costs.
A federal judge ruled last month that Fieldwood Energy LLC, a privately held company that currently controls the old wells and had sought bankruptcy protection, could pass on hundreds of millions of dollars in environmental liabilities to prior owners and insurers of the wells as part of its reorganization plan.
Exxon Mobil Corp., BP PLC, Hess Corp., Royal Dutch Shell PLC and insurance companies had objected to the plan. The dispute, litigated for months in federal bankruptcy court in Houston, centered over who should bear the enormous costs of capping and abandoning wells, primarily in the shallow waters of the Gulf of Mexico where an oil spill could wreak havoc.
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Pentagon officials on Tuesday terminated the massive JEDI cloud-computing contract and said they would start fresh with a new project, capping a yearslong initiative that had become mired in litigation from Amazon.com Inc. and a barrage of objections from Congress.
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Credit Suisse offices in New York. The bank has been scrambling to shore up its ranks with new hires.
PHOTO: KATELYN PERRY FOR THE WALL STREET JOURNAL
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Credit Suisse Group AG is continuing to lose senior bankers to competitors in the wake of missteps including a $5.5 billion loss tied to the meltdown of Archegos Capital Management.
Several investment bankers in the U.S. gave their notice in the past week, while others are considering leaving, people familiar with the matter said.
Bankers recently heading for the exits include: Eric Federman, who was a co-head of the media and telecom team and is joining Barclays PLC; Spyros Svoronos, who was a co-head of the global industrials team in the Americas specializing in chemicals and agricultural companies and is joining Lazard Ltd.; Brian McCabe, who was head of global energy and is joining JPMorgan Chase & Co; and Brad David, who works with private-equity firms and is joining Evercore Inc.
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