US financial crime-fighting agency steps up its crypto efforts by hiring its first digital-currency advisor

US Treasury builiding
US Treasury building

  • The US Treasury’s crime bureau, FinCEN, hired its first chief digital currency advisor.
  • Michele Korver, who was in the Digital Currency Council for the Department of Justice, has got the job.
  • The focus of the role will be on preventing a boom in illicit activities in the digital space.
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The US government arm for tackling financial crimes has hired its first cryptocurrency chief, as it takes aim at illicit activity that has involved digital assets.

The Financial Crimes Enforcement Network (FinCEN) said on Tuesday it had hired Michele Korver as its first chief digital currency advisor.

FinCEN’s role is to clamp down on financial crimes like money laundering, and Korver will focus on fulfilling this mission in the digital space.

“Michele brings a wealth of digital currency expertise, and will be a tremendous leader in co-ordinated efforts to maximize FinCEN’s contribution to the innovative potential for financial expansion of opportunity, while minimizing illicit finance risk,” FinCEN acting director Michael Mosier said in a statement announcing the hire.

Regulators have cited the use of cryptocurrencies in money laundering as one factor in considering whether to introduce tougher rules for the industry.

The US was home to more crypto-related criminal activity in 2020 than anywhere else, Chainalysis said in a February report that covered ransomware and money laundering, among other areas. According to the crypto research firm, most cryptocurrency linked to illicit addresses in the US came from scams.

Korver is no stranger to crimes in the digital space as she served in the Digital Currency Council for the Department of Justice for three years up until this month. In her role there, she advised government attorneys, federal agents and other bureaus nationwide on digital currencies as well as developed policy on cryptocurrency seizures.

At the DOJ, Korver wrote or contributed to three papers on digital currency, including one on enforcement . In a paper earlier this year, she wrote about how cryptocurrencies are a unique money-laundering tool because they are decentralized and can keep identities hidden.

Money laundering in the crypto space typically involves criminals sending illicit proceeds to exchanges that are regarded as being risky, or less reputable than well-established ones. There, the funds end up in deposit addresses that are usually controlled by cyber criminals, according to Chainalysis.

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Treasury Secretary Janet Yellen warns of ‘absolutely catastrophic’ hit to economic recovery this summer if US can’t pay its bills on time

janet yellen fed
  • On Wednesday Secretary Yellen asked Congress to extend a July deadline to pay back some of the federal debt.
  • Without an extension, she warned of a “catastrophic” default that could hurt economic recovery.
  • Some in the GOP have signaled they want spending cuts in exchange for increasing the debt ceiling.
  • See more stories on Insider’s business page.

Treasury Secretary Janet Yellen urged Congress on Wednesday to extend a July 31 deadline to pay down a portion of the federal government’s $28 trillion in debt to investors and foreign governments.

Without the extension, she warned of an “absolutely catastrophic” default that would imperil the nation’s economic recovery from the pandemic.

“I think defaulting on the national debt should be regarded as unthinkable,” she told the Senate Appropriations Committee, calling it “utterly unprecedented in American history for the US government to default on its legal obligations.”

Though borrowing is a routine cycle the federal government uses to keep the country running through the sale of bonds, it’s reaching its “debt ceiling” on July 31 and needs to service its debt before it can borrow more. The Treasury has some ability to keep payments flowing beyond that date, but Yellen said it could exhaust those measures sometime in August during the month-long Congressional recess. Increasing the debt ceiling does not mean additional federal spending.

If the federal government defaults, Yellen said it could jumpstart a chain reaction of cash shortages starting with US bond holders, which include individuals, businesses, and foreign governments.

“I believe it would precipitate a financial crisis,” Yellen said. “It would threaten the jobs and savings of Americans and at a time we’re recovering from the COVID pandemic.”

Congress last suspended the borrowing limit in July 2019 for two years under President Donald Trump. Yellen also emphasized the pandemic is causing uncertainty around the Treasury’s emergency powers to step in with emergency payments if it became necessary.

Some Republicans have signaled they will press for spending cuts in exchange for signing onto a debt ceiling increase, despite supporting a surge of red ink under Trump. Among many Democrats, memories of a 2011 brawl between House Republicans and President Barack Obama on the debt ceiling are still fresh, as it sent stocks tumbling and caused the first downgrade to US credit.

“This is a page from the Obama-era economic sabotage playbook, and I’m not going to let Republicans play games with the economy for their political benefit,” Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, told Insider in April.

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US senators urge stricter crypto regulation after a flood of ransomware attacks

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Sen. Mark Warner (D-VA) on January 30, 2020 and Sen. Roy Blunt (R-MO) on February 3, 2020 both in taken in Washington, DC.

Two US senators called for stricter cryptocurrency regulation after a flood of ransomware attacks that plagued the country in the past months.

Democratic Senator Mark Warner of Virginia, chair of the Senate Intelligence Committee, told NBC Meet the Press on Sunday that regulators need to scrutinize the cryptocurrency loopholes that help criminals carry 0ut cyberattacks.

“There was some good things coming out of distributed ledger technology, but we are seeing now some of the dark underbelly,” Warner said. “If a company is paying, if there’s not some transparency of that payment, the bad guys will simply find another way to hide it.”

The senator said while there has been some progress when it comes to bipartisan legislation, the debate about cryptocurrencies and ransomware is “just starting.”

In May, the Colonial Pipeline paid DarkSide Ransomware a $5 million ransom to restore services, Bloomberg reported. The transaction was said to be untraceable.

The following month, JBS, the largest meat supplier in the US, revealed it was hit by a cyberattack that affected some of its systems. Whether there was a payment of ransom or not remains unclear.

Republican Senator Roy Blunt of Missouri, also a member of the Intelligence Committee, said regulators need to demand more transparency when it comes to attacks like these to protect the American financial system.

“Nobody wanted to report that they had been hacked. That was a fight we’ve been having now for almost a decade,” he told NBC Meet the Press. But “the only way you can begin to get on top of this is to know how pervasive the problem is.”

He continued: “We have a lot of cash requirements in our country, but we haven’t figured out in the country or in the world how to trace cryptocurrency.”

“There ought to be more transparency if a company does pay, so we can go after the bad guys,” Warner said. “Right now what’s happening around ransomware, not only are the companies often not reporting that they are attacked, but they’re not reporting the ransomware payments.”

The Biden administration is reportedly looking at how to increase oversight of the cryptocurrency market to protect retail investors, sources told The Washington Post. The administration is also analyzing potential gaps that may be used to finance illicit activities, sources said.

US Treasury secretary Janet Yellen has been critical of cryptocurrencies in the past, calling out their misuse, which she described in February as “a growing problem.”

“I see the promise of these new technologies,” the former Federal Reserve chief said. “But I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

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Bill Gross is shorting US Treasurys and says inflation will be as high as 4% in coming months

FILE PHOTO: Billionaire investor Bill Gross listens during the Milken Institute Global Conference in Beverly Hills, California, U.S., May 3, 2017. REUTERS/Lucy Nicholson/File Photo

Billionaire “Bond King” Bill Gross told Bloomberg he is short US Treasurys and is expecting inflation to spike up in the US in the near future.

The PIMCO co-founder said in a Bloomberg TV interview he was short US Treasurys heading into the sell-off last week where the 10-year Treasury rose above 1.6% and prices fell. On Wednesday, the yield on the benchmark 10-year Treasury note hit 1.67%, a level not seen since mid-January 2020.

He’s still short Treasurys, and he also expects inflation to rise above the Fed’s target to 3-4% in the next few months as nearly $2 trillion in fiscal stimulation enters the market and household income goes “gangbusters.”

“There’s no reason to expect that inflation at least, not necessarily treasuries, but inflation at least will be screaming higher over the next several months and that’s what some investors are anticipating,” Gross said.

He added: “Inflation, you know, currently below 2% now is not going to be below 2% in the next few months. I see a 3% to 4% number ahead of us.”

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