The Crypto Market Integrity Coalition faces fraud head-on | #lovescams | #datingapps

Crypto cleans up its act

The crypto industry has wrestled with the reputation that it operates in a world of shady players. Now it wants the world to know that it’s going after the bad guys. Crypto’s biggest players, including Coinbase, Circle and Anchorage Digital, just launched the Crypto Market Integrity Coalition, which is taking aim at “manipulation and abuse.”

The timing makes sense, given the drumbeat of news about hacks and scams, but it’s also bound to raise eyebrows.

It’s an about-face on the idea that crypto facilitates crime. For years, crypto companies have downplayed the prevalence of criminal activity on the blockchain — even when careful analysis showed billions of dollars in illicit transactions.

• The CMIC promises to work for a “safe crypto ecosystem,” which is an admission that we don’t have one today. “DeFI and digital assets are at a tipping point,” said Kathy Kraninger, vice president of Regulatory Affairs at Solidus Labs, which spearheaded the creation of the alliance.
• Yes, crypto is ushering in positive changes to the world of finance, she said, but these also “present new forms of market manipulation, fraud and risk to consumers, investors and economies.”
• Bad players are porting over tried and tested techniques from stock scams and money laundering, including pump-and-dump, spoofing and wash trading.
• And then there are rug pulls and other forms of digital deception. In a fast-growing industry based on constantly evolving technology, new tricks inevitably emerge. The CMIC warned of “crypto-specific market manipulation schemes unique to digital asset trading.”
• The CMIC group invited other crypto players to make a public pledge that they want to “root out manipulation and fraud from our markets,” Kraninger said.

Crypto wants to show that it can clean up its own act. “If this is going to be mainstream, the sector needs credibility,” especially given the “popular perception that there is a fair amount of fraud and shadiness going on,” Stanford Graduate School of Business lecturer Rob Siegel told Protocol.

• Unfortunately, the problems just keep popping up. Over the weekend, Binance, the world’s biggest crypto marketplace, warned investors against another “massive phishing” scam involving apparently bogus withdrawal requests sent via SMS messages to crypto users.
• NFTs, a fast-growing segment of the crypto market, quickly became a major target of wash trading and money-laundering schemes, according to Chainalysis.
• Crypto companies need to show that they are united in fixing these issues. They “need to do stuff like this if they want to make it,” especially with regulators increasingly worried about crypto’s impact, Chris McCann, partner at Race Capital, told Protocol.

“This is the thing you do when you see regulation coming around the corner,” Alex Johnson, fintech research director at Cornerstone Advisors, told Protocol. It’s a “very common lobbying move,” he said. “You try to forestall or soften that regulation by ‘voluntarily’ pledging to hold yourself to certain standards.”

— Ben Pimentel (email | twitter)

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On Protocol: Google Cloud added a new security layer to combat crypto-mining attacks. After noting that “cryptojacking” has been on the rise for the past few years, the tech giant added a security protocol to detect takeovers of cloud servers by miners in an effort to protect customers.