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The Morning Risk Report: Crypto-Savings Lawsuit Puts Principles of DeFi to the Test
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Good morning. The emerging world of decentralized finance offers the holders of cryptocurrency many of the amenities of a modern financial system, under the premise that blockchain technology can cut out the middlemen, replacing flesh-and-blood bankers with autonomous, self-governing computer programs.
The model promises lower costs and greater access. It also begs the question: Who’s responsible when things go wrong? Risk & Compliance Journal's Dylan Tokar reports.
[Continued below...]
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That is the question being raised by a class-action lawsuit filed in New York federal court against one such novel DeFi service, a cryptocurrency savings application called PoolTogether. The application, described as a “no loss prize game,” incentivizes users to save their cryptocurrencies by offering them the chance to win awards from the interest generated by the collected funds.
The lawsuit, filed by a software engineer named Joseph Kent, has challenged the legality of PoolTogether’s operation, saying the scheme is essentially a lottery and prohibited under New York law. Read more.
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Carnival’s Princess Unit to Pay $1 Million for Violating Environmental Probation
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Carnival Corp.'s Princess Cruise Lines pleaded guilty to violating probation imposed as part of a 2017 environmental settlement with the U.S. Justice Department and agreed to give more independence to an internal watchdog.
Princess pleaded guilty Tuesday in Miami federal court to a second violation of the probation imposed in 2017, when it acknowledged illegally discharging oily waste off England's coast in 2013 and covering up the incident. It was convicted of violating the probation in 2019.
The company will pay a $1 million fine related to the latest violation, on top of a $40 million penalty levied in 2017.
The Justice Department said on Tuesday that the company's government-mandated internal investigative office was inadequate. Under the new settlement, the investigative office will have to report directly to a committee of Carnival's board. Carnival must give the overhauled watchdog the authority to initiate investigations and determine their scope, and the company will be restricted in its ability to remove an executive in charge of investigations, the Justice Department said.
Princess admitted internal investigators weren't allowed to determine the scope of their probes and management had interfered with their work. Carnival said it has implemented a number of the changes required and intended to “strive for excellence in compliance."
Problems with the watchdog were identified shortly after Princess’s probation started, the Justice Department and Princess said in a joint court filing. An outside consultant retained by Carnival's risk group said in 2018 that the company suffered from a "lack of a mature learning culture," the filing said.
Princess’s probation is slated to end in April.
—Richard Vanderford
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Support for Workplace Vaccine Mandates Remains Consistent
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Support for Covid-19 vaccine mandates remained relatively high through the end of 2021 among rank-and-file employees, human-resource professionals and organizational leaders, according to the latest survey by employee-engagement software maker TinyPulse.
In the fourth quarter, 67.1% of HR and organizational leaders and 73.8% of non-HR employee respondents surveyed globally said they supported vaccine mandates in their workplace. That is consistent with the 68.1% of HR leaders and 74% of employees who supported mandates in the third quarter of last year.
“That kind of signals a leveling off—any increase in the virus is not going to change people’s opinion very much, in whether they support the vaccine mandate or not,” said Elora Voyles, TinyPulse’s people scientist and one of the two lead researchers on the report.
The percentage of staff that would consider quitting if mandates were put in place also remains small. About 4.9% of HR and organizational leaders and 3.8% of employees said they would consider quitting if vaccines were mandated.
Employers, for the most part, aren’t using dismissal as a threat to enforce mandates—35.8% use reminders to encourage employees to get their shots and to submit proof to their employers, while 13.1% have policies to fire employees who fail to comply with vaccine mandates.
Ms. Voyles expects continued support within companies for keeping vaccine mandates in place. “Ultimately they see it’s important for employee safety and for their own safety,” said Ms. Voyles.
The survey queried 621 HR professionals and other organizational leaders and 474 rank-and-file employees globally.
—David Smagalla
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From Risk & Compliance Journal
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Proposed Framework Seeks to Better Define Liability for Chief Compliance Officers
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A compliance professionals group is asking regulators to consider how a corporate compliance program functions within a firm, such as the resources it has available and the support it receives from leadership, when determining personal liability for compliance officers.
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A Senate sanctions bill personally targets Russian President Vladimir Putin for any further escalation of hostilities in Ukraine.
PHOTO: ALEXEY NIKOLSKY/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The Biden administration has thrown its support behind a bill that would impose mandatory sanctions against Russian leaders, banks and businesses if Moscow escalates hostilities or further invades Ukraine.
The endorsement comes as the White House lobbies wavering Democratic senators against another sanctions bill expected to get a Senate vote this week that is sponsored by Sen. Ted Cruz (R., Texas). The Cruz bill would initiate sanctions against Nord Stream 2, a pipeline built to deliver Russian natural gas to Germany.
Related: Russia, NATO Fail to Resolve Differences in Ukraine Talks
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Cryptocurrency lenders are going to be able to start checking credit reports. TransUnion, one of the three major U.S. consumer credit reporting firms, will let consumers give blockchain companies access to their personal credit data through the security firm Spring Labs’ ky0x Digital Passport.
Consumers will be able to receive better interest rates when borrowing money from financial-services companies that operate on public blockchains such as Ethereum by providing this information, the companies said.
Related: Turks Pile Into Bitcoin and Tether to Escape Plunging Lira
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Novak Djokovic thrust to center of debate over Covid-19 vaccine mandates
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China is luring record levels of investment into the country’s technology sector, even as it clamps down on consumer-technology firms like Alibaba Group Holding Ltd. and ride-hailing company Didi Global Inc.
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Germany’s financial regulator said it would clamp down on mortgage lending, signaling mounting concerns about the risks posed by the nation’s rapidly rising house prices.
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Theranos Inc. founder Elizabeth Holmes’s potential prison term for defrauding investors, like her company’s blood-testing technology, will likely fall short of what is advertised, according to an analysis of federal data by a sentencing consultant.
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A U.S. federal judge denied Prince Andrew’s request to dismiss a lawsuit accusing him of sexually abusing a teenager, dealing a blow to the royal’s efforts to stop litigation alleging his ties to disgraced financier Jeffrey Epstein and British socialite Ghislaine Maxwell.
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Simon Johansson, on phone, Adam Munkbo and Emilia Söderberg from Nordic Choice’s operational support team helped hotel employees migrate to Google’s Chrome operating system to get back online after a ransomware attack. PHOTO: JOSEFIN LIGNÉ /NORDIC CHOICE HOTELS
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Inside a Ransomware Hit at Nordic Choice Hotels: A chain with more than 200 hotels across Scandinavia and the Baltic countries is still dealing with technology problems and the fallout from a data leak after a Dec. 1 ransomware attack.
Immediately after the incident, the company shut down corporate computers, check-in desks and machines such as music systems, and disconnected computers from the internet, said Kari Anna Fiskvik, Nordic Choice’s vice president of technology.
More than five weeks after hackers hit, glitches continue in machines that provide heating, music and other services, she said.
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Municipal workers in Almaty, Kazakhstan, cover the charred city hall in the aftermath of violent protests. PHOTO: SERGEI GRITS/ASSOCIATED PRESS
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For years, Kazakhstan’s vast natural riches and relative political stability have made the country a ripe target for U.S. investments. The current wave of protests, which has led to dozens of deaths, is now making those investments a riskier proposition.
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In a sharp reversal of fortunes over just a few weeks, Ethiopian government forces have repelled rebel fighters who had appeared poised to seize the country’s capital, Addis Ababa, and threaten the government led by Ethiopia’s Nobel Peace Prize-winning prime minister.
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Over the past two years, China has used some of the strictest measures anywhere to keep Covid-19 out and long succeeded in holding numbers down. But as Omicron poses the biggest challenge since the start of the pandemic, the country is looking more boxed in by its own formula.
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Scholastic’s titles include Suzanne Collins’s ‘The Ballad of Songbirds and Snakes.’ PHOTO: DAVE BENETT/GETTY IMAGES
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Scholastic Corp. CEO Richard Robinson’s death gave the reins to an executive, his former romantic partner, Iole Lucchese, who must now address problems plaguing the publisher’s innovation efforts while facing some skepticism over her track record.
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Robinhood Markets Inc. said most employees will no longer be required to make regular trips to the office, while some teams will meet in person occasionally. PHOTO: AMIR HAMJA FOR THE WALL STREET JOURNAL
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Most employees of retail-trading platform Robinhood Markets Inc. will be working remotely on a permanent basis amid a spike in Covid-19 cases that has many companies rethinking their return to the office. Using a primarily remote workforce will help Robinhood hire top talent across the U.S. regardless of where they live, the company said in a blog post Wednesday, describing itself as “a remote-first company.”
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Thousands of workers at supermarket operator Kroger Co. went on strike in Denver, the latest push by employees who said they are seeking higher wages, more benefits and safer workplaces.
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