#CyberFLASH: What money without borders or bankers looks like

Hacker-took-83K-Bitcoins-cyber-experts-620x330How Canadians interact with money – both physical and digital – is changing as financial technology evolves.

Bitcoin may be the most famous cryptocurrency since it emerged in 2009, but it stands far from alone on the financial landscape.

There are hundreds of cryptocurrencies worldwide, which are in essence a medium of exchange like the Canadian dollar that are fully decentralized from the control of governments. Cryptocurrencies are virtual currencies that use encryption to generate and regulate the units of currency across many computers, so they are not issued by a central authority.

Though each may be tailored to fulfill certain criteria, such as those that focus more heavily on privacy and anonymity, cryptocurrencies were all designed to meet a number of basic aims.

“The whole point about cryptocurrency is it’s a fast and inexpensive way to move money around the world outside of the banking system,” says Danny Wettreich, the founder and chief executive officer of GreenBank Capital Inc. He points out that the advantage is that it can be done without an intermediary, such as a bank, which would habitually take its cut for rendering its services.

As a result, Toronto-based GreenBank Capital, which also has offices in the United States and the Britain, has developed GreenCoinX, which it calls the world’s first cryptocurrency where users are not anonymous and features digital identification. Opening a GreenCoinX account is much like opening a traditional bank account, where users must present government-issued identification, such as a passport or driving licence, to qualify.

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#CyberFLASH: Senate recommends Ottawa use a ‘light touch’ when regulating Bitcoin

Hacker-took-83K-Bitcoins-cyber-experts-620x330TORONTO – A report from Canada’s Senate says Ottawa should use a “light touch” when considering any regulation of Bitcoin and other digital currencies in order to avoid stifling the growth of these new technologies.

The report, the culmination of more than a year of research by the Standing Senate Committee on Banking, Trade and Commerce, recommends that the federal government employ “almost a hands-off approach” when it comes to virtual currencies, monitoring the situation as it evolves and only introducing regulations as necessary.

The Bitcoin Alliance of Canada says it welcomes the report’s findings and is urging the government, as well as the private sector, to consider them.

Bitcoin is a digital currency that is exchanged through peer-to-peer computer networks and is not issued or controlled by a central bank or any other authority.

Virtual currencies like Bitcoin employ blockchain technology — computer code that makes up the currency’s underlying architecture.

The Senate report says blockchain technology has many promising applications, and recommends that the federal government consider using it to enhance the protection of private information.

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#CyberFLASH: Hacker took $83K Bitcoins : cyber experts

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Scientists with a cyber security firm say they have uncovered that a hacker used access to a Canadian Internet provider to hijack large foreign networks, stealing more than US$83,000 in virtual currency.

The U.S.-based Dell SecureWorks says the hacker operated between February and May this year.

Joe Stewart, director of malware research at SecureWorks, said the hacker targeted firms that hosted servers generating virtual currencies such as Bitcoin — including Amazon in the U.S. and OVH in France — and redirected some activity.

“We were able to track the origins to a Canadian ISP,” he told The Canadian Press from Las Vegas, where he was attending a computer security conference.

“Someone had access to a router at that ISP. It had to be someone who managed to hack into that router and gained administrative rights, or someone who already had access.”

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#CyberFLASH: Ottawa bitcoin exchange defrauded of $100,000 in cyber currency

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An Ottawa-based bitcoin exchange has been defrauded of more than $100,000 worth of the cyber currency in a heist that was anything but sophisticated.

The Ottawa police are investigating an Oct. 1, 2013, incident at Canadian Bitcoins, when someone opened an online chat session with a technical support worker at Granite Networks, now owned by Rogers Communications, and claimed to be Canadian Bitcoins owner James Grant.

He claimed to have a problem with a server and asked the attendant to reboot it into recovery mode, allowing him to bypass security on the server.

“It’s ridiculous,” said the real James Grant when asked about the incident. “There was absolutely zero verification of who it actually was.”

According to a text copy of the chat session obtained by the Citizen, at no point during the nearly two-hour-long conversation was the caller asked to verify his identity. After being asked, the technical support worker gained access to Grant’s locked server pen, plugged in a laptop and then manually gave the fraudster access to Canadian Bitcoins servers, where he cleaned out a wallet containing 149.94 bitcoins, valued at around $100,000.

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#CyberFLASH: Alberta bitcoin bank Flexcoin shuts down after hackers stole all of its online coins

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Flexcoin, a Canada-based bitcoin bank, said it was closing down after losing bitcoins worth about $600,000 to a hacker attack enabled by flaws in its software code.

Flexcoin said in a message on its website that all 896 bitcoins stored online were stolen on Sunday. Its collapse came after Mt. Gox, once the world’s dominant bitcoin exchange, filed for bankruptcy protection in Japan and said it may have lost some 850,000 bitcoins due to hacking.

“As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately,” Flexcoin said.

It later posted an update on its site saying that the attack exploited a flaw in its code on transfers between users and involved inundating the system with simultaneous requests to move coins between accounts.

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#CyberFLASH: How a Canadian was charged with money laundering in sale of bitcoins

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On a hot Florida morning a week ago, a young Quebecker named Pascal Reid showed up at a boutique hotel in Miami’s Art Deco district, carrying a laptop and an electronic wallet that held $316,000 in digital currency.

Mr. Reid was expecting to meet a man who had purchased bitcoins from him before. The buyer was, in fact, an undercover agent for the U.S. Secret Service, which arrested Mr. Reid and charged him with money laundering.

The case has shone a spotlight on the way that virtual currencies such as bitcoin have been used for illicit purposes. The arrest is also significant because it targeted people using Localbitcoins.com, an online directory that is one of the last places where bitcoins can be traded anonymously, an expert said.

“Bitcoin may be pseudonymous, but actually buying and selling bitcoins anonymously is not easy,” Nicholas Weaver, a senior researcher at the University of California at Berkeley’s International Computer Science Institute, said in an e-mail interview.

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Canadian regulator takes lighter view of Bitcoin

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It appears Canada’s anti-money laundering regulator will leave Bitcoin exchanges in the country alone for now.

LibertyBit, which exchanges the virtual currency Bitcoin for U.S. and Canadian dollars, has been told it does not have to register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), said CEO Paul Szczesny, via email on Tuesday.

FINTRAC, which was created in 2000, is responsible for investigating and preventing money-laundering and activities used to fund terrorism.

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