SEC - Page 183

The Hong Kong Securities and Futures Commission (SFC) has been inundated with crypto license applications, totaling 18 from various local and global players over a span of two months.

Among the applicants are prominent names like Huobi HK, Crypto.com, OKX, Bybit, and DFX Labs.

To meet the stringent licensing requirements, applicants must undergo thorough due diligence checks, including comprehensive financial audits, which can be a costly endeavor.

It’s reported that Web3 firms are spending up to $25 million to ensure compliance and build robust applications for these licenses.

The clarity provided by Hong Kong’s regulatory framework regarding exchange licensing has not only attracted crypto exchanges but also traditional brokerages like Tiger Brokers.

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Tiger Brokers recently expanded its SFC license to incorporate crypto trading, acknowledging the growing significance of cryptocurrencies as an asset class and leveraging its fintech expertise to integrate Web3 technology.

Additionally, Harvest Hong Kong, a major Chinese fund manager, submitted the first application for a spot Bitcoin exchange-traded fund (ETF) on Jan. 26, marking a significant development in Hong Kong’s crypto landscape.

In terms of security measures, Hong Kong has imposed a minimum insurance requirement of 50% for licensed crypto exchanges to safeguard customers’ assets.

Notably, OSL Exchange has taken steps to exceed this requirement by partnering with Canopius, a Lloyd’s of London underwriter syndicate, to secure an insurance policy covering 95% of its users’ assets over a two-year period.

This underscores the increasing focus on security and risk mitigation within the crypto industry.

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Microsoft has revealed a substantial investment into Europe, earmarking £1.5 billion to expand its artificial intelligence (AI) and cloud infrastructure in Spain.

Following a meeting with Spain’s Prime Minister, Pedro Sánchez, Brad Smith, Microsoft’s vice chair and president, confirmed the company’s commitment to Spain over the next two years.

Smith emphasised that their endeavour extends beyond mere data centre construction, highlighting Microsoft’s dedication to fostering the nation’s “security, development, and digital transformation of its government, businesses, and people.”

The company’s engagement with Spain spans 37 years, with a recent milestone being the establishment of a new research and development centre for AI technologies in Barcelona, announced in September 2021.

Alberto Granados, President of Microsoft Spain, hailed this investment as testament to Spain’s prowess in the digital arena.

This initiative follows Microsoft’s recent £2.2 billion investment into Germany’s AI landscape, announced on February 15.

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Echoing their Spanish strategy, Microsoft aims to utilise the funds over the next two years to fortify German AI infrastructure, erect new data centres, and provide AI skills training.

The surge of Big Tech investments in Europe aligns with the imminent enactment of the EU AI Act legislation.

Concurrently, France’s Ministry of Economy, Finance, and Industrial and Digital Sovereignty, in collaboration with Google, unveiled plans to establish an AI-focused hub in Paris.

This hub, set to accommodate nearly 300 researchers and engineers, will bolster France’s AI aspirations.

Notably, Google unveiled its “AI Opportunity Initiative for Europe” two days prior, vowing a £21.4 million investment in AI skills training for Europeans.

These investments underscore the tech industry’s recognition of Europe’s burgeoning AI landscape and the imperative to nurture local talent.

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The realm of artificial intelligence (AI) has experienced notable expansion in recent years, with forecasts indicating that, by 2030, the sector could contribute up to £15.7 trillion to the global economy — a sum surpassing the current economic outputs of key players like China and India combined.

One noteworthy development in this domain, attracting significant attention of late, is the emergence of “deepfakes” — highly realistic video and/or audio recordings crafted using AI, capable of replicating genuine human appearances or voices to a degree often indistinguishable from the real thing.

A recent viral post on X exemplified how some individuals are utilising readily available open-source and commercial software to manipulate a person’s selfie with generative AI tools, fabricating counterfeit ID images that could potentially deceive many contemporary security measures.

As the digital landscape progresses, the proliferation of AI-generated deepfakes poses substantial challenges to the established Know Your Customer (KYC) framework. Toufi Saliba, CEO of HyperCycle, a company developing the requisite components for enabling AI microservices to communicate seamlessly, explained to Cointelegraph that a significant aspect of this challenge lies within the existing security processes themselves. He remarked:

“Perhaps KYC itself is the attack vector on self-sovereignty, and these [deepfake] tools are proving how today’s KYC systems could be rendered obsolete in the near future.

A resilient solution would involve using certain cryptography properly to service the claimed intent of KYC proponents, thereby also protecting future generations.”

Saliba underscored the implications of AI and deepfakes for the cryptocurrency sector, stressing the urgent need for swift adaptation.

“This issue of fake image creation is likely to disrupt entire centralized systems from the inside out, thus presenting one of the best opportunities for well-intentioned regulators and centralized entities to realize that cryptography can come to the rescue when needed,” he asserted.

Regarding the detection of deepfake content, Dimitry Mihaylov, an AI research expert for the United Nations, stated that with criminals increasingly employing sophisticated tools to produce realistic fake identification documents, unforeseen challenges are emerging.

He emphasised the imperative for industries across the spectrum to evolve rapidly, adding:

“The market for AI-generated image detection is evolving with projects like FakeCatcher, a project that has been developed in partnership with Umur Ciftci. The technology showcases the potential of real-time deepfake detection with a 96% accuracy rate.”

Looking ahead, Mihaylov anticipates a significant shift in regulatory approaches to KYC, suggesting a future where dynamic and interactive verification processes become standard.

“We may see the introduction of more dynamic KYC procedures, like video KYC, as regulatory frameworks adapt to these technological advancements,” he suggested.

The impact of deepfakes reverberates across various industries, including cryptocurrency.

For instance, a platform named OnlyFake recently gained attention for purportedly circumventing the KYC protocols of several prominent cryptocurrency trading platforms successfully.

At just £15 each, the platform claims to produce counterfeit driver licenses and passports for 26 nations, including but not limited to the United States, Canada, the United Kingdom, Australia, and several European Union member states.

On Feb. 5, a company called 404 Media revealed that it had leveraged OnlyFake’s services to evade the KYC verification process of the popular crypto exchange OKX.

Likewise, leaked discussions unveiled OnlyFake’s clientele celebrating their success in bypassing verification processes at numerous other cryptocurrency exchanges and financial institutions, including Kraken, Bybit, Bitget, Huobi, and PayPal.

READ MORE: Grayscale’s Bitcoin ETF Sees Slowing Outflows, Potential for Further Bleeding

The process of generating a counterfeit document on the website is reportedly swift, with the platform capable of producing up to 100 fake IDs at once using Excel spreadsheet data alone.

Additionally, users have the option to include their own photo or select one from a curated “personal library of drops,” foregoing reliance on a neural network.

The counterfeit driver’s licenses and passports are depicted on various domestic surfaces like kitchen counters, bedsheets, carpets, and desks, mimicking the typical presentation for online verifications.

One post even showcased a fabricated Australian passport bearing the details of a former U.S. president laid out on a piece of fabric.

In late 2022, blockchain security company CertiK unveiled an underground marketplace where individuals offered their identities for sale for as little as £8.

These individuals consented to serve as the legitimate face for fraudulent cryptocurrency initiatives and to establish banking and exchange accounts for users otherwise barred from certain platforms.

Additionally, the widespread availability of AI deep fake technology has raised concerns among leaders in the cryptocurrency sector, particularly regarding the reliability of video verification processes employed in certain identity validations.

Binance chief security officer Jimmy Su expressed concern in May 2023 about the rise in fraudsters using deep fake technology to bypass exchange KYC procedures, warning that these video forgeries were approaching a level of realism capable of deceiving human evaluators.

Finally, a study by Netherlands-based Sensity AI revealed that liveness tests used for identity verification were significantly vulnerable to deepfake attacks, enabling scammers to substitute their own faces with those of others.

A man from Kerala, India recently fell victim to a ruse where the scammer, posing as his friend, stole £40,000 (approximately $500). Similarly, a deepfake video of Elon Musk sharing misleading crypto investment advice circulated on Twitter last year.

As we advance towards a future shaped by artificial intelligence, there is ample evidence suggesting that the threat of “face swap” deepfake attacks will continue to rise.

A recent study noted that attacks against remote identity verification systems surged by 704% between 2022 and 2023, attributed to the accessibility of free and low-cost face swap tools, virtual cameras, and mobile emulators.

Furthermore, with each passing month, hackers and scammers appear to be growing more sophisticated with their attacks, as evidenced by the emergence of digital injection attack vectors and emulators, enabling miscreants to create and utilise deepfakes in real-time, posing a serious challenge to both mobile and video authentication systems.

Consequently, it will be intriguing to observe how this emerging security paradigm evolves, particularly considering humans’ increasing reliance on these advanced technologies.

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Ether’s price breached the £3,000 mark on February 20th for the first time since April 2022.

From a value of £2,881 on February 19th, Ether surged over 4% in the past 24 hours and 74% over the last year, reaching a year-to-date peak at £3,000.97 on Binance at 13:45 UTC, as per CoinMarketCap data.

The surge in Ether’s price coincides with anticipation surrounding the potential approval of a spot Ether exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) and the upcoming implementation of Ethereum Improvement Proposal (EIP) 4844 through the Dencun upgrade.

According to current odds from Polymarket, there’s a 45% likelihood of the SEC approving a spot Ether ETF by May 31st.

Bernstein, a wealth management firm, recently suggested that ETH might be the only other cryptocurrency to secure an ETF spot in the United States.

“Ethereum with its staking yield dynamics, environmentally friendly design, and institutional utility to build new financial markets, is well positioned for mainstream institutional adoption,” analysts Gautam Chhugani and Mahika Sapra reportedly wrote in a note on Feb. 19.

Meanwhile, Bloomberg’s Eric Balchunas forecasts a 70% chance of approval, suggesting a positive outlook for Ether ETFs amid regulatory delays.

READ MORE: Coinbase Assures Genesis GBTC Sell-Off Won’t Rattle Crypto Markets

The last time Ether exceeded £3,000 was almost 22 months ago, on May 4, 2022, when it hit a high of £2,966 before entering a prolonged bear market that saw its price plummet to £883 in June 2022.

ETH’s recent surge may also be linked to the much-anticipated Dencun upgrade of the network.

The Dencun upgrade, scheduled for March 13, is expected to incorporate several EIPs, including EIP-4844, which introduces proto-danksharding.

This upgrade streamlines the transaction process by storing some data off the blockchain, thereby accelerating transactions and reducing costs.

Data from CoinGlass indicates a growing open interest (OI) in Ether futures markets, reaching a record £10.19 billion, affirming the current volatility in ETH’s price.

Many market participants anticipate the recent bullish momentum to persist amidst any developments regarding the approval of a spot Ether ETF and potential movements in the broader cryptocurrency market.

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Zap Protocol stands as a notable endeavor within the blockchain and cryptocurrency landscape, aiming to foster innovation and accessibility in decentralized finance (DeFi) and beyond. Its ambition is to streamline the integration and utilization of smart contracts and decentralized applications (dApps) across various industries by providing an open platform for the creation and deployment of oracle services.

These services are vital for dApps to interact seamlessly with real-world data and external systems, bridging the gap between blockchain technology and practical, real-world applications.

Overview of Zap Protocol

Zap Protocol offers a multifaceted infrastructure designed to enhance the functionality and interoperability of smart contracts by enabling them to securely and efficiently access a wide range of external data sources and APIs. This is achieved through the use of oracles, which are entities that fetch and verify external data for smart contracts. In the context of Zap Protocol, these oracles are decentralized, thus ensuring that the data they provide is reliable, tamper-proof, and transparent.

The protocol leverages the power of blockchain technology to create a decentralized marketplace for data feeds and other services that can be used by smart contracts. This marketplace allows data providers to list their services, which can range from financial data, weather information, to various other types of external data. Smart contract developers can then easily access and integrate these services into their applications, enabling them to create more complex, responsive, and useful dApps.

Key Features and Benefits

1. Decentralization: By operating on a decentralized network, Zap Protocol ensures that the data provided by oracles is not controlled by any single entity, which significantly reduces the risk of manipulation and increases trust in the data used by smart contracts.
2. Flexibility: The protocol supports a wide range of data types and sources, making it a versatile tool for developers looking to create dApps for various industries and purposes.
3. Security: The use of blockchain technology ensures that all transactions and data exchanges on the Zap Protocol are secure and immutable, providing a reliable foundation for the development of dApps.
4. Tokenization: Zap Protocol introduces its native token, ZAP, which is used within the ecosystem for transactions, staking, and governance. This tokenization aspect facilitates a self-sustaining economy where users are incentivized to participate and contribute to the network.

Use Cases

The applications of Zap Protocol are vast and diverse, reflecting its potential to revolutionize how dApps interact with the real world. Some notable use cases include:

• Finance: Integration of real-time financial data into DeFi platforms for accurate and decentralized financial services.
• Insurance: Automated, blockchain-based insurance policies that trigger payments based on verifiable, real-world data.
• Supply Chain Management: Transparent tracking of goods as they move through the supply chain, with data integrity ensured by decentralized oracles.
• Gaming: Creation of dynamic, data-driven gaming experiences that can respond to real-world events and data.

The ZAP Token

The ZAP token is central to the functioning of the Zap Protocol ecosystem. It serves multiple purposes, including paying for data feeds, staking to participate in the governance of the protocol, and incentivizing data providers and users to maintain and enhance the network’s value and security.

Where to Buy ZAP Tokens

ZAP tokens can be purchased on several cryptocurrency exchanges, both centralized and decentralized. Availability can vary based on the region and the regulatory environment, so it’s essential to check the most current listings. Some of the platforms where ZAP tokens might be available include:

1. Centralized Exchanges (CEXs): ZAP is listed for live trading on numerous CEXs, including Poloniex and Bitrue.
2. Decentralized Exchanges (DEXs): For those preferring a more decentralized approach, platforms such as Uniswap, SushiSwap, and 1inch offer the ability to trade ZAP tokens directly from a cryptocurrency wallet without the need for an intermediary.
3. Crypto Wallets: Some crypto wallets offer integrated services that allow users to buy tokens like ZAP directly within the wallet interface. This option combines convenience with the security of not having to transfer tokens between a wallet and an exchange.
4. P2P Platforms: Peer-to-peer platforms might also offer ZAP tokens for trade, allowing for direct transactions between individuals without the need for a centralized platform.