Pakistan Government to Put the Searchlight on Bitcoin Traders Says Local Media

Powerful Pakistan government and media officials appear to be contradicting the domestic population’s embrace of bitcoin.   

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Pakistan Government on the Defensive, Maybe

Karachi, Pakistan’s Dawn, a widely circulated and read periodical and website in English, is rather cosmopolitan. Covering bitcoin, however, its website curation seems to have a decidedly negative slant.

Pakistan Herald Publications Limited is Dawn‘s owner, and its CEO is Hameed Haroon, noted regional journalist and member of a highly influential family in the country.

In one dispatch from Mr. Haroon’s flagship, reprinted all over the world, the headline announced, “FBR goes after bitcoin traders.”

Pakistan Government to Put the Searchlight on Bitcoin Traders Says Local Media
Faisal Khan’s only evidence Pakistan’s government is paying any attention to bitcoin.

FBR is Pakistan’s Federal Bureau of Revenue, its principal collector of tax.

“The top intelligence department,” the piece insisted, “is investigating cases where investors trade digital currencies probably to evade taxes or launder money.”

The sentence-inserted link refers to the site’s own coverage of bitcoin reaching 1000 USD early this year. Not a single reference to FBR nor an investigation.

“A senior tax official said people evade tax and launder money using cryptocurrencies,” the article asserts without a single quote or reference. “They buy bitcoin to launder their tax-evaded money […], adding that they park their black money out of Pakistan in many cases.”

Paraphrases are allowed, of course, but this drove news.Bitcoin.com to search relevant Pakistani government pronouncements on bitcoin specifically, cryptocurrencies generally.

Nothing.

The Dawn piece goes on in this manner, listing a veritable alphabet soup of agencies and investigators and laws employed to hunt bitcoin traders without citing a documented source.

Pakistan Government's and Street's Tensions with Bitcoin
Screen Shot of SBP by Faisal Khan, showing no reference to the bank’s position on bitcoin.

What Blogs and Independent Sites Know

Faisal Khan, financial technology scout for venture capitalists and payments consultant, based in Turkey, blogged his similar bafflement.

After he too read the Dawn piece, he “wanted to explore the basis under which these raids are being conducted and wanted to comment on this further.”

He searched and searched.

Mr. Khan writes, “I’ve searched […], trying to find any circular &/or notification, gazette, SRO, press release, etc. related to Bitcoin &/or Cryptocurrency – but I could not find it.”

His knowledge of Pakistan’s legal history is impressive, and he cites all the documents he examined.Pakistan Government's and Street's Tensions with Bitcoin

“For bitcoin to be considered for money-laundering,” Mr. Khan notes, “it has to be defined into an asset class whereby [bitcoin] has been declared [money] or some form of an asset as per ‘some’ legal definition in some law in Pakistan.”

He concludes, “Right now, the Government of Pakistan in no way recognizes [bitcoin] as legal tender or legal ‘anything.’ It has no legal standing under any law in Pakistan.”

Since the series of articles in Dawn, bitcoin seems to be capturing the attention of Pakistani rupee holders anyway.

Localbitcoins exchange activity in the region as of this writing has risen exponentially, matching a global pattern.

Citing Japan’s approach, long-time Pakistani commodity trader Shahan Rehman urged acceptance “by a country compels people to jump on the bandwagon, increasing its price massively.”

As of now, official government pronouncements are not available to the public.

Are Pakistan’s laws on bitcoin just not available digitally? Is the government on purpose holding back? Tell us in the comments below.

Greek Authorities Arrest Suspected BTC-e Mastermind

123Suspected BTC-e mastermind, Alexander Vinnik, was arrested on Wednesday whilst vacationing with his partner in Northern Greece. The 38-year-old Russian is suspected of directing a criminal organization accused of laundering over $4 billion through BTC-e since 2011. Accusations of Vinnik’s involvement in laundering bitcoins that were stolen during the devastating hack that resulted in Mt.Gox’s insolvency are also mounting.

 

BTC-e Is Currently Offline, Hosting a Static Front Page Displaying the Message “Site Is Under Maintenance. We Apologize for the Inconvenience.”

Greek Authorities Arrest Suspected BTC-e Mastermind

A 38-year-old Russian man has been arrested in Northern Greece for his suspected role in the operation of the shadowy bitcoin exchange BTC-e. The man, Alexander Vinnik, is accused of having facilitated the laundering of over $4 billion worth of bitcoin since 2011. Vinnik is currently in the custody of the Thessaloniki Court of Appeals, pending an application for his extradition to the United States to commence.

BTC-e is currently offline, hosting a static front page displaying the message “Site is under maintenance. We apologize for the inconvenience.” Updates are being provided via the exchange’s Twitter account.

The arrest was carried out by Greek authorities working in partnership with US agencies. The FBI had been surveilling Vinnik for over a year, as documents pertaining to his arrest make reference to a Webmoney account that was accessed from a luxury Abu Dhabi hotel in May 2016. Electronic equipment is reported to have been seized from his hotel room.

Evidence Is Compiling Linking Vinnik to the Mt.Gox Hack That Saw $2.1 Billion Worth of Customers’ Bitcoin Stolen

Greek Authorities Arrest Suspected BTC-e Mastermind

Greek have police made an official statement regarding the arrest, stating that “an internationally sought ‘mastermind’ of a crime organization has been arrested. Since 2011 the 38-year-old has been running a criminal organization which administers one of the most important websites of electronic crime in the world.” The US Department of Justice has described BTC-e as “one of the largest entities in the field of electronic money laundering and money laundering in the world”, stating that the company’s “illegal proceeds come from a number of high-level piracy, ransom repayment systems, drug trafficking and tax systems”.

Evidence is also compiling that links Vinnik to the infamous of Mt.Gox hack that saw approximately $2.1 billion worth of customers’ bitcoin stolen. Wizsec claims that approximately 300,000 bitcoin stolen in the hack was laundered via BTC-e. Crucially, their reports suggest that many of the stolen bitcoins were immediately moved from wallets owned by Vinnik to BTC-e internal storage, rather than customer deposit wallets. Similar patterns have also been identified in the circulation of bitcoin “stolen from Bitcoinica, Bitfloor and several other thefts from back in 2011 and 2012.”

Do you think that Vinnik will be extradited to the United States? Share your thoughts in the comments section below!

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin Price

Japanese companies continue to benefit from embracing Bitcoin, following its approval by the government as a form of payment. Small businesses listed on stock exchanges that offer bitcoin-related services are seeing their share prices rise as the price of bitcoin spikes.

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Bitcoin’s Gains Spilling into Traditional Stock Markets

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin Price
Prime Minister Shinzo Abe

On April 1, Prime Minister Shinzo Abe’s government legalized bitcoin as a form of payment. The law, which enforces strict rules on bitcoin exchanges, gives the digital currency more credibility. Many companies subsequently began integrating bitcoin into their business models, with some forming partnerships with small bitcoin startups.

As bitcoin becomes more widely accepted in Japan, its price rises sharply. The cryptocurrency has risen approximately 180 percent at press time since the beginning of the year, according to data from Japan’s largest bitcoin exchange by volume, Bitflyer.

Meanwhile, small exchange-listed companies that have started incorporating bitcoin into their businesses are seeing a similar pattern in their share prices. A well-known Japanese day trader, Naoki Murakami, said that “All of these gains coincide with bitcoin’s rally,” Bloomberg reported on Monday. He explained:

That has made the stocks of these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. […] Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.

“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ he noted.

In addition, he explained that Japanese stock markets have relatively loose listing requirements, therefore many small companies are able to go public with “no income and a market value of as little as $10 million.” That is why the Tokyo Stock Exchange is home to hundreds of small companies, he explained, adding that:

It’s probably not a coincidence that Japan’s stock market is being seen as a proxy for bitcoin investments.

Here are Some Winners

Among companies that are seeing their stocks rally after they announced businesses relating to digital currencies are Remixpoint Inc, Infoteria Corporation, and Fisco Ltd, according to Bloomberg.

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin PriceRemixpoint Inc. is the largest of the three companies, having a market value of about 31.3 billion yen ($283 million). The company opened a bitcoin exchange, Bitpoint, at the end of May before announcing its plans to install over 100,000 ATMs nationwide. Its stock has more than doubled in value since the partnership with Peach Aviation to bring bitcoin payments to the airline, Bloomberg noted. “Remixpoint is trading at 514 times earnings, the highest among all Japanese technology companies worth more than 30 billion yen.”

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin PriceInfoteria Corporation partnered with bitcoin exchange platform developer Tech Bureau and is testing ways to use blockchain technology for proxy voting. The company saw its shares up more than 50 percent in the past month. Similarly, financial information services provider Fisco Ltd. began operating a bitcoin exchange last year and is up about 25 percent since early May, the news outlet detailed.

When the price of bitcoin fell, these companies’ share prices also experienced a similar downturn. However, overall, their gains have significantly outweighed their losses.

Do you think these companies will continue to benefit from bitcoin’s price rise? Let us know in the comments section below.

Federal Board Of Revenue goes after bitcoin traders In Pakistan

5925dda2f0facISLAMABAD: The top intelligence department of the Federal Board of Revenue (FBR) is investigating cases where investors trade digital currencies probably to evade taxes or launder money.

The State Bank of Pakistan (SBP) does not recognise cryptocurrencies, such as bitcoin. These digital currencies are also traded as commodities.

A senior tax official said people evade tax and launder money using cryptocurrencies. They buy bitcoin to launder their tax-evaded money, he said, adding that they park their black money out of Pakistan in many cases.

The anti-money laundering cell of the Directorate General of Intelligence and Investigation, Inland Revenue (I&I-IR) started investigating on Wednesday the financial affairs of people having huge investments in cryptocurrencies, including bitcoin.

Tax evasion is a predicate offence under Anti-Money Laundering Act 2010. The government has appointed the Directorate General of I&I-IR as investigating and prosecuting agency in cases where tax-evaded money is laundered.

According to the tax official, the trade of bitcoin is on the rise in Pakistan. The initial inquiry revealed that bitcoin is being traded mostly against cash in the country.

The current price of bitcoin is hovering around Rs200,000. Upon receipt of credible information, the Directorate General of I&I-IR undertook a search to trace the trade.

Summonses were served on major traders of bitcoin for further investigation. As per a report published online, the trade volume of bitcoin in Pakistan increased 400 per cent during December 2016 alone.

Bitcoin is sometimes used as a tool for money laundering due to the decentralisation of peer-to-peer online transactions and their anonymity. No laws currently regulate the trade in bitcoin.

According to the tax official, the inquiry showed major traders of bitcoin are employed in a multinational telecommunication company in Islamabad. They also maintain bank accounts in a few other countries.

However, they were not reporting their business activities to the tax authorities, which gave rise to the suspicion of money laundering.

The tax official said there is a high chance of tax evasion and money laundering in the trade of cryptocurrency.

Therefore, an in-depth probe is being carried out to gauge the actual quantum of bitcoin trading and scrutinise whether its income is being properly reported under the tax laws.

Published in Dawn, May 25th, 2017