Risk & Fraud in FinTech Panel

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It was a wonderful privilege to host this panel on risk and fraud in the financial technology sector at the Palo Alto Law Offices of Sheppard Mullin Richter & Hampton LLP.

In my opinion, this was one of the best panel discussions on risk and fraud in 2017, due in large part to this stellar group of panelists.

Special thanks to Pemo Theodore of Silicon Valley TV, Bill Wyatt of Sheppard Mullin, Lauren Russell of AAA, Abhishek Agarwal of Croudify, Olga Zlatkova of Signifyd, and Naddav Parran of TM Financial Forensics.

 

 

 

 

           

Federated Blockchains’ Financecloud API & Device

Recently, I had an interesting discussion with Matthias Klees (MK) of the Europecoin Team about an intriguing device currently under development by his new startup Federated Blockchhttps://twitter.com/EuropeCoinBotains.

I hope you enjoy his insights and are as anxious about this new project, API, and device as I am:

 

KH:  Matthias, as soon as I saw this device I instantly became curious. How did this idea take shape?

 

MK: In December of 2016, it started with Europecoin making a call-for-developers, by publishing a paper on “a permissionless, chain-agnostic federated service bus” with an idea of “how to get such a “finance API (application programming interface)” done.  After getting in touch with the “internet-of-coins” team, I realized, that this was exactly, what these guys had been developing for over two years. Because the I.o.C. team didn’t like to get too much exposure in public, we met each other face to face, to join our efforts. The internet of coins team kept focussing on developing the “Coinstorm Hybrid Technology” while I was doing some education on the ground.

While learning, I became aware of the fact, that such an abstract technology, would be rather difficult to grasp (even for slightly informed crypto users).  This triggered a thought process and I realized, that an average non-crypto user, still is lost with even the simplest tasks, to take advantage to form the crypto revolution.  We, the crypto community simply failed to transform our technology into an accessible product for everybody.  In fact, our community rushed as soon, as one idea has been developed, to the next “innovation” without even thinking about taking anything to the mainstream market.

KH: Matthias, tell me more about your team and the current status of the project.

 

MK: The Federation Protocol is a blockchain integration concept we are testing integration using the SIA blockchain.  The testing of this premature version is the payment gateway, while the hardware layout of the device is completed.

Our first round of funding has been raised and we are now working with four developer teams:

The Internet-of-Coins Team is in the process of finalizing the cross-chain smart contract service bus that mostly done and currently in beta.

Olaf Breuer, from IBM Watson Studio (Munich), is running our hardware development, which is currently completing our second version of the prototype and our own hardware encryption system.

Florian Winter, a private developer, is building our own multi-coin-to-fiat payment gateway, which is currently, functional, but in pre-alpha testing.

Jan Külkens is a Ph.D. in Informatics, specializing in Server and Cloud Management. He is developing our own MulticoinX Electrum Server Deamon, which is progressing in a premature state.

 

KH: I think that it is great that you are trying to make cryptocurrencies more accessible and understandable by the common person, but what is the goal of this project?

 

MK: New users are challenged to understand things, that are basic and easy for an experienced crypto user, like exchanges, payment processes or how to power a shop and to earn cryptocurrencies as a payment. Even if there are some solutions around, they have to find them to know about them. All in all, a fresh user will have a long learning curve of finding, understanding, installing and investigating numerous services, websites, and wallets.

So, we are aiming, to make cryptocurrencies more accessible, easy, and secure; while keeping the user in control. The idea is to put everything into a cloud, controlled by the user and give him the choice, with whom to communicate, share and federate. We are making tools easy, unified and accessible, to make crypto a daily choice for average mainstream users. To achieve that we are developing a hardware based and hardware encrypted cloud device with an app-store, based on the internet-of-coins service bus.

 

KH: How would you describe this solution for users?

 

MK: A pre-configured, hardware encrypted device for a home network. Users can plug it into their router, choose coins, exchanges, and services from their app-store and can use all these innovations via one unified interface, without having to know about the technology behind it. You will be able to switch from “user mode” to “professional-mode” to do advanced operations.

 

KH: How would you characterize the solution for traders?

 

MK: The device will come with a pre-configured online-shop, that enables to accept over a hundred cryptocurrencies via our payment gateway to conventional fiat currencies and vice versa. Traders will find most of the exchanges under one single interface and can choose them via the app store. Merchants will be able to stick with their point-of-sales system of choice, by just plugging our device into their network.

 

KH: How can this proposed device help developers?

 

MK: The app-store works in a hardware encrypted container inside of a cloud network of user devices. It provides an app-wizard, that generates an HTML5-App-Skeleton from any given service API, wallet API, or ElectrumX server with a single push of a button. A version-control with GitHub integration helps him managing his software.

 

KH: How can this device and API assist experts in the space?

 

MK: The Finance Cloud API is connecting any Altcoin and Bitcoin to the Ethereum smart contract network via Internet-of-Coins (Coinstorm) hybrid network. Adding your service or coin as an app will be a snap via the app-stores developer access. Europecoin will provide its “Soft-Cold-Storage” Blockchain capabilities to the network for any form of value. Other data can be, freely chosen, stored into locations, clouds or blockchains like SIA cloud and will be hardware encrypted on the fly by your Financecloud device. An anonymity gateway (Tor, Mixer, and others) can be optionally used from the app-store.

 

KH: How can the device help industry?

 

MK: The API comes with a Java and a Python interface, that can connect to point-of-sales systems and other business software interfaces. A cloud-to-cloud Federation protocol enables businesses, to connect and to do financial collaboration in a peer-to-peer manner.

 

 

There is so much to look forward to with this device and the possibilities that it can provide to all the groups mentioned.  I will be sure to remain posted on future developments and report back once it is ready for public consumption. 

 

If you would like to know more information about this project, visit:

https://www.info.federatedblockchains.eu.org

 

You can also find our more on the EuropeCoin team, here:

https://www.europecoin.eu.org/our-team

Chris Bates Interview Part 2

 

Do You Think Governments Understand Bitcoin?

The irony is politicians make a lot of decisions on a host of pressing issues. The system doesn’t allow them to become specialists and they’re forced to make quick decisions. Things like blockchain are being heavily investigated by governments but the problem is some of the government officials are going to people who don’t have objective information and this causes them to be skeptical about what is being presented.

To me it is for the community to stop trying to hype these projects and become more pragmatic in their approach to getting the information on blockchain across, or else the window on getting it out will close.

Realistically, no government has any interest in giving up sovereignty over their currency for Bitcoin, especially if they have no forum to represent themselves. One of the upsetting things that I see in the crypto community is when a particular country’s currency begins failing and people rejoice thinking people in certain countries are going to flock to Bitcoin. I find this disturbing because you have to think about what are the motivations behind the groups that are advocating for those types of practices.

What Are Your Thoughts on Failing Currencies, the Unbanked, the Unbankable; and How Bitcoin is Being Marketed Toward These Constituencies?

I think it’s a problem for a couple of reasons number one, no one knows who controls Bitcoin. As much as it’s supposed to be agnostic the trade gets heavily concentrated towards certain exchanges that can move from country to country. So we’re talking about at a currency that is controlled by different parties that may dump the currency on a whim because of a personal interest. When this happens you see a lot of wild swings in the price. Some countries actually try to control Bitcoin in order to not destroy their own currency.

I don’t think that the Federal Reserve is ever going to replace the US dollar by a government order for Bitcoin and I’m not sure why people try to convince me of this. There is no country whether it’s the United States, Russia, or China that would ever consider replacing their currency with Bitcoin.

In the case of countries where currencies are actually failing and you see people who are cheering that kind of news, it is disturbing because they are doing so in order to profit from it and that is just not ethical.  However, this is what some of the people in the Bitcoin community are turning into.

If this is the sentiment among some in the Bitcoin community, what makes them any different from the bankers or the 1%?  How is that decentralization?

 

It Is Great to Hear an Alternative to the Common Narrative.  In Your Opinion What Else Needs to Be Done to Close the Knowledge Gap?

People need to get engaged in more discussions and debates around these issues and have them tested.  We should not allow all of the important discussions to take place behind closed doors.

That way if we take the debate back to the public square people will get to see how the big ideas are tested and allow certain viewpoints to be vulnerable to being wrong when someone doesn’t have the proper information.  This is the way people will be able to accelerate the conversation.

What Are The Latest Developments in The Project?

We have just finished our alpha build and we have our first client in Mauritius at the Avalon golf club and working to get video surveys of their properties thereby attaching a digital registry with video footage of all of their properties. Once they start transacting it will be attached to the blockchain and this is where we are also trying to take our progress from this project and pitch to developers that are working in Mauritius on the Smart City. We are basically getting the proposals ready and asking and asking if we can be the blockchain backing their projects.

The relationship with the Avalon golf course came about when I presented to government agencies and other private organizations at a blockchain conference in September. After showing them what the software could do, they wanted to know more. It wasn’t easy and it wasn’t overnight, but once we showed them the value of our product and how it could help them they were happy to sign on.

 

How Would You Describe The Process of How You Think Your Crowdsale Went? 

Our crowd sale took place last May and we rose close to $40,000.  By crowd sale standards it would be considered negligible in terms of the amount of money that we were able to gather.  Most of the money went to securing lawyers and business facilities but what we were able to do with that money was pretty good compared to what Etherium has done with 18 million.  I’m much more proud of the impact we’ve made with what we were able to raise, which was much greater. My thing is it’s not a matter of how much money you have, it’s what you do with it.  Hype-trains sooner or later get derailed and with the money that we received, we are headed in a direction that nobody’s going to see coming.

 

I Was Disappointed [Now Really Regretting] That I Was Unable To Participate In The Crowd Sale Because I Had Trouble Obtaining Tokens.

That is what happened to a lot of people because the interface that we used to raise funds was a little obtuse. I had arguments with the people who designed the interface in the terms of why they needed to redesign it.  Ultimately, it impacted our crowd because it wasn’t intuitive and people got deterred by the by the learning curve associated with obtaining digital currency.  It’s great to raise $40,000 in revenue and be contacted by various governments to use our software, but if we had anywhere near what other projects have been able to raise there’s no telling where we would be right now.

A lot of people are skeptical about cryptocurrencies and blockchain technology because some of the projects out there don’t have normal software development life cycles and are not following normal protocols. This describes why so many of these projects are seeing so many forks taking place on their blockchains because every piece of software needs an upgrade, patch, or an update at some point in order for the software to work properly.  It happened with Etherium and now it is happening with Bitcoin, even though many said it wouldn’t happen but now they have to change their rhetoric.

 

How Do You See the Bitcoin Fork Working Out?

It comes down to whether people want to continue to delude themselves.  The code is inherently flawed and the community is going to need to make the choice of whether or not they want to upgrade or continue to patch. The community is backtracking towards regular software development life cycles instead of taking the decentralized approach. Ultimately comes down to the development community needing a leader. The community will make the choice in the end because you can’t do shit without a leader.

 

Interview with Chris Bates of BitLand [Part 1]

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Recently, I had the chance to sit down Chris Bates, the Cheif Security Officer of BitLand.  It was a great conversation and not very long into our discussion, I came to the conclusion that Chris is a big thinker.  I hope you appreciate the first part my interview with Christ and be on the lookout for Part 2 in the coming weeks!

 

[KH] How did you become acquainted with blockchain technology?

[CB] It happened when I was living in Turkey and I started hearing about Bitcoin and its affiliation with Silk Road. I started doing more research into Bitcoin but was thrown off by the pairing.  However, I got back into cryptocurrencies through Dogecoin because they were sponsoring the construction of wells in Africa and other clean water projects.

So many people were doing so many positive things by pooling their money into these projects. They were even more transparent than what I saw with conventional charitable entities who were working with millions of dollars. This made me look into how the blockchain funded projects were functioning as opposed to the way regular charities were operating.

What I saw was blockchain technology has the capacity to make capital use transparent and if someone is putting money towards a cause it would be easy for someone to see where the money was going. That’s what really got me interested in looking into the potential of the technology and understanding the economics and social adoption that was needed in the sense of how do you get someone to adopt something in the first place?  I try to understand blockchain through all the aspects rather than just the cryptographic hash technological aspect.

 

That’s interesting.  I spoke to someone not too long ago about how they used crypto-currencies to help families in Nepal after the earthquake instead of donating to the Red Cross after they saw how the money was mismanaged with the earthquake in Haiti.  He was able to set up tin-roof shelters for over 30 families with only a few thousand dollars.

Those are the types of things I started examining early in 2012 and 2013 before Livestrong had an incident of mishandling their funds. I noticed a pattern after seeing it again with what happened in Haiti with the Red Cross.

What I began to find is that charities don’t work whether it is conceptually or in the application. So what ended up happening is even though Bitland started out as an NGO, it is now limited business entity.  Bitland is a socially-minded humanitarian company that follows business practices that allow people to have a fair chance to earn wealth instead of being given a handout or a way out of poverty with strings attached.  That doesn’t really allow the underprivileged to get out of poverty, and they never become wealthy that way.

We as a society have seen that charity doesn’t really work. How many 5Ks do people need to run before they understand that they won’t cure cancer?  We’re misappropriating scientific research and the application of capital on the ground for a middleman called charity where a very small part of it is transparent.  To go further how it applies to taxes and corporate research and development.

How much of the corporate culture is centered around high-level Executives getting a disproportionate amount of pay and nobody knowing where the money is really going in a company? However, if a company implements a blockchain they may not have as much of a problem and be may be more efficient and making more money because their transactions are taking place with lower overhead from unnecessary intermediaries.

In reality, the economy would do much better and actually be more efficient and evolve quicker if we implement systems that cut out the middlemen because they don’t benefit anyone other than themselves. Extreme ideologies like communism, socialism or free market capitalism don’t work in the real world.  The people who tout free market capitalism as the solution to the woes of humanity often conflate the application of capital to development and research as a benefit of capitalism, where in actuality, those are two totally different things.

Many economic theories sound great until you put them into the real world and try to apply them.  Most of these economists have no idea what it is like to be a worker, thus they have no idea of what motivates workers.

I’ve worked a lot of blue-collar jobs, some of which were during the coldest winters on record.  I enjoy doing physical work and labor-intensive jobs, but it’s not about it being fun.  Instead, I need to do these things every so often in order to understand the needs of workers and their sentiments. I have experience as a psychologist and have conducted research, so I want to understand how these theories can be applied to motivate employees and a lot of economic theories leave out the human element, thinking workers are just robots.  You have a lot of people who don’t understand the worker’s mindset because they’ve never done it before or it’s been so long since they’ve done it, so they have no business trying to comment on these motivations.  However, I understand the blue-collar mindset as well as blockchain Technology.

So when we take that kind of disconnect and put it in context with implementing digital currencies, what I find is people in the mainstream talking about how digital currencies can change the globe, but what they are saying is completely absurd.  For example, in the sense of Africa, where so many in the Bitcoin space think it is going to “save” Africa or “drastically change” Africa. All of these people conveniently leave out M-Pesa in the conversation, because M-Pesa, as far as adoption goes, has dwarfed a number of Bitcoin users and other digital currencies in the same period of time.

The reason is M-Pesa’s ease of use.  This is one of the things that the cryptocurrency community has fought against and they’ve tried to make things more complex to the point where that was what drove the community for so long and the reason why most digital currencies have not caught on yet is because those people have no idea what the average user wants and have no idea what mainstream consumers are looking for.  The reason why some of these projects continue to fail is that they are trying to get consumers to adapt to the technology without evaluating what motivates the people who are actually going to use the product.

It is very clear to me that there are people in the cryptocurrency community that have special interests and are not being objective in how they present information and whether they’re invested in if the Ethereum, Bitcoin, or Dash; any person that pushes one currency over any other is invested in that currency and I can almost say it with 100% confidence.

 

What is the Bitland project?

The Bitland project is digitizing land records using a public blockchain in order to get unregistered land onto the market and make them into functioning properties. The great thing about this is a lot of countries have mechanisms in place where we can just come in, attach a blockchain and upgrade their records.  We do this by digitizing them and from that point on that record can now have and identity attached to it in the blockchain that has an immutable record which can be referenced. Thus solving land disputes can then be an issue of examining a digital title instead of relying on what some person is holding a physical record that could have been altered.  Many of the land disputes come from the non-digitized paper records that are currently in place in these countries.

We are working to develop international standards that will help establish a general culture that is inclined towards transparency and following the rules rather than people were inclined to being corrupt and work off the books.

 

How did you get involved in this project?

Early on Nari (Narigamba Mwinsuubo) was trying to build the team to take it from theory to product and I was one of the first people he contacted to ask for help with the project.  I liked the concept as it was a viable, impactful, and had a lot of potential.  So I said I would work on the project pro-bono and see where we can take it and that’s how I joined the team in late 2014.

 

What is your role in the project and how has it evolved from then to now?

Early on in the project, I was moving to change the brand identity because I felt that they were approaching certain aspects of the project all wrong and needed to remove some of the anti-government rhetoric.

We were able to reframe how we were going to approach things and that’s when I came in as Chief security officer and basically tried to protect the project from having the concepts stolen or having the project implode in any way. Once we were able to reframe the project I felt more comfortable putting my name on and getting even more involved.

I’m one of the few people in the crypto space that actually is pro-government when it comes to implementing blockchain technology. The reason why I feel this way is this is the only way blockchain technology is ever going to last long term; that is, there has to be some degree of government buy-in and compliance.

There are a lot of people who feel is a Bitcoin and the blockchain are a sort of panacea and try to deify this technology in disturbing ways that amounts to a Ponzi scheme.  I think they do this because they really don’t understand what Bitcoin is.

Established and Emerging Trends in Bitcoin Fraud (Presentation)

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This month I had the opportunity to deliver a presentation before the San Francisco Chapter of the Association of Certified Fraud Examiners.  It was an honor and a privilege to be invited to this summit before my certifying body to present my independent research within two years of being certified.

I hope you enjoy my presentation:

Deck

You can find more information on this event here.

Confessions of an Anonymous Altcoin Trader

This week I had the chance to sit down and speak with an anonymous trader in alternative currencies (altcoins).  Alternative currencies, for those who don’t know, are all digital currencies other than bitcoin.  I found my discussion to be informative and at times eye opening.   I hope you find the discussion to be as valuable as I did.

KH:  For the purposes of this discussion, what should I call you?

GC:  I like going by “Genghis Coin” (GC).

KH: Fair enough.  How did you get involved in trading bitcoin and other altcoins?

GC:  2011 was the first time I heard of bitcoin.  At the time I was finishing college and it was hard to get your hands on bitcoin.  I wanted to try to mine it, but that was also very difficult to do.  So I put it off for a few years until I was given a severance package by my employer and started reading about it more again.

Ultimately, I put part of the severance into an IRA and the other portion into Dogecoin.  After making some money with it, I cashed out my IRA for bitcoin in 2013 after the price jump and from that point forward, I have been trading alt-coins.  Right now, I am currently divested from bitcoin and diversified across altcoins and new ICOs.

KH:  How did you become an organizer for the Atlanta bitcoin meetup?

GC: One day I went online and saw an event that was being hosted at BitPay.com.  It was the BitPay meetup that was run by their CEO Tony Galippi. As BitPay grew, it became more difficult for the company executives and staff to continue to host, so myself and a few of my friends started our own meetup that was later endorsed by BitPay that allowed us to take over the event.  Once their members joined our meetup it grew from 100 members to 600 members and it is still growing!

KH: What are the indicators you look for when investing in an altcoin?

GC: First of all, I don’t employ fundamental or technical analysis.  Instead, I trade almost completely on market sentiment.

KH:  How do you decide whether to trade a digital asset for the short-term or long-term?

GC:  When trading long-term, I look to see if the currency employs a platform that serves a useful purpose with known developers and a large community behind them.

For the short-term, I look for active market makers with affiliations and wait for a pump to occur.  I do absolutely everything I can to avoid shit coins.

KH: What are “shit coins?”

CG:  “Shitcoins” are alt-coins that are traded simply based on a fad for a short-term play.  They typically have a developer make a fancy looking landing page to attract people and pump the coin.  In fact, my strategy for trading them is to come in and make a quick scalp, but I never hold onto them for any long period of time.

KH: So would you put Trumpcoin in that category?

GC: Just another shit coin.  I didn’t think much about it at first, but next thing I knew it was pumping.  No telling when it will dump, though.

KH: So how do you know an alt-coin is a scam?

GC:  The vast majority of alt-coins are a scam.  They are an easy money grab. There are so many young and impressionable investors in the space.  In the past, people have caused an alt-coin to appreciate through a major pump cycle only to grab the money and disappear.

KH: When do you know when to avoid an alt-coin?

GC: Generally, it comes down to doing your research.  I try to avoid newcomers to the cryptocurrency space. Platforms that have bad technical writing, no informational website or Github/active development.  Most of all, I avoid any project that has a big pre-mine.

For example OneCoin, more like “One Big Scam” with no blockchain, no mining, and no place to trade it.  They are just scamming people that are interested in bitcoin and sells at an extremely inflated market cap.

KH: Yes, OneCoin is an absolute disaster… Well, thanks so much for your time Genghis!

 

 

 

 

Why Musicians Need a Blockchain Solution

Recently, I had the chance to watch a great mini-series chronicling the lives and careers of the members of the music group New Edition.  It was a harsh reality about how the music business operated at the time.   What hasn’t changed from then to today is many artists remain at the peril of executives, managers, accountants, and lawyers.  Although the vast majority of these non-artist professionals in the music industry adhere to a high standard of ethics, there is a select few that have taken advantage of their clients’ trust.  Recently, Alanis Morissette’s manager, Jonathan Schwartz, admitted to embezzling $4.8 million from her and an additional $2 million from his other artists.  Over the years, we have heard the similar stories from artists and music groups like Aerosmith, Billy Joel, N.W.A., and Elvis Presley.

This kind of behavior from artist management in addition to current music industry practices is beginning to have a chilling effect on how artists handle their dealings.  It is no wonder why so many artists have shied away from signing with a major label and remained independent.   Last year, Chance the Rapper made the difficult decision of turning down a recording deal extended to him by Kanye West.  When asked for his reason, Chance was quoted by ABC stating, “I wanted to give the idea of freedom back to artists, and one of the biggest things is control over how you release your music.” He went on to say, “So streaming and free releases, I figured that that would be a good beacon to have people at least pick up on what I was doing as an independent artist.” Chance is just one of a growing number of artists who prefer to remain independent in order to keep control of the business decisions affecting their career.

What’s missing is a tool that will allow independent artists to protect their intellectual property, understand how their music is being accessed across the Internet, and be able to track how their music is generating revenue and who has access to that income all in real time. Blockchain technology has the ability to offer artists just such a tool. The blockchain is publically accessible digital ledger that accounts for transactions that take place on Bitcoin and other digital currencies. Currently, there are a number of companies that have worked on the concept of implementing a blockchain for handling music rights for royalties. A blockchain solution can also allow an artist the ability to set the price of their music at a price point that avoids the need for free releases, while simultaneously being able to analyze that sales data to assess the value of their work for future music offerings.

This apparatus can ultimately allow artists to do these things themselves or have a manager take care of them. However, if at anytime there is a suspicion of impropriety on the part of the manager or others handling the artists’ rights, the blockchain can be independently audited by an external party as a means of verifiable oversight to protect against fraud.

This is just a few ways in which a blockchain can make musicians lives easier while protecting them from being taken advantage of and granting them more autonomy within their careers.

Kamal Hubbard is an advisor to the Tao Network project.  For more information on the Tao blockchain, visit: tao.network

Komodo: The Anonymous Cryptocurrency

This year has seen numerous Initial Coin Offerings (ICO) promising innovation and value.  In the past, there have been coins to modify the transparent nature of bitcoin and now the research and development collective at BitcoinDark and SuperNET teams aim to provide anonymity and security with Komodo.

According to the press release, the cryptocurrency forked from ZCash supports zero knowledge proofs secured by Bitcoin’s global hash rate.  The delayed Proof of Work consensus mechanism developed by Komodo Platform enables the Komodo blockchain to be backed up on the Bitcoin blockchain. The custom transactions are broadcasted to the Bitcoin blockchain by the platform’s notary nodes.  These notary nodes can be used by other cryptocurrencies to secure their own blockchain. Komodo already has an operational testnet in place, while the developers work on furthering the technology. More information is available in the recently released delayed Proof of Work whitepaper.

Komodo Platform draws inspiration from Bitshares and Steemit. In order to eliminate the use of PoW mining, Komodo blocks are created using Delegated Proof of Stake mechanism. The upcoming ICO will provide the much-required funds for the development of notary nodes.  The ICO also offers an opportunity for the not so “tech savvy” members of the cryptocurrency community to gain a stake in ZCash technology, which otherwise is only possible through mining.

Komodo will start with a supply of 100 million KMDs, of which 90% will be distributed to investors during the ICO and the remaining 10% will be used for development, marketing, advisers, and bounties.

Komodo has great potential and with the joint talents of the SuperNet and the BitcoinDark teams, I am interested to see how this platform will perform in the future.

The TAO Network

The TAO Network, its cryptocurrency, and the TAO of Music are coming.

According to its press release, the TAO Network is a smart contract DAO platform for creating and operating decentralized applications is currently offering an opportunity for the cryptocurrency community to invest in the ongoing crowdsale.

The TAO Network is built on a solid foundation with a range of enhancements that make its blockchain more versatile and robust. By using IntelliTx technology, TAO Network offers a content agnostic way of creating smart contracts on the platform, irrespective of the protocol. The user-friendly, privacy-centric platform already has one of the many use cases built in the form of ‘the TAO of Music’.

The TAO Network has made 30 million TAO tokens available for the ongoing month-long crowdsale. Rest of the tokens are allocated for development, marketing and community building exercises. The platform has announced that the value a TAO token will not be more than $1.00 during the crowdsale.

The TAO of Music project is created by a team of futurists and developers to protect and secure artists’ content over a long period of time. TAO of Music is operated as a distributed autonomous organization that can act as a bond between competing blockchain based solutions by various music publishing administration companies. TAO Network achieves this by creating an interoperable design that can work irrespective of the format of blockchain implementation currently adopted by artists.

The TAO of Music has the chance to revolutionize the music industry by finally giving artists a greater stake in their careers by establishing a public ledger for legal access to their catalogs, regardless of who owns the rights.

If the TAO Network is able to live up to the hype, it has the potential to be the next big thing in cryptocurrency and smart contracts.

New Legislation Moving through Congress is set to Raise Equity Crowdfunding Limits

Earlier this year, Title III of the Jumpstart Our Businesses Startup (JOBS) Act was finalized with the SEC release of Regulation Crowdfunding.  Not even three months after the new rules went into effect; a bill has passed in the House of Representatives that will amend the regulations to raise the cap on equity crowdfunding from $1 million to $5 million.

The Fix Crowdfunding Act, sponsored by Representative Patrick McHenry of the House Financial Services Committee, seeks to amend the Securities Act of 1933 to raise the limits small business and startups can raise through crowdfunding.  Additionally, the bill will modify the JOBS Act to allow crowdfunding portals to prohibit issuers from selling securities if it is discovered that the issuer has disseminated an untrue statement or omission of material fact to investors.

A second bill entitled the Supporting America’s Innovators Act, also sponsored by Representative McHenry, seeks to amend the Investment Company Act of 1940 by defining a “qualifying venture capital fund“ as one not able to purchase more than $10 million in securities from any one issuer and enlarging a pool of investors in a qualifying venture capital fund from 100 people to 250.

Both bills have been received by the Senate for future review.

The Springboard Initiative

posted in: Miscellaneous | 1

It is time to report on a very important program that I am putting my full support behind.  The Springboard Initiative is hosting an eight month training curriculum centering on technology skills targeting African American youth in the San Francisco Bay Area ages 18-24.  This program will serve as a pipeline for African Americans who are drastically underrepresented in the technology sector.

Once students complete the training, then they will have an opportunity to participate in an apprenticeship placement interview with a starting salary of $40,000.  Along the way participants will be able to take advantage of the following perks:

  • Monthly Stipend
  • Transportation Funding
  • Clothing Allowance
  • Mentoring
  • Case Management

This is a fantastic chance for young African Americans in the city of San Francisco to get the skills they need to forge a career in technology.  I have to give credit to the sponsors and partners for organizing this effort and would like to simultaneously encourage young people interested in the training to become involved and remain determined through the duration of this very important undertaking.

More information on the Springboard Initiative can be found here.

Special thanks to Maura Devlin-Clancy, Chair of CNIT at City College of San Francisco and the following partners and sponsors:

Base11

Ellie Mae

Bayview YMCA

Collective Impact/MoMagic

springboard_revmay3

 

 

Game of Threats

posted in: Cybersecurity | 0

As a member of the Association of Certified Fraud Examiners, I had the opportunity to observe a demonstration of Game of Threats at the San Francisco office of PriceWaterhouse Coopers.  Game of Threats is a turn-based cyber attack/intrusion simulation that is designed to prepare the C-suite and senior staff on how to make decisions during a cyber incident.  Those decisions can depend on many factors that ultimately have implications on how the company moves ahead with its business.

In the scenario I witnessed, a nation state was pitted against a mid-sized defense company.  Each team has its own resources in order to carry out or mitigate an attack. The nation state team resources included a compromise specialist, an attack specialist, and a breach specialist.  The defense company’s team resources encompassed a PR firm, external counsel, an incident response firm, a chief information security officer, and a security operations center. Other tools that can be utilized in the simulation are anti-virus software, a spearphising monitoring system, an intrusion detection system, a firewall, and a data loss prevention system.

Game of Threats is a great exercise on how to formulate the right strategies and tactics while reacting to an active data breach.  It is also a great way for officers and directors in a company to better understand how the incident management process takes place when a company is under attack.

Be sure to visit the PWC website to find more information on Game of Threats, here.

John McAfee’s Presidential Campaign Prioritizes Cybersecurity Matters

posted in: Cybersecurity | 0

John McAfee, pictured at his home in Portland, Ore., on May 11.

In case you haven’t noticed it is an election year.  One of the issues on the campaign trail that I feel is not getting enough attention is that of cybersecurity.  John McAfee has an approach that few other candidates have expressed.  He even has a solution on the FBI’s dilemma with the San Bernardino shooter’s iphone.

I agree with McAfee that the United States is largely illiterate when it comes to cyber awareness, but after getting more acquainted with McAfee’s platform on cybersecurity, I feel like it is the most comprehensive.  When attacks on the scale of what took place with Office of Personnel Management for two years without detection, the public needs assurances that it can’t happen again.  The only other candidate that I feel made a concerted effort to mention cybersecurity was Jim Webb, but he’s is no longer in the running.

According to a recent interview with McAfee in Black Enterprise Magazine, the Libertarian candidate doesn’t feel the FBI has the expertise to unlock the phone and forcing Apple to do it only makes the nation more vulnerable.  “If they [the FBI] can’t decrypt it, they can go to a private security company.” He says the consequences for Apple complying with the government agency’s demand could be dire.  “The problem with putting in a backdoor into the software…the Chinese can find it, the Russians can see it…it makes us totally defenseless,” McAfee says.

This view is quite contrary from the rest of the political establishment and a bit refreshing to hear.  Although I am still undecided as for who I am going to vote for this election year, McAffee’s insights give me much to think about in terms of America’s cybersecurity future.

 

Photo Credit: Craig Mitchelldyer for USA TODAY

Stanford Law School Together with Sullivan & Cromwell Launch the Foreign Corrupt Practices Act Clearinghouse

There is a new online research tool that will change the way everyone analyzes the Foreign Corrupt Practices Act.  The great people at Stanford Law School and Sullivan & Cromwell have recently introduced the FCPA Clearinghouse (FCPAC).

According to the recently issued press release, the FCPAC provides business leaders, law firms, policymakers, scholars, judges, the media and the general public with a comprehensive database of enforcement actions and information related to the FCPA, all at no charge. Users can search and sort data about FCPA enforcement actions according to their individual needs and interests. They can view original documents, access relevant laws and precedent, and read articles about FCPA compliance and enforcement.

The FCPA has to date generated more than 400 enforcement actions by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), implicating transactions in more than 100 countries. Defendants in these prosecutions have paid fines and penalties in excess of $7 billion, and the government has signaled its intention to substantially increase its enforcement efforts. Foreign nations are also intensifying their efforts to combat corruption by enacting new legislation and by participating in multilateral conventions and working groups aimed at reducing the incidence of bribery on a global basis.

Congratulations to the FCPAC team on this exceptional new research tool that will help to solve the serious problem of global corruption.

Securities Class Action Clearinghouse & Cornerstone Research Release 2015 Report

According to the Stanford Law School Securities Class Action Clearinghouse (SCAC), a collaboration with Cornerstone Research, class action lawsuits reached their highest level since 2008.  Federal securities class action litigation rose to 189 filings in 2015, an 11% increase over 2014 levels.

Some of the important trends include:

  • Dismissals within the first three years of the filing of a class action peaked for 2010 and 2011 filing cohorts. In filing cohort years 2012, 2013, and 2014, early dismissals (those within the first year) have declined relative to 2010 and 2011 cohorts.
  • Reversing trends noted at year-end 2014, filing activity against Industrial and Technology firms increased to levels more consistent with historical averages, while filings against Energy companies declined to average historical levels.
  • Biotechnology, healthcare, and pharmaceutical companies (included in the Consumer Non-Cyclical sector) together accounted for 19 percent of total filings in the first half of 2015. Within this group, filings against pharmaceutical firms were the most common class action.

The press release can be found here:

http://securities.stanford.edu/research-reports/1996-2015/Cornerstone-Research-Securities-Class-Action-Filings-2015-YIR-Press-Release.pdf

 

SEC Definitively Weighs in On Crowdfunding

Three years after the passage of the Jumpstart Our Businesses Startups (JOBS) Act, the Securities and Exchange Commission has released new guidelines for small businesses raising money online. Crowdfunding originally allowed people to fund companies and projects, typically on a website, without the stringent regulations large companies face when trying to acquire financial backing from the public.  Before the JOBS Act came into existence, crowdfunding was operating without much government oversight and protection for people who choose to lend their financial support.

In a move to protect investors from fraud, the SEC is allowing crowdfunded securities to only be sold by established brokerage firms or internet funding portals that are registered with the SEC and licensed by FINRA.  The rules would allow companies to crowdfund up to a million dollars within a 12 month period.  Another safeguard of the new rules allows investors within certain thresholds to participate in crowdfunded investments.  These would include investors with an annual income or net worth less than $100,000 will be allowed to devote a cap of 5% of their annual income, while investors with higher incomes can invest up to 10%. No investor can contribute more than $100,000 in any crowdfunding securities offerings or resell such securities for the period of a year.

Crowdfunding is an example of one of the many new ideas that is driving the “sharing” economy, but without regulation and oversight it can be yet another haven for scammers and fraudsters.  For that reason, I am glad the SEC has gotten behind the new rulemaking to institute protections for investors who may be more apt to invest online through crowdfunding as opposed to other conventional methods.

T-Mobile Customers’ Data in Peril After Experian Data Breach

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Another prominent company has fallen victim to a data breach at the hands of hackers.  This time it is T-Mobile’s customer data, entrusted to Experian for credit review.  It is currently estimated that nearly 15 million customer records were compromised.  However, sometimes initial estimates related to data breaches can be under-reported and this could mean the 15 million projection could soon grow after further investigation.  There is no telling if there are more T-Mobile records that were implicated or if other customers that were serviced by Experian were affected.

This attack on the global leader in credit checks has now put its contract with T-Mobile in jeopardy.  T-Mobile CEO John Legere said, “I am incredibly angry about this data breach and we will institute a thorough review of our relationship with Experian.”  Now with holiday season almost upon us, an event like this could seriously impact T-Mobile’s customer growth for the year.  Recently, T-Mobile became the fastest growing mobile carrier in America, so there is a lot at stake with how the company handles this situation for their customers.

The next breach is just around the corner as hacker groups remain steadfast in searching for a backdoor to exploit in a company’s network.  Sadly, you can now add T-Mobile and Experian to the likes of Sony, Staples, Target, and Home Depot all of which having suffered at the hands of patient and relentless hackers.

France’s Front National Party Charged with Misuse of Assets and Complicity in Fraud

France’s Front National (FN) Party is known for its staunch anti-immigrant stance and other far-right positions, but now it is getting attention for its possible involvement in election fraud.  Marine Le Pen and other party officials have strongly denied the accusations despite the investigation launched by judges focusing on the conduct of FN officials and affiliated companies for allegedly defrauding the state by inflating campaign costs during the 2012 parliamentary elections.

The investigation comes at an inopportune time as Le Pen and the party prepare for regional elections later this year.  This juxtaposed against the FN party’s well-known stance for running a campaign free from the influence of the county’s elite; and FN putting the spotlight on the purported corruption of France’s Republican and Socialist parties.

The basis of the allegations concentrate on the involvement of the FN affiliated “micro-parties” that sold what were known as special “election campaign kits” comprised of various communication materials through different mediums such as posters, websites, and other collateral in support of over 500 FN parliamentary candidates.  The micro-party would sell the kits for as high as $18,000 only to be reimbursed by the state if the candidate reached a 5% share of the vote. 

So far, less than ten companies and their workers have been charged through the course of the investigation. Currently, there are no direct links demonstrating that FN officials sanctioned the sale of the over-inflated kits by any of the micro-parties.  As the investigation continues it will be interesting to see just if FN operates at the level of transparency it holds other French political parties to.

What Happens When You Give A 25 Year-Old A Smartphone and The Keys To The City?

Bom Jardim is arguably one of the poorest cities in Brazil.  You wouldn’t know that by the opulent life of the municipality’s mayor Lidiane Leite who stated on her social media, “Before I was mayor I was poor, and had a Land Rover. Now I’m in a Toyota SW4… I should have bought a better car, because thanks to God money is no longer a problem.”  Ms. Leite is 25 years of age and the successor to her one-time husband, Beto Rocha’s, mayoral administration.  As coincidence would have it, Rocha’s time in office was cut short after his alleged involvement in corruption was uncovered.

 

After winning the election, Ms. Leite did not occupy the office long before it was suspected she moved to the state of Maranhao’s capital city of Sao Luis, where she began delegating to duties to her staff and diverting city funds from her WhatsApp account.  The majority of such funds came from the Bom Jardim school system totaling close to $4 million.  As a result, the education system has crumbled and teachers are not able to be paid.  An investigation and arrest warrant has been issued for Ms. Leite by the local authorities.  Citizens in the town of 39,000 protested in the streets demanding an end to the malfeasance.

 

The children, teachers, and taxpayers are the ones who lose out most in this unfortunate incident.  Children living in towns lacking adequate resources deserve an opportunity to have quality education to one day improve their economic situation.  At the same time, teachers who are dedicated educating youngsters deserve prompt and adequate compensation. Lastly, taxpayers deserve to have the assurance that the income levied on their paychecks is going to ethical, engaged, and transparent government.

John Doe Files Purported Class Action Against Ashley Madison

posted in: Cybersecurity | 0

John Doe is pursuing class action status in federal district court in Los Angeles against Ashley Madison.com and its parent company.  This case arises from the massive data breach suffered by the website catering to people interested in having extramarital affairs.  Last week, a Canadian class action was filed seeking $578 million in damages.  Doe is seeking unspecified damages in relation to the eight allegations including negligent infliction of emotional distress, invasion of privacy, and breach of contract.

The attack was allegedly perpetrated by the “Impact Team,” which disclosed the names and emails of public figures, government officials, and high-level corporate executives.  So far two people have committed suicide as a result of the breach and countless others have no doubt suffered public shame and private anguish at the hands of the merciless technicians.

According to the complaint, the attack was a result of the Ashley Madison’s “inadequate data security,” which failed to encrypt users’ personal information. Additionally, one of the motives behind the Impact Team’s attack was the $19 “cancellation” fee associated with the expunging of the user’s account information that was still available on Ashley Madison’s servers, despite the numerous users paying for their records to be deleted.

Toronto based Avid Life Media is the parent company of Ashley Madison and four other websites that strive to set themselves apart from the conventional dating websites.  The company presented a 500 million Canadian Dollar reward to apprehend the hackers in the Impact Team responsible for the attack.

Due to the risqué nature of the subject matter disclosed there will be more stories written about this data breach than others in years’ past.  However, what I am most interested in is whether this case will be settled or dismissed, and if so, what stage of the litigation this will occur.

The SEC Accompanies German Prosecutors’ Examination of Ford’s Involvement in Russia

Prosecutors in Cologne, Germany began an investigation in 2013 of Ford Motor Company and the state-owned freight logistics company DB Schenker. Scrutiny of the two companies began after police inspected Schenker’s office as a result of an anonymous tip of alleged bribes made to expedite the transfer of containers through the Port of St. Petersburg. Ford has agreed to fully comply with the investigation involving two Ford workers, eight former and current Schenker employees, and a Russian subcontractor.

Cologne is the home to Ford European’s headquarters and two of its manufacturing plants. DB Schenker is a wholly-owned subsidiary of Deutsche Bahn, a Berlin company specializing in transportation and logistics by air, land, and sea. DB Schenker’s operational logistics concentrates on rail freight.

Representatives from Ford and the Securities and Exchange Commission declined to comment on specific details of the investigation.

The SEC and DOJ Announce Parallel FCPA Enforcement Actions Against Former SAP Executive

According to a Securities and Exchange Commission press release, a former executive at the worldwide software manufacturer SAP has agreed to settle charges that he violated the Foreign Corrupt Practices Act (FCPA) by bribing Panamanian government officials through an intermediary to procure software license sales.

Vicente E. Garcia crafted a scheme that lasted from 2009 to 2013, wherein Garcia paid $145,000 in bribes to a Panamanian government official and made promises to pay two other Panamanian government officials.  The payments and promises were in exchange for four SAP software contracts to the Panamanian government. During the time of the scheme, slush funds were created not only to pay the officials, but were also used as kickbacks to Garcia himself.

SAP is headquartered in Germany with 272 subsidiaries servicing over 263,000 customers in 188 countries. Garcia sidestepped SAP internal controls by turning in false approval forms with excessive discounts to a Panamanian local agent. Garcia also used his company and personal email accounts to outline the particulars of the amounts going to the government officials.

According to the SEC order, Garcia violated the anti-bribery and internal controls provisions of the Securities Exchange Act of 1934.  Garcia consented to the entry of the cease-and-desist order and agreed to pay disgorgement of $85,965, which is the total amount of kickbacks he received, plus prejudgment interest of $6,430 for a total of $92,395.

In the criminal information filed by the Department of Justice, Garcia was charged with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act.  Garcia has pled guilty and is awaiting sentencing in December of this year.

What Happens When Hackers Meet Rogue Traders?

posted in: Cybersecurity | 0

During my time at the Clearinghouse I learned how valuable press releases are, not only to traders, but to shareholders awaiting news on case filings and their settlements. Today, the Securities and Exchange Commission, federal prosecutors, and other law enforcement agencies announced the filing of indictments and the arrest of several hackers and rogue traders who allegedly engaged in insider trading.

The scheme took place over five years and consisted of the traders sending hackers (headquartered in the Ukraine) a list of companies that prepared press releases before they were disseminated to the public.  The hackers would then provide the traders tutorials on how to compromise the companies’ networks and obtain a pre-release view of the corporate statements to the public. Consequently, 32 traders and hackers were able swindle over $100 million dollars in ill-gotten gains on the trading of inside information.

One of the indictments details that five of the named defendants broke into press release companies like Marketwired, Business Wire, and PR Newswire to steal over 150,000 news releases being prepared for disclosure on behalf of the publicly traded companies. Traders would typically agree to pay the hackers a percentage or a flat fee for gaining this advantage over the market on the unreleased information.  Some of the companies the traders obtained inside information on were Clorox, Caterpillar, Honeywell, and Bank of America.

Like most sophisticated fraudsters, the defendants started careful and meticulous, but they were caught once they became too sloppy and overly brazen. In many of the illicit trades the rogues would only act on a small portion of the hundreds of thousands of press releases in order to conceal their plot. After the illegal profits came in, a laptop was seized and the hackers routinely bragged in chat rooms with messages like, “I’m hacking prnewswire.com.”

This story demonstrates not only shows how scary things can be when dirty traders and hackers team up, but how hackers to are finding new ways to exploit systems for big payoffs.  Despite the ingenuity of these hackers, it all came to an end when rudimentary mistakes were made once the money came rolling in.

Puerto Rico in Default

posted in: Miscellaneous | 0

This week Puerto Rico’s Government Development Bank announced that it would make a partial payment on its upcoming Public Finance Corporation (PFC) debt.  Moody’s stated that such action would be deemed a default by the island commonwealth. “This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments. This is a first in what we believe will be broad defaults on commonwealth debt,” stated Emily Raimes, vice president at Moody’s Investors Service.

 

The default has prompted the biggest municipal default in US History, which will no doubt bring about lengthy and contentious litigation with creditors, as well as guaranteed austerity making life all the more difficult for working families who choose to remain on the island.  To put the debt payments in perspective this week’s deadline required a $58 million payment, however, the government was only able to transfer $628,000 to the PFC. The island is encumbered to the tune of $72 billion in total debt, which is equal to the Puerto Rican gross national product.

 

The US island territory simply has not been able to grow at a rate fast enough to sustain its debt obligation. Years of sluggish wages, brain drain, and high unemployment have been emblematic of this inevitable outcome.

 

Now the question is what comes next?  A Detroit-style bankruptcy under Chapter Nine is unavailable due to the Puerto Rican Constitution’s prohibition of declaring bankruptcy. Since Puerto Rico is a United States territory and not a sovereign nation it cannot seek relief from the International Monetary Fund. That means Congressional intervention is needed to facilitate the how Puerto Rico will be able to negotiate a settlement with the commonwealth’s creditors. Two possible options for Congress is granting the commonwealth statehood, or authorizing Puerto Rico the power to pursue Chapter 9 bankruptcy.

 

As it stands now, Puerto Rico seems to be headed in a similar direction as Greece, facing heavy austerity measures that threaten to cripple the island’s education system and other social programs.  In the months to come it will be intriguing to see how Congress will make Puerto Rico’s recovery a priority despite a forthcoming election year and the typical legislative dysfunction.

2015 Securities Class Action Mid-year Report

According to the Stanford Law School Securities Class Action Clearinghouse (SCAC) in collaboration with Cornerstone Research, securities class action litigation filings so far this year remain below the historical average. Based on the SCAC’s findings there have been a total 85 privates securities class actions filed in the federal district courts.

In the first six months of 2015, there have been more securities class actions filed against foreign companies when compared to the first half of last year. Asian companies were the defendants in more than half of the foreign firms.

“Securities class actions continue to percolate at a relatively low level, whether measured by the number of cases filed or the dollar amounts at stake,” noted Professor Joseph Grundfest, former Securities and Exchange Commissioner and current director of the SCAC. “The interesting question is ‘why?’ Some observers point to high stock price valuations and the lack of volatility in equity markets. Others point to the fact that many of the major accounting scandals now appear to be happening outside the United States. A combination of both factors could well be at work.”

The major trends observed within Cornerstone’s Midyear Assessment were:

  • The total Disclosure Dollar Loss (DDL), which calculates investor losses at the time that an alleged fraud is disclosed, remained at low levels.  Aggregate DDL was $34 billion in the first half of 2015, 43% below the historical semiannual average of $60 billion.

 

  • The total Maximum Dollar Loss (MDL), a measure of the largest amount that plaintiffs might seek to recover, was $105 billion, an amount 65% below the historical semiannual average MDL of $304 billion.

 

  • Filing activity against companies with large market capitalizations, as represented by firms in the S&P 500, remained well below average. Only 1.6% if S&P 500 firms were the subject of class actions in the first half of 2015.

 

  • The median lag between the end of the alleged class period and the filing of the lawsuit declined to 11 days, the third lowest on record, suggesting intensifying completion for filings by the plaintiff bar.

 

  • Dismissals within the first three years of the filing of a class action peaked for 2010 and 2011 filing cohorts.  In filing cohort years 2012, 2013, and 2014 early dismissals (those within the first year) have declines relative to 2010 and 2011 cohorts.

 

  • Reversing trends noted at year-end 2014, filing activity against Industrial and Technology firms increased to levels more consistent with historical averages, while filings against Energy companies declines to average historical levels.

 

  • Biotechnology, healthcare, and pharmaceutical companies (included in the Consumer Non-Cyclical sector) together accounted for 19% of total filings in the first half of 2015. Within this group, filings against pharmaceutical firms were the most common class action.

 

The full report can be found here.

 

Deputy Speaker of the UK Parliament Resigns Amidst the Release of Hidden Camera Footage

Lord Sewel the former Commander of the Order of the British Empire and former chairman of the Committees of the House of Lords recently became the focus of a criminal investigation by the London Metropolitan Police into his alleged dealings with prostitutes and illicit drugs. The revelations came to light after Lord Sewel was surreptitiously videotaped in his UK flat with his guests making statements of former president George W. Bush and Prime Minister David Cameron, among other things. Sewel described the Prime Minister as, “the most facile, superficial prime minister there’s ever been.”

Shortly after the story went public, Sewel decided to step away from his post. In his resignation Lord Sewel stated, “I have today written to the Clerk of the Parliaments terminating my membership of the House of Lords,” Sewel said in a statement published in the New York Times. “The question of whether my behavior breached the code of conduct is important, but essentially technical. “The bigger questions are whether my behavior is compatible with membership of the House of Lords and whether my continued membership would damage and undermine public confidence in the House of Lords,” he added. “I believe the answer to both these questions means that I can best serve the House by leaving it.”

Add Lord Sewel’s name to very long list of politicians who have been caught on tape behaving badly. It will be interesting to see the not only the findings of the investigations, but where his career goes from here.