Monthly Archives: May 2013

Digital currency firms rush to adopt anti-money laundering rules

By Emily Flitter and Brett Wolf

NEW YORK/ST. LOUIS (Reuters) – These are unsettling times for digital currency businesses and the venture capitalists backing them.

On Tuesday, authorities in Spain, Costa Rica and New York arrested five people at the digital currency firm Liberty Reserve, including its founder Arthur Budovsky, and seized related bank accounts and Internet domains.

It was a further wake-up call for those involved in digital currencies, such as the most prominent, Bitcoin, that they need to comply with anti-money laundering rules or risk facing a crackdown.

They had already been put on notice – first by an April 2012 report from the U.S. Federal Bureau of Investigation that explained how Bitcoin was being used by criminals to secretly transfer money around the world, and then this March by the U.S. Treasury Department. Its anti-money laundering arm, the Financial Crimes and Enforcement Network (FinCEN) stated that digital currency firms needed to comply with the same anti-money laundering rules as other financial institutions, including monitoring customers and reporting suspicious activity to the government.

As regulators tighten the screws, businesses built around digital currencies are trying to satisfy new monitoring requirements without letting public enthusiasm for the technology-based concept slip away.

“I think the whole ecosystem is maturing very quickly and we have young companies that are just beginning to understand how to navigate the regulatory issues,” said David A. Johnston, co-founder and executive director of BitAngels, a new venture which only this week announced it had raised $6.7 million to fund startups tied to Bitcoin.

Digital currency is electronic money that can be passed between individuals without the use of the traditional banking or money transfer system.

Different currencies are structured in different ways. Some, like Liberty Reserve’s “LR” digital currency, use units of value that are tied to an existing hard currency, such as the U.S. dollar. By contrast, the value of Bitcoin, the best known virtual currency, fluctuates according to supply and demand.

Bitcoin, which has been embraced by a number of venture capitalists in Silicon Valley, exists through an open-source software program that any users with enough skill and computing power can access. It is not managed by a single company or government. Users can buy bitcoins through exchanges that convert real money into the virtual currency.

Liberty Reserve, which was closed last week, however, was a firm that U.S. prosecutors said created a platform that enabled criminal gangs to launder more than $6 billion.

Bitcoin’s supporters cite a host of legitimate reasons for using a digital currency: It can be transferred using less infrastructure than traditional currencies, and with fewer service fees. A virtual currency could also be safer than using a regular credit card for online purchases, because it is not attached directly to any bank account.

But law enforcement officials see Bitcoin as another vehicle for criminals to anonymously transfer money.

FinCEN’s statement in March set off a rush inside the community to learn about anti-money laundering rules and figure out how to comply with them. At the 2013 Bitcoin Conference in San Jose, California two weeks ago, discussion focused heavily on regulatory compliance – its intricacies and its costs.

“That was a big theme of the whole conference,” said Jerry Brito, director of the technology policy program at the Mercatus Center at George Mason University. Brito said businesses exchanging Bitcoins were coming to terms with the fact that they would now need to get licensed as money transmitters in 48 U.S. states, a process requiring in-person interviews in each state, thanks to FinCEN’s guidance.

“Everything I’m telling you, I’ve learned over the past couple of months as I’m racing to learn,” said Brito, who attended the Bitcoin Conference in San Jose. “I think that’s what the Bitcoin community is doing too.”

Charlie Shrem, chief executive of Bitcoin transfer firm, told the conference about the importance of complying with the new rules.

“You have to know your customer,” he told the audience, according to a video posted on the Internet. “Whether or not you agree with the laws or not, you’ve got to follow them.”

The FinCEN statement means companies that exchange Bitcoins for hard currency must now hire full-time compliance officers to verify the identities of users, especially those looking to transfer Bitcoins out of the digital world and back into dollars or other hard currencies. Estimates vary on how much it costs to get compliant, but licensing and registration fees alone can total in the tens of thousands of dollars, an added heavy cost for small startup businesses.

Brito said the Bitcoin community is also trying to increase its contact with law enforcement and regulators. The Bitcoin Foundation, a Bitcoin advocacy group made up of Bitcoin-related business owners and software programmers, is looking to hire a full-time lawyer based in Washington to make its case to regulators and lawmakers.

Some members of the community are declining to discuss regulation. Jon Matonis, the Bitcoin Foundation’s secretary who is identified on the group’s website as one of two spokesmen for press inquiries, told Reuters: “I am electing to take a brief break from commenting on issues such as this.”

U.S. law enforcement officials are looking first and foremost to unmask criminals operating in cyberspace and arrest them, wherever they may be in the world, and they’re looking to digital currency businesses to help.

Ed Lowery, special agent in charge of the U.S. Secret Service’s criminal investigative division, said the agency is working “aggressively with our international partners” to pursue cyber crime and the companies that permit the misuse of digital currencies. He declined to comment specifically on Bitcoin.

Liberty Reserve has not been the only recent target for the authorities. The Tokyo-based firm Mt. Gox, the world’s largest exchanger of U.S. dollars with Bitcoins, had two accounts held by its U.S. subsidiary seized this month by agents from the Department of Homeland Security on the grounds that it was operating a money transmitting business without a license.

Mt. Gox on Thursday announced it would require all of its users accounts to be verified before allowing them to perform any more deposits or withdrawals. Its founder declined to comment for this story.

Other companies are simply trying to avoid having to comply with U.S. rules by keeping away from the country. Following FinCEN’s statement, two digital currency firms structured similarly to Liberty Reserve – Russia-based WebMoney and Panama-based Perfect Money – restricted access to their services from inside the United States.

Vyacheslav Andryushchenko, a spokesman for WebMoney in Russia, said each of the company’s 20 million users had to agree to prohibitions against money laundering and illegal trade when signing up for an account. Users who violate the rules are cut off, and all actions inside WebMoney’s system are recorded, the spokesman said. A user is blocked if there are any suspicions of anything illegal. In addition, the less personal information the user provides, the fewer services are available to him or her, the spokesman said.

Several messages on the listed number on Perfect Money’s website were not returned. The company’s address is an empty suite in an office block on the northwestern side of Panama City. A secretary in a neighboring office said she had never seen anyone go in or out.

(Reporting by Emily Flitter in New York and Brett Wolf in St. Louis; Additional reporting by Maria Kiselyova in Moscow and Lomi Kriel in Panama City; Editing by Martin Howell and Richard Chang)

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Lideri globali in aplicatii, jocuri si muzica pentru telefon, pe scena ICEEfest

Unul dintre cei mai cunoscuti oameni de marketing digital din lume, Tom Eslinger, director global de creatie al agentiei “Saatchi & Saatchi” si primul presedinte al juriului Mobile Lions de la Cannes vine la ICEEfest, unde va sustine nu doar o prezentare ci si un training privat, cu locuri limitate. Workshopul dispune de doar 30 de locuri, iar intrarea se poate face pe baza de inscriere prealabila – pentru cei care detin deja un bilet full pass – dar si cu acces doar la acest eveniment din cadrul festivalului, in limita locurilor disponibile pe site-ul, sectiunea “Registration”.

O alta prezentare asteptata este cea a serviciului muzical DEEZER, reprezentat de Clément Cezard, Chief Business Development Officer. In Romania, serviciul de muzică DEEZER a devenit foarte cunoscut mai ales dupa ce a fost inclus în abonamentele Panteră de la Orange. Cele peste 20 de milioane de melodii oferite de DEEZER pot fi accesate si de pe computer, dar si de pe telefonul mobil, printr-o aplicație compatibilă cu sistemele de operare mobile iOS, Android, Windows Phone și BlackBerry OS.

Si Facebook vine la Bucuresti si pentru a prezenta ultimele noutati legate de aplicatii mobile si jocuri pe telefon. Juanma Jura, Lead for EMEA Gaming Marketing Solutions, va deschide cea de-a doua zi de ICEEfest.

Evenimentul este cel mai amplu de acest tip care a avut loc pana acum la Bucuresti, reunind mari jucatori ai industriei – Google, Facebook, Microsoft, Yahoo – alaturi de agentii de creatie si strategie digitala majore din lume, producatori de tehnologie, aplicatii, jocuri si continut online.

In plus, ICEEfest are si o consistenta parte de divertisment, cu evenimente precum “Viral Movie Night” unde comedianti cunoscuti vor vorbi despre cele mai amuzante clipuri de pe net sau “Stars vs Internet” unde vedete precum Horia Brenciu sau Marius Moga vor discuta despre cum le-a influentat cariera tehnologia si social media.  

Evenimentul de saptamana viitoare e organizat de Thinkdigital in parteneriat cu Orange si cu sprijinul Microsoft Romania  prin Internet Explorer 10 si Windows 8. 

Ultimele locuri libere pot fi rezervate pe site-ul oficial

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O ţară întreagă ar putea fi ŞTEARSĂ de pe harta Europei, dacă acest vulcan ar erupe. Experţii nu îşi explică misterul

Vulcanologii nu îşi explică de ce vulcanul Etna, cel mai activ vulcan din Europa, “scuipă” lavă cu o intensitate extrem de crescută în ultimii ani. Cu toate că este cel mai studiat vulcan din lume, este în acelaşi timp şi cel mai imprevizibil, scriu jurnaliştii de la Der Spiegel.

De la începutul anului, din luna februarie, Etna a erupt până acum de 13 ori, aruncând în aer, o dată la câteva săptămâni “fântâni arteziene de lavă”, mai înalte decât Turnul Eiffel.

Etna are o înălţime de 3.329 metri, de la această înălţime oferind o panoramă spectaculoasă, asupra oraşului sicilian Catania.

“Erupţiile vulcanice din ultimele luni au fost foarte puternice şi neobişnuit de feroce”, spune vulcanologul Boris Behncke, unul din mulţii experţi care studiază cu atenţie acest vulcan.

“Astfel de erupţii au mai avut loc, însă niciodată cu o intensitate atât de mare şi într-o perioadă atât de scurtă de timp. Cenuşa cade la distanţe mult mai mari decât în mod normal”, a afirmat vulcanologul.

Multe voci spun însă că dacă vulcanul Etna va erupe în adevăratul sens al cuvântului, vulcanologii spun că acum “se joacă”, oraşul şicilian va fi şters de pe faţa pământului, iar “Cizma” va avea iremediabil de suferit din această cauză. Mai mult, vor avea loc schimbări climatice fără precedent.

Aceste supoziţii nu sunt împărţite de toţi experţii care studiază acest vulcan.

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Eating the Dog Food – Starting a Linux Machine on HP Public Cloud

As a new member of the HP Cloud Services team I thought I would check out the OpenStack based public cloud and share my experience launching a new Linux instance for the first time. To begin with you will need an account on the HP Public Cloud and with a 90 day free trial there is no excuse to not give it a try. To assist in the process, I used the Getting Started Guide which is well written and easy to follow. Read more about Eating the Dog Food – Starting a Linux Machine on HP Public Cloud »


Some states push back against new school standards

KANSAS CITY, Mo. (AP) — Some states are pushing back against a set of uniform benchmarks for reading, writing and math that have been fully adopted in most states and are being widely put in place this school year.

The new Common Core standards replace a hodgepodge of educational goals that had varied greatly from state to state. The federal government was not involved in the state-led effort to develop them but has encouraged the project.

While proponents say the new standards will better prepare students, critics worry they’ll set a national curriculum for public schools rather than letting states decide what is best for their students.

There was little dissent when the standards were widely adopted in 2010, but that begun changing last year and debate picked up steam this year. The standards have divided Republicans, with former Florida Gov. Jeb Bush championing them and conservatives such as Sen. Chuck Grassley, R-Iowa, opposing them.

Lawmakers and governors are reviewing the standards in Kansas, Missouri, Michigan, Pennsylvania, Georgia, Indiana, Alabama, South Carolina and Utah. Grassley, meanwhile, persuaded eight other senators to sign onto a letter in April asking the Senate Appropriations Committee to stop the Education Department from linking adoption of the standards to eligibility for other federal dollars. That same month, the Republican National Committee passed a resolution calling the standards an “inappropriate overreach.”

Kristy Campbell, a spokeswoman for the Bush-backed Foundation for Excellence in Education, said conservatives historically have supported higher standards and greater accountability.

“The fact that they are opposed to Common Core now is a little surprising and disappointing given the fact that states came together to solve a need,” Campbell said, adding that the new standards will allow for state-by-state comparisons that haven’t been possible before. “We are going to have more rigorous assessments that are going to test kids against those higher standards and hopefully achieve what we all want, which is a dramatically greater quality of education in America.”

The American Legislative Exchange Council, a conservative, Washington-based think tank that espouses conservative policies in state legislatures, debated in November whether to oppose the Common Core standards. The group ultimately decided to remain neutral, but its discussion, along with concerns raised by conservative groups such as the Goldwater and Pioneer institutes, caught the attention of lawmakers.

States that adopt the standards are supposed to use them as a base on which to build their curricula and testing, but they can make their benchmarks tougher than Common Core. While the Thomas B. Fordham Institute, a Washington, D.C.-based think tank, found the new standards to be more rigorous than those that had been used by three-quarters of all states, critics question what will happen in states whose previous standards were tougher.

“So in that regard we really viewed Common Core as the race to the middle, not to the top,” said Jamie Gass, director of the Center for School Reform at the Pioneer Institute.

Questions about testing also have arisen. In New York, among the first states to test students based on the standards, some students complained this spring that the Common Core-aligned English exams were too difficult to complete in the allotted time, and there were reports of students crying from stress.

Jonathan Butcher, education director for the Goldwater Institute, based in Phoenix, said opposition also is gaining traction because states and districts are at the point where money has to be appropriated to pay for the standards.

“As soon as states had to start spending money on the Common Core, as soon as it became a line item in the budget, people sit up and take notice,” Butcher said. “And that wasn’t going to happen until now, until states started to implement it. So it’s unfortunate that there is so much attention to it so late in the game but that’s kind of where we are. As soon as it starts to become a money issue people will pay attention.”

Calculations on the cost of implementing the standards vary, with the Pioneer Institute and two other anti-Common Core conservative think tanks estimating it will cost $16 billion over seven years. Meanwhile, the Fordham Institute, which is pro-Common Core, said the cost over a one-to-three-year transition period could range from $8.3 billion to breaking even or even saving money, depending on things like whether the states purchase hard-copy textbooks or use open-source learning material written by experts, vetted by their peers and posted for free downloading.

One issue is that new tests tied to the standards will be computerized, requiring some states and districts to make technology upgrades. The Pioneer analysis included those technology costs; the Fordham one didn’t.

In backing ultimately unsuccessful anti-Common Core legislation in Missouri, Rep. Kurt Bahr, a Republican from the St. Louis suburb of O’Fallon, said he was concerned that many communities lacked the bandwidth and hardware to administer the tests.

“We don’t have that connectivity,” Bahr said. “It’s about to become a massive pocketbook issue.”

The standards are the result of an initiative sponsored by the National Governors Association and the Council of Chief State School Officers. Carrie Heath Phillips, who oversees implementation of the standards for the council, played down the concerns about cost, noting that states periodically update their standards and that spending money to implement new ones is nothing new. She also acknowledged that technology upgrades can be a real issue for states that haven’t invested in it, but asked, “If you’re not moving into the 21st century now in 2013, when are you going to?”

The standards have a long list of supporters, including the National Parent Teacher Association, several education associations and businesses such as the Boeing Co. and Microsoft Corp.

Literacy teacher Jessica Cuthbertson said she attempted to fully implement the new standards in her sixth-grade Aurora, Colo., classroom for the first time this year and found her students’ writing was “substantially better.”

“I feel that often the debate isn’t about the learning,” said Cuthbertson, who also trains teachers to use the new standards as part of her job with a virtual teacher leadership initiative called the Center for Teaching Quality. “We’re not talking about what the kids are producing and doing with these cool standards. We’re talking about the big brother federal government controlling curriculum. I don’t think it’s really grounded in student learning, and yet in the hands of teachers focused on student learning, I just think there is nothing but hope.”

While the federal government wasn’t involved in developing the standards, it has provided $350 million to two consortiums developing Common Core tests. The federal Education Department also encouraged states to adopt the standards to compete for “Race to the Top” grants and seek waivers around some of the unpopular proficiency requirements of the No Child Left Behind federal education act.

“They have done some things that have kind of muddied the waters at the very least,” said Butcher of the Goldwater Institute. “It’s hard for me to say, ‘Well, clearly the federal government has no interest in this.'”

But in Michigan, where the Republican-led Legislature is taking steps aimed at halting the standards, Republican Gov. Rick Snyder is defending them as a “really important opportunity” for the state.

“Unfortunately, it’s been too much about politics,” he said. “It’s being viewed as the federal government putting another federal mandate on us. … It was the governors of the states getting together … to say we want a partner at the national level and all levels to say, ‘Let’s raise the bar.'”


Associated Press writers Chris Blank in Jefferson City, Mo., John Milburn in Topeka, Kan., Alanna Durkin in Lansing, Mich., Christina A. Cassidy in Atlanta, Tom LoBianco in Indianapolis, Phillip Rawls in Montgomery, Ala., Seanna Adcox in Columbia, S.C., Michelle Price in Salt Lake City, Marc Levy in Harrisburg, Pa., and Karen Matthews in New York contributed to this report.

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