Thailand Creeps into Action with Some Swiss Effort
February 24, 2025
Hackers are intelligent bad actors who use their skills for evil. They do black hat hacking tricks for their own gains. The cyber criminal recently caught in a raid performed by three countries was definitely a huge scammer. Khaosod English reports on the takedown: “Thai-Swiss-US Operation Nets Hackers Behind 1,000+ Cyber Attacks.”
Four European hackers were arrested on the Thai island Phuket. They were charged with using ransomware to steal $16 million from over 1000 victims. The hackers were wanted by Swiss and US authorities.
Thai, Swiss, and US law enforcement officials teamed up in Operation Phobos Aetor to arrest the bad actors. They were arrested on February 10, 2025 in Phuket. The details are as follows:
“The suspects, two men and two women, were apprehended at Mono Soi Palai, Supalai Palm Spring, Supalai Vista Phuket, and Phyll Phuket x Phuketique Phyll. Police seized over 40 pieces of evidence, including mobile phones, laptops, and digital wallets. The suspects face charges of Conspiracy to Commit an Offense Against the United States and Conspiracy to Commit Wire Fraud.
The arrests stemmed from an urgent international cooperation request from Swiss authorities and the United States, involving Interpol warrants for the European suspects who had entered Thailand as part of a transnational criminal organization.”
The ransomware attacks accessed private networks to steal personal data and they also encrypted files. The hackers demanded cryptocurrency payments for decryption keys and threatened to publish data if the ransoms weren’t paid.
Let’s give a round of applause to putting these crooks behind bars! On to Myanmar and Lao PDR!
Whitney Grace, February 24, 2025
TikTok Alleged to Be Spying on … Journalists
February 19, 2025
It is an open secret that TikTok is spying on the West and collecting piles of information on (maybe) unsuspecting victims. Forbes, however, allegedly has evidence of TikTok spying on its reporters: “TikTok Spied On Forbes Journalists.”
ByteDance, TikTok’s parent company, conducted an internal investigation and discovered that their employees tracked journalists who were reporting on the company. The audit also revealed that they used the journalists’ user data to track if they had been in close proximity with ByteDance employees.
“According to materials reviewed by Forbes, ByteDance tracked multiple Forbes journalists as part of this covert surveillance campaign, which was designed to unearth the source of leaks inside the company following a drumbeat of stories exposing the company’s ongoing links to China. As a result of the investigation into the surveillance tactics, ByteDance fired Chris Lepitak, its chief internal auditor who led the team responsible for them. The China-based executive Song Ye, who Lepitak reported to and who reports directly to ByteDance CEO Rubo Liang, resigned.”
ByteDance didn’t deny the surveillance, but said that TikTok couldn’t monitor people like the article suggested. The parent company also said it didn’t target journalists, public figures, US government members, or political activists. It’s funny that TikTok is trying to convince the Trump administration that it’s a benign force, but this story proves the opposite.
All of this is alleged of course. But it is an interesting story because journalists don’t do news. Journalists are pundits, consultants, and podcasters.
Stephen E Arnold, February 19, 2025
Hackers and AI: Of Course, No Hacker Would Use Smart Software
February 18, 2025
This blog post is the work of a real live dinobaby. Believe me, after reading the post, you know that smart software was not involved.
Hackers would never ever use smart software. I mean those clever stealer distributors preying on get-rich-quick stolen credit card users. Nope. Those people using online games to lure kiddies and people with kiddie-level intelligence into providing their parents’ credit card data? Nope and double nope. Those people in computer science classes in Azerbaijan learning how to identify security vulnerability while working as contractors for criminals. Nope. Never. Are you crazy. These bad actors know that smart software is most appropriate for Mother Teresa type activities and creating Go Fund Me pages to help those harmed by natural disasters, bad luck, or not having a job except streaming.
I mean everyone knows that bad actors respect the firms providing smart software. It is common knowledge that bad actors play fair. Why would a criminal use smart software to create more efficacious malware payloads, compromise Web sites, or defeat security to trash the data on Data.gov. Ooops. Bad example. Data.gov has been changed.
I read “Google Says Hackers Abuse Gemini AI to Empower Their Attacks.” That’s the spirit. Bad actors are using smart software. The value of the systems is evident to criminals. The write up says:
Multiple state-sponsored groups are experimenting with the AI-powered Gemini assistant from Google to increase productivity and to conduct research on potential infrastructure for attacks or for reconnaissance on targets. Google’s Threat Intelligence Group (GTIG) detected government-linked advanced persistent threat (APT) groups using Gemini primarily for productivity gains rather than to develop or conduct novel AI-enabled cyberattacks that can bypass traditional defenses. Threat actors have been trying to leverage AI tools for their attack purposes to various degrees of success as these utilities can at least shorten the preparation period. Google has identified Gemini activity associated with APT groups from more than 20 countries but the most prominent ones were from Iran and China.
Stop the real time news stream! Who could have imagined that bad actors would be interested in systems and methods that would make their behaviors more effective and efficient.
When Microsoft rolled out its marketing gut punch aimed squarely at Googzilla, the big online advertising beast responded. The Code Red and Code Yellow lights flashed. Senior managers held meetings after Foosball games and hanging at Philz’ Coffee.
Did Google management envision the reality of bad actors using Gemini? No. It appears that the Google acquisition Mandiant figured it out. Eventually — it’s been two years and counting since Microsoft caused the AI tsunami — the Eureka! moment arrived.
The write up reports:
Google also mentions having observed cases where the threat actors attempted to use public jailbreaks against Gemini or rephrasing their prompts to bypass the platform’s security measures. These attempts were reportedly unsuccessful.
Of course, the attacks were. Do US banks tell their customers when check fraud or other cyber dishonesty relieves people of their funds. Sure they don’t. Therefore, it is only the schlubs who are unfortunate enough to have the breach disclosed. Then the cyber security outfits leap into action and issue fixes. Everything is the cyber security world is buttoned up and buttoned down. Absolutely.
Several observations:
- How has free access without any type of vetting working out? The question is directed at the big tech outfits who are beavering away in this technology blast zone.
- What are the providers of free smart software doing to make certain that the method can only produce seventh grade students’ essays about the transcontinental railroad?
- What exactly is a user of free smart software supposed to do to reign in the actions of nation states with which most Americans are somewhat familiar. I mean there is a Chinese restaurant near Harrod’s Creek. Am I to discuss the matter with the waitress?
Why worry? That worked for Mad Magazine until it didn’t. Hey, Google, thanks for the information. Who could have known smart software can be used for nefarious purposes? (Obviously not Google.)
Stephen E Arnold, February 18, 2025
FOGINT: Pavel Durov Offers a Fix for Lagging US Innovation
February 10, 2025
Yep, another dinobaby emission. No smart software required.
Pavel Durov, familiar to the US Securities & Exchange Commission and the French judiciary, has offered some advice to Americans. Mr. Durov founded Telegram, and he shared some ideas via is Du Rove Channel on Telegram. You can find the message at https://t.me/durov/394. (You do not need to have the Telegram mini app installed to read his post.) Mr. Durov’s message addresses the success of DeepSeek, and the lack of innovation in the United States. He believes that China will dominate the West without positioning his home country as a winner or a loser in AI innovation.
He points out:
Following the success of the Chinese startup Deepseek, many are surprised at how quickly China has caught up with the US in AI. However, China’s progress in algorithmic efficiency hasn’t come out of nothing. Chinese students have long outperformed others in math and programming at international Olympiads.
He then draws a parallel to inform Americans about the reason for the Chinese Deepseek achievement:
When it comes to producing outstanding performers in math and science, China’s secondary education system is superior to that of the West. It fosters fierce competition among students, a principle borrowed from the highly efficient Soviet model.
As you may know, Mr. Durov encountered some friction with Russian authorities when he operated VKontakte, the so-called Russian Facebook. Mr. Durov exited that company, bounced around looking for a suitable location for Telegram. He settled on Dubai and operated a service in order to make free speech a possibility for many people in the world.
Mr. Durov explains the difference between the outstanding Chinese and Russian educational systems and the American approach:
… most Western schools discourage competition, prohibiting public announcements of students’ grades and rankings. The rationale is understandable — to protect students from pressure or ridicule. However, such measures also predictably demotivate the best students. Victory and defeat are two sides of the same coin. Eliminate the losers — and you eliminate the winners.
Mr. Durov’s logic is that educational systems must allow the super achievers to fulfill their destiny. I want to point out that Mr. Durov is rumored to have fathered more than 100 children. Allegedly he will pay a suitable female breeder for the costs of artificial insemination. The idea is that supermen need to produce super children in order for the superior people to improve society.
He then makes clear why China will dominate the West:
Reality, unlike well-meaning school policies, does have public grades and rankings — whether in sports, business, science, or technology. AI benchmarks that demonstrate Deepseek’s superiority are one of such public rankings. And more are coming. Unless the US secondary education system undergoes radical reform, China’s growing dominance in technology seems inevitable.
Several observations are warranted:
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- The clever recasting of his name from Durov to Paul Du Rove is a brilliant play on words. Wordsmiths require time to find the precise way of delivering a bon mot. Mr. Durov has had some time to contemplate his means of expression. He has been confined to France since August 2024.
- His principles of freedom have been modified since his lengthy interview with the American (presumably one who has not fulfilled his intellectual capabilities due to a lack of competition) Tucker Carlson. In that interview, Mr. Durov expressed his commitment to freedom and resisting governmental pressure to compromise the security of Telegram users. However, shortly after the interview, Mr. Durov blocked Ukrainian government messages to Russian users of Telegram.
- Mr. Durov is now responsible for steering Telegram through a number of business challenges while incrementally increasing his cooperation with legal authorities interested in money laundering, human trafficking, and CSAM activities on Telegram.
To sum up, the message from Mr. Durov illustrates his staunch belief in the Chinese and Russian systems. He makes a case that better education generates more innovation. Words from a person under the control of the French judicial system speak volumes.
Stephen E Arnold, February 10, 2025
Telegram Speed Dates a Bad Actor: Pavel Durov and Judgment or Lack Thereof
February 5, 2025
Another non smart software write up from a real, authentic dinobaby.
Pavel Durov has had a rocky start to 2025. He may have about 100 loving children. He has his brother Nikolai’s support. He has pals from his days at VKontakte. And he has new friends from the French judiciary urging him to embrace some opportunities for freedom. That private jet is waiting. The sunny skies of Dubai beckon.
But another decision may come to haunt him. Telegram and the TON Foundation’s BFF has been busted. According to the US Attorney for the Southern District of New York, one of the outfits shepherding the Ku Group and its KuCoin operations said, “Yep, we are guilty of unlicensed money transmitting business.”
As a dinobaby, I think the statement in “KuCoin Pleads Guilty to Unlicensed Money Transmission Charge and Agres to Pay Penalties Totaling Nearly $300 Million” means in rural Kentucky speak something like “money laundering.” The official news release explains:
U.S. Attorney Danielle R. Sassoon said: “For years, KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions. As a result, KuCoin was used to facilitate billions of dollars’ worth of suspicious transactions and to transmit potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes. Today’s guilty plea and penalties show the cost of refusing to follow these laws and allowing unlawful activity to continue.”
Pavel Durov’s proxy outfit the Open Network Foundation showcased Ku Group at the November 2024 Gateway Conference in Dubai. Ku Group’s then-CEO (apparently not called out in the official statement issued on January 27, 2025, by the southern district) sparkled with optimism about the tie up between the owner of the Messenger mini app and the Peken Global Limited / Ku Group operation.
The news release points out:
KuCoin was founded in or about September 2017. Since its founding in 2017, KuCoin has become one of the largest global cryptocurrency exchange platforms, with more than 30 million customers and billions of dollars’ worth of cryptocurrency in daily trading volume. Between in or about September 2017 and in or about March 2024, the date of the Indictment, KuCoin served approximately 1.5 million registered users who were located in the U.S., and earned at least approximately $184.5 million in fees from those U.S. registered users.
Some of Ku Group’s services included, according to the official AG statement placing:
orders for spot trades in cryptocurrencies, including Bitcoin, Ethereum, and others, and orders for derivative products, including futures contracts, tied to the value of Bitcoin and other cryptocurrencies. As a result of its operation of this business, KuCoin has, at all relevant times, been a money transmitting business required to register with FinCEN and reported suspicious transactions.
The November BFF moments between Ku Group and Telegram’s proxy organization make clear that the Messenger app is a clever and versatile technology system. It is also now clear that the intent of some of Telegram’s announcements is possibly going against the established financial systems methods of serving their customers.
For now, Chun (Michael) Gan and Ke (Eric) Tang have suffered a set back. Will the Peken Global and Ku Group disappear? Possibly. However, the Ku Group’s and Telegram’s vision of a Web3 financial services entity is likely to thrive. Will the French judiciary amp up their discussions with Pavel Durov? Will the United Arab Emirates take a closer look at the Telegram operation which has a nominal headquarters in Dubai? Will the Swiss authorities pay a visit to the TON Foundation’s office in Zug, Switzerland? Will bad actors change their ways of hiding money in digital form?
Good questions. I think the French are on the job. The other entities may be reluctant to rock the good ship Telegram too much more. Could those folks have a vision for a financial system cut loose from traditional ways to do money business?
My thought is that BRICS, Russia, China, and some influential people have a goal. Telegram and the Ku Group were players, not leaders.
Stephen E Arnold, January 5, 2025
So You Want to Be an AI Millionaire?
January 27, 2025
A blog post from an authentic dinobaby. He’s old; he’s in the sticks; and he is deeply skeptical.
The US Attorney in the Northern District of California issued a remarkable public statement about an AI investor scheme that did not work. The write up states:
A 25-count indictment was unsealed today charging Alexander Charles Beckman, the founder and former CEO of GameOn, Inc., also known as GameOn Technology or ON Platform (“GameOn”), and Valerie Lau Beckman (“Lau”), an attorney who worked on GameOn matters and is married to Beckman, with conspiracy, wire fraud, securities fraud, identity theft, and other offenses. Lau was also charged with obstruction of justice. According to the indictment filed on Jan. 21, 2025, Beckman, 41, and Lau, 38, both of San Francisco, allegedly conspired to defraud GameOn investors, GameOn, and a bank.
I want to point out that this type of fraud is a glimpse of the interesting world of the Silicon Valley FOMO or fear of missing out. Writing checks based on a PowerPoint deck is a variation of playing roulette, just with money not a casino with no clocks.
However, in the official statement, there was some fascinating information about the specific method used by the individuals involved in the scam. The public document says:
As alleged in the indictment, Beckman’s statements to GameOn investors often described non-existent revenue, inflated cash balances, and fake and otherwise exaggerated customer relationships. To further the scheme, Beckman allegedly used the names of at least seven real people—including fake emails and signatures—without their permission to distribute false and fraudulent GameOn financial and business information and documents with the intent to defraud GameOn and its investors. Among the individuals whose names Beckman used to commit the fraud scheme was a GameOn CFO, two bank employees, and an employee of a major professional sports league. Beckman also fabricated two GameOn audit reports using the names, signatures, and trademarks of reputable accounting firms, including one of the Big Four accounting firms, to validate false financial statements, and distributed over a dozen fake bank statements for GameOn’s accounts as part of the scheme.
Building a financial crime is hard, detailed work. Here’s the twist used by those in the US Attorney’s news release:
After changing law firms multiple times, Lau joined a venture capital firm in September 2021. Lau is alleged to have provided Beckman with genuine audit reports that she obtained from her own employer that Beckman then used to create fake audit reports for GameOn. The indictment alleges that Lau personally emailed one of these fake audit reports to a GameOn investor’s representative, knowing it to be fake, to induce further investment into the company. In June 2024, Lau furthered the scheme to defraud by delivering a fake GameOn account statement—one that she knew falsely listed GameOn’s balance at a certain financial institution as over $13 million when the company’s true balance was just $25.93—to a bank branch in San Francisco and asking a bank employee to keep the fake statement in an envelope at the bank for Beckman to pick up later that day. Lau knew that Beckman planned to pick up the fake statement with a GameOn director who represented a major investor on GameOn’s board. Beckman picked up the fake statement with the GameOn director that day.
Several observations:
- Bad actors in this case did a great deal of work. Imagine the benefit of applying those talents to a non-fraudulent activity.
- The FOMO lure generates a pool of suckers for get rich quick schemes.
- The difference between a “real” AI play and one that is little more than a vehicle for big bucks resides on a fine line subject to Heisenberg’s uncertainty principle. Some crazy AI schemes get lucky and become “real” businesses. Everyone is surprised.
The clever work may be rewarded with new career opportunities for those involved.
Stephen E Arnold, January 27, 2025
FOGINT: Telegram Sends Message: We Are Coming to America!
January 15, 2025
A short blog post from the FOGINT team.
In 1988, Eddie Murphy starred in the film Coming to America. The film features this bit of dialogue:
- Lisa McDowell: So why did you come here?
- Prince Akeem: To find something special.
- Lisa McDowell: It’s a long way to travel.
- Prince Akeem: No journey is too great when one finds what he seeks.
What Telegram and its wing man, the Open Network Foundation, seek is a new market. Telegram, since the detainment of Pavel Durov (Telegram’s founder) has been pushing crypto. Pushing hard. Now the organization with more than 900 million users is coming to America. “No journey is too great when one finds what he seeks.” And what Pavel Durov seeks is a market for online gambling linked to crypto currency. Online gambling, link ups with organizations mostly unknown in the US, and a messaging system with a mind-boggling range of features.
Pavel Durov is coming to the New World, a land of opportunity for crypto and certain interests unlikely to be aligned with those of the United States and its allies. Thanks, creative You.com. Good enough.
Bloomberg published “Telegram Linked TON Blockchain to Expand in US As Trump Courts Crypto.” Similar stores have appeared in Cryptobriefing, Cryptotimes, and Cryptonews, among others. For example, “Telegram-Linked TON Eyeing U.S. Expansion” reports:
The TON Foundation, associated with Telegram Messenger, is planning to expand into the U.S. market, anticipating more favorable regulatory conditions under President-elect Donald Trump. As part of its U.S. expansion strategy, the foundation has appointed Manuel Stotz, founder of Kingsway Capital Partners, as its new president.
The film was a comedy. Telegram’s return to the United States is an important step. Telegram is not just a messenger service used by warfighters, purveyors of contraband, and goofy pitches for get rich schemes originating in Myanmar. Telegram is different from Signal, Threema, and WhatsApp. The decentralized organized organization has a social media component, a recruitment program, a venture fund, some smart software, and a conceptual commitment to ideas somewhat different from those in the US and some countries in Western Europe, including France where Pavel Durov is confined to the country as a legal proceeding involving him moves forward through the French judicial system.
As Prince Akeem said, “No journey is too great when one finds what he seeks.” Mr. Durov has found what he seeks. Telegram in America.
Stephen E Arnold, January 15, 2025
More about NAMER, the Bitext Smart Entity Technology
January 14, 2025
A dinobaby product! We used some smart software to fix up the grammar. The system mostly worked. Surprised? We were.
We spotted more information about the Madrid, Spain based Bitext technology firm. The company posted “Integrating Bitext NAMER with LLMs” in late December 2024. At about the same time, government authorities arrested a person known as “Broken Tooth.” In 2021, an alert for this individual was posted. His “real” name is Wan Kuok-koi, and he has been in an out of trouble for a number of years. He is alleged to be part of a criminal organization and active in a number of illegal behaviors; for example, money laundering and human trafficking. The online service Irrawady reported that Broken Tooth is “the face of Chinese investment in Myanmar.”
Broken Tooth (né Wan Kuok-koi, born in Macau) is one example of the importance of identifying entity names and relating them to individuals and the organizations with which they are affiliated. A failure to identify entities correctly can mean the difference between resolving an alleged criminal activity and a get-out-of-jail-free card. This is the specific problem that Bitext’s NAMER system addresses. Bitext says that large language models are designed for for text generation, not entity classification. Furthermore, LLMs pose some cost and computational demands which can pose problems to some organizations working within tight budget constraints. Plus, processing certain data in a cloud increases privacy and security risks.
Bitext’s solution provides an alternative way to achieve fine-grained entity identification, extraction, and tagging. Bitext’s solution combines classical natural language processing solutions solutions with large language models. Classical NLP tools, often deployable locally, complement LLMs to enhance NER performance.
NAMER excels at:
- Identifying generic names and classifying them as people, places, or organizations.
- Resolving aliases and pseudonyms.
- Differentiating similar names tied to unrelated entities.
Bitext supports over 20 languages, with additional options available on request. How does the hybrid approach function? There are two effective integration methods for Bitext NAMER with LLMs like GPT or Llama are. The first is pre-processing input. This means that entities are annotated before passing the text to the LLM, ideal for connecting entities to knowledge graphs in large systems. The second is to configure the LLM to call NAMER dynamically.
The output of the Bitext system can generate tagged entity lists and metadata for content libraries or dictionary applications. The NAMER output can integrate directly into existing controlled vocabularies, indexes, or knowledge graphs. Also, NAMER makes it possible to maintain separate files of entities for on-demand access by analysts, investigators, or other text analytics software.
By grouping name variants, Bitext NAMER streamlines search queries, enhancing document retrieval and linking entities to knowledge graphs. This creates a tailored “semantic layer” that enriches organizational systems with precision and efficiency.
For more information about the unique NAMER system, contact Bitext via the firm’s Web site at www.bitext.com.
Stephen E Arnold, January 14, 2025
FOGINT: The French Method for Communicating with Telegram Works
January 8, 2025
A post from the FOGINT team.
Direct action by French authorities has had a visible impact on Telegram. The FOGINT team noted a report in Arab News which provides some color to this observation. “Surge in Telegram User Data Passed to French Authorities.” The article reports:
Messaging service Telegram passed vastly more data on its users to French authorities in the second half of 2024 following founder Pavel Durov’s arrest in Paris, figures published by the platform showed.
The company said it handed over IP addresses or telephone numbers that Paris asked for in 210 cases in July-September and 673 in October-December.
Prior to the action by French authorities, Telegram had the reputation of ignoring legitimate requests from government authorities in the EU and elsewhere. The company explained that it stood for free speech. However, in April 2024, Telegram blocked Ukrainian government messages from Ukraine to Telegram users in Russia.
According to the article, Telegram explained:
He [Mr. Durov] and his supporters have claimed that most French and European authorities’ requests for user data were simply not being sent to the right department at the company and therefore received no response.
Several observations from the FOGINT team are warranted:
- Direct action by French authorities has been productive. Consequently Telegram has responded.
- Mr. Durov remains under observation by the French government with his legal proceedings moving at the speed of the French bureaucracy; that is, in a methodical manner.
- Mr. Durov’s releasing of user names associated with active investigations has pushed Telegram into a course change for 2025. The company is now emphasizing its crypto currency features, functions, and services.
Consequently Telegram’s technical platform and its ability to take advantage of growing interest in online gambling provide a new challenge to investigators. Its flurry of deals with crypto centric organizations in Eastern Europe and Southeast Asia pose a new challenge to investigators. Tracking financial transactions facilitated by Telegram’s global decentralized and distributed design becomes more costly and time intensive. Telegram’s smart automation allows transactions to move from crypto currency wallet to crypto currency wallet under different identities quickly. The likely use case for Telegram’s crypto services may be money laundering.
Stephen E Arnold, January 8, 2025
Dubai: The 21st Century Crypto “Silicon Valley”
January 7, 2025
Information from the FOGINT research team.
How prescient was Telegram when it selected Dubai as headquarters of a decentralized, distributed company? After Pavel Durov bounced from Moscow to Berlin, to Singapore to San Francisco, and ended up in Dubai, United Arab Emirates, his judgment seems good. FOGINT’s view is that he listened to UAE government officials and determined that that country wanted to become the financial hub for crypto currency. The goal of both UEA and Telegram aligned: Both wanted to exploit a desire of many countries and financial entrepreneurs from the US-centric financial system to one based on crypto currency, largely unregulated crypto currency cut loose from the shackles of the US financial system. A standard other than and competitive with the US dollar promised a shift of finance from Wall Street to Sheikh Zayed Road.
The plan is not a secret. “UAE to Attract Crypto Ventures Amid EU’s Stringent MiCA Regulation: Experts” reports that regulations in Western Europe are adding a kick in the pants for some crypto-centric innovators. The regulation is Markets in Crypto-Assets Regulation (MiCA). Its purpose is to establish a legal framework — that is, uniform rules for crypto assets — across the EU. MiCA might be the booster that the United Arab Emirates and other Middle Eastern states want. A more supportive regulatory environment and a thriving crypto community exist in the United Arab Emirates.
According to the Crypto News’ report:
The MiCA regulation introduces a pan-European licensing and supervisory regime for crypto-assets, exchanges, and service providers… Among its stringent requirements, small stablecoin issuers must hold 30% of their reserves in low-risk EU-based commercial banks, while major players like Tether face a mandate to maintain 60% or more in similar institutions. While aimed at ensuring market stability, these rules are seen as increasing operational costs, potentially undermining the financial viability of many firms.
The FOGINT team wants to point out that the UAE provides a “crucible” for crypto innovation; specifically:
- A regulatory environment different from that in the US and Western Europe; for example, a Virtual Assets Regulatory Authority (VARA) in Dubai oversees the regulation, licensing, and governance of virtual assets
- Tax benefits because there is currently no direct taxation on cryptocurrencies in the UAE
- Infrastructure provides a “Silicon Valley”-type of magnetic pull situated almost equidistant from Asian financial hubs and Western European money centers
- The UAE supports the crypto industry via the Dubai Multi Commodities Centre and the Dubai International Financial Centre
The UAE has cultivated a robust ecosystem for crypto and blockchain innovation with more than 500 crypto startups are now based in Dubai’s free zones. One poster child for Dubai’s flexibility is Telegram’s choice of the city as the location for its “headquarters.” (Keep in mind that Telegram is a distributed and decentralized organization, so the “staff” in Dubai is modest in size for the company’s size.) Plus, the UAE has implemented measures to ensure investor protection and market stability with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. Also, the Central Bank of the UAE approved a custodial insurance product to protect financial institutions and their clients from potential losses due to hacks or internal fraud.
One key question: Are there technical professionals with crypto experience in Dubai? The answer, in part, can be approached via the attendance at the November 2024 TON Foundation Gateway Conference. The conference attracted about 400 people in 2023. In November 2024, more than 2000 crypto savvy professionals participated in two day program held in Dubai. The UAE may be on the path to becoming the hot spot for crypto innovation.
Stephen E Arnold, January 7, 2025
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