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The Morning Risk Report: DeFi Protocols Are Increasingly Popular Tool for Laundering Money, Study Finds
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Good morning. Decentralized finance protocols are playing an increasing role in money laundering, with the total value of cryptocurrency laundered rising year over year by 30% in 2021, according to blockchain data platform Chainalysis Inc.
Cybercriminals laundered about $8.6 billion in cryptocurrency in 2021, Chainalysis said in a partial release of its 2022 cryptocurrency crime report, the full version of which will be published in February. Chainalysis determined the figure by tracking cryptocurrency sent from illicit addresses to addresses hosted by cryptocurrency services such as centralized exchanges and peer-to-peer exchanges.
[Continued below...]
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More than $33 billion worth of cryptocurrency has been laundered since 2017, according to the report.
DeFi protocols—an umbrella term for financial services offered on public blockchains—received $900 million from illicit addresses in 2021, a 1,964% increase in value from 2020, according to the report.
DeFi was notably popular for laundering stolen funds, particularly through hacking, compared with funds from other types of crimes such as scams and ransomware, Chainalysis found. Its report noted that addresses associated with theft sent just under half of their stolen funds to DeFi platforms, or more than $750 million worth of cryptocurrency.
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Omicron Prompts DOJ, SEC to Go Virtual Once Again
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The Justice Department has pulled back on in-person meetings with companies and their counsel in light of a surge in Covid-19 cases largely caused by the Omicron variant, a senior prosecutor said Wednesday.
Prosecutors mostly had adapted to operating during a pandemic, said David Last, chief of the DOJ’s Foreign Corrupt Practices Act unit. Before Omicron, the Justice Department would hold smaller in-person meetings to discuss ongoing cases with white-collar lawyers, while avoiding larger gatherings.
“I expect—I hope—that as things with Omicron lessen, we'll be kind of getting back into that where we can do some [meetings] in person,” Mr. Last said at the American Conference Institute’s FCPA gathering in Houston.
Officials said they continue to allow for Covid-related investigations delays. “We’re definitely sensitive to it,” said Charles Cain, chief of the U.S. Securities and Exchange Commission’s FCPA unit, referring to added time that companies might need to comply with agency requests. “But we always want to verify that it's not just being thrown out there in a circumstance where it's not justified.”
—Dylan Tokar
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Myanmar Poses Extensive Risks to Businesses, U.S. Warns
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The U.S. government has warned companies they face a host of risks should they do business in Myanmar, particularly with the country’s military regime.
Doing business with Myanmar’s state-owned enterprises, including those that manage the country’s lucrative oil-and-gas sector, poses significant reputational, financial and legal risks to companies and financial institutions, the U.S. Treasury Department, U.S. State Department and other executive departments said in a notice published Wednesday. The notice also highlighted growing money-laundering concerns in the country.
Myanmar returned to military rule after a February 2021 coup, and the regime has been involved since then in serious human rights abuses and corruption, the notice said. The U.S. imposed some sanctions after the coup.
Last week, France's TotalEnergies SE said it intends to withdraw from Myanmar, where it operates a large natural gas project, after facing pressure from shareholders. The U.S. and other countries have faced pressure from lawmakers and human-rights advocates to directly target Myanmar's oil-and-gas industry with sanctions.
—Richard Vanderford
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PHOTO: ALYSSA SCHUKAR FOR THE WALL STREET JOURNAL
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Federal regulators proposed measures that would significantly increase their visibility into private-equity funds and some hedge funds, the first in a range of plans to expand oversight of private markets.
The Securities and Exchange Commission voted 3-1 to issue a proposal that would increase the amount and timeliness of confidential information that private-equity and hedge funds report to the agency on a document known as Form PF.
The main goal, Chairman Gary Gensler said, is to allow regulators to better spot risks building up in private markets, stepping up an effort that began after the 2008 financial crisis.
The commission, in a meeting Wednesday, also voted 3-1 to propose expanding oversight of some trading platforms that match buyers and sellers of U.S. Treasury securities. The agency will seek comment on the proposals before completing the rules, a process that could take several months at least.
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Justice Stephen Breyer plans to retire at the end of the current Supreme Court term, giving President Biden an opportunity to shore up the court’s liberal wing for decades to come and deliver on his promise to nominate the court’s first Black woman.
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Nike Inc. appointed Ann Miller, who has been with the business since 2007, as executive vice president and general counsel. She has served as Nike’s chief ethics and compliance officer for the past six years.
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The World Trade Organization on Wednesday authorized China to impose retaliatory tariffs worth $645 million on imports from the U.S. in a decade-old dispute over Chinese subsidies to promote exports of products such as solar panels and steel pipes.
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Intel Corp., which announced its profit fell last quarter, scored a legal victory in Europe on Wednesday when the EU’s General Court in Luxembourg struck down much of a 2009 finding that the chip maker had abused its dominant position by issuing loyalty rebates and payments that restricted rival chip maker Advanced Micro Devices Inc. from competing.
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Witnesses started poking some holes in the government’s case against Gang Chen, a Massachusetts Institute of Technology professor accused of hiding his ties to China, soon after his arrest in January 2021, interviews and a review of related documents show, a year before prosecutors decided last week to drop criminal charges against him.
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Russian President Vladimir Putin. PHOTO: KREMLIN POOL/ZUMA PRESS
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After the West pummeled Russia with sanctions for annexing Crimea from Ukraine in 2014, President Vladimir Putin embarked on what analysts have dubbed a Fortress Russia strategy, padding the country’s foreign reserves, buying gold and pivoting some exports to China.
Now, a raft of harder-hitting measures in case of a renewed incursion into Ukraine could test this approach and experts say they could cause broad economic pain, despite Mr. Putin’s efforts to cushion the blow.
The U.S. on Tuesday said it is prepared to impose sanctions and export controls on critical sectors of the Russian economy. Senior administration officials said the U.S. could ban the export to Russia of various products that use microelectronics based on U.S. equipment, software or technology, similar to the U.S. pressure campaign on Chinese telecom giant Huawei Technologies Co. U.S. officials have previously said that measures under consideration also include cutting off Russian banks’ access to the dollar and possible sanctions on Russian energy exports.
“It’s unpleasant, of course, but it can be solved by the financial institutions” in Russia, Finance Minister Anton Siluanov said this month about the prospects of more sanctions, insisting that Russia was prepared. “I think they will cope in case of such risks.”
Related: U.S. Delivers Response to Russian Demands Amid Ukraine Crisis
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The Federal Reserve signaled it would begin steadily raising interest rates in mid-March, its latest move toward removing stimulus to bring down inflation.
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Federal Reserve Chairman Jerome Powell’s views on price pressures have undergone an evolution over the past 12 months, as inflation surged and remained elevated, crashing into the Fed’s one-time expectation that the phenomenon would be a short-lived product of reopening the economy following pandemic shutdowns.
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Trucks are taking over American roads, fueled by a rise in pandemic online shopping and disruptions to global supply chains.
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North Korea conducted its sixth weapons test since Jan. 5, South Korea’s military said, flying two suspected short-range ballistic missiles off its east coast.
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Verizon, which acquired TracFone in late November, said it has added security protections to the recently acquired services. PHOTO: ANDREW KELLY/REUTERS
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Attackers have commandeered thousands of TracFone customers’ phone numbers in recent weeks, forcing new owner Verizon Communications Inc. to improve safeguards less than two months after it took over the prepaid wireless provider.
TracFone offers prepaid wireless service under several brands, including Straight Talk, Total Wireless and its namesake brand. Some customers of Straight Talk said they found their phone lines suddenly disconnected around the December holidays.
“We were recently made aware of bad actors gaining access to a limited number of customer accounts and, in some cases, fraudulently transferring, or porting out, mobile telephone numbers to other carriers,” TracFone said in a notice posted on its website this month.
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The Seattle-based charity has an endowment of more than $50 billion. PHOTO: PAUL CHRISTIAN GORDON/ZUMA PRESS
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The Bill & Melinda Gates Foundation named four new members to its board of trustees, adding outsiders to the board for the first time in its history after the divorce of its co-founders Bill Gates and Melinda French Gates.
The changes are part of efforts to add more governance and independence to one of the world’s largest philanthropies, which has an endowment of more than $50 billion. Mr. Gates and Ms. French Gates remained co-chairs after their marital split, but the foundation had no other trustees after Bill Gates Sr. died in 2020 and Warren Buffett, another major donor, resigned in June 2021.
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A Whirlpool employee at one of the company’s facilities. PHOTO: USA TODAY NETWORK/REUTERS
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Washing machines, refrigerators and other appliances are likely to remain hard to get this year as Covid-19 infections continue to fuel supply chain problems, Whirlpool Corp.’s chief executive said Wednesday.
The company, based in Benton Harbor, Mich., has increased production to meet higher demand but the Omicron variant has extended staffing challenges and order backlogs, said Whirlpool CEO Marc Bitzer.
“It was labor shortages, component shortages,” Mr. Bitzer said, referring to issues that influenced meeting demand in 2021. “Now with Omicron and all the ripple effects, there is a good probability where we see it through the entirety of 2022.”
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South Korea’s LG Energy Solution Ltd. has an audacious plan to dominate the world’s electric-vehicle battery industry: emphasize that it isn’t Chinese.
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Fintech companies have established themselves as viable competitors in the financial-services business, but now they face a new challenge: Some mainstream banks have started to offer fintech-inspired services such as early paycheck access and no-fee overdrafts.
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Boeing Co. said production problems and delivery delays with its 787 Dreamliner jet would cost it another $4.5 billion as the plane maker reported its third annual loss in a row.
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Elon Musk said Tesla Inc. won’t introduce new vehicles this year, as the electric-vehicle maker bets on increasing deliveries over diversifying its product offerings in the face of ongoing supply-chain disruptions.
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More signs emerged that the Omicron wave is taking a less serious human toll in Europe than earlier phases of the pandemic, while U.S. data showed daily average deaths from the disease exceeding the peak reached during the surge driven by the previously dominant Delta variant.
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Moderna Inc. has started testing in people a version of its Covid-19 vaccine modified to target the Omicron variant of the coronavirus, in case such a shot is needed to bolster protection.
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