Consumer protection

EU designates Apple’s iPadOS as a gatekeeper under DMA

The European Commission has taken another giant step in digital regulation by designating Apple’s iPadOS as a gatekeeper under the Digital Markets Act (DMA). The legal measure follows an investigation into Apple’s ecosystem, which found that iPadOS plays a crucial role as a gateway for business users to reach end consumers despite failing to meet initial quantitative thresholds. The Commission’s findings indicate that Apple’s large ecosystem effectively locks end users and business users into iPadOS, discouraging them from switching to other tablet operating systems. As a result, Apple has been given six months to ensure full compliance of iPadOS with DMA obligations.

The DMA, aimed at fostering fair and contestable markets in the digital sector, focuses on regulating gatekeepers — large digital platforms that serve as vital gateways between businesses and consumers. This designation carries significant implications, as gatekeepers possess the potential to create bottlenecks in the digital economy due to their entrenched positions. The Commission’s decision regarding iPadOS represents the first market investigation conducted under the DMA rules, which were initiated with a best-endeavour deadline of 12 months to conclude based on qualitative criteria.

In addition to Apple, the European Commission has designated other tech giants like Alphabet, Amazon, Meta, and Microsoft as gatekeepers. These companies were required to comply fully with DMA obligations by 7 March 2024. However, the Commission has opened investigations into alleged non-compliance by Alphabet and Meta, focusing on issues such as self-preferencing and steering within their platforms. Furthermore, recent notifications from Booking, ByteDance, and X suggest potential inclusion under the DMA rules, indicating ongoing scrutiny and expansion of regulatory measures within the EU’s digital landscape.

Why does it matter?

The Commission’s proactive stance depicts the evolving nature of digital regulation and the imperative to maintain fair and competitive digital markets. As it continues to assess compliance and investigate potential violations, the Commission remains committed to ensuring that gatekeepers adhere to DMA obligations, fostering an environment conducive to innovation and consumer choice within the digital ecosystem.

A final version of stablecoin bill in the US could be ready soon

US House Representative Maxine Waters, a top Democrat on the House Financial Services Committee, has indicated that the final version of the stablecoin bill could be ready soon. In an interview with Bloomberg, Waters expressed optimism about the progress made towards getting the bill in the short run. This is a significant development, considering Waters had previously criticised a version of the same bill.

Waters now emphasises the importance of protecting investors and ensuring that cryptocurrency known as stablecoins have proper backing. This focus on investor protection underscores the need for robust regulation in the rapidly growing market.

Both the Senate and the House of Representatives have seen an acceleration in the movement towards a legislation in the past few weeks. Waters mentioned that the US Federal Reserve, the Treasury Department, and the White House have all had input in shaping the bill, underscoring the extensive collaboration involved.

In addition to progress within the House, a new stablecoin bill has been introduced in the Senate by Senators Cynthia Lummis and Kirsten Gillibrand. The bill proposed a ban on algorithmic stablecoins and requirements for issuers’ tokens to be fully backed by reserve assets. This bipartisan effort demonstrates the growing interest in regulating stablecoin cryptocurrency and ensuring their stability and transparency.

Notably, there is mention of a possible pairing of the stablecoin legislation with a marijuana banking bill. It is suggested that Waters is hopeful of overcoming potential opposition to the marijuana banking bill from Republican leader Mitch McConnell, which could facilitate further progress on both fronts.

Executives of the cryptocurrency wallet Samourai indicted for money laundering

Keonne Rodriguez and William Lonergan Hill, the CEO and CTO of cryptocurrency company Samourai Wallet, have been indicted and charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. The charges stem from their alleged involvement in the development, marketing, and operation of a cryptocurrency mixer that facilitated over $2 billion in unlawful transactions and enabled more than $100 million in money laundering activities from illegal dark web markets.

The indictment accuses Rodriguez and Hill of knowingly facilitating the laundering of criminal proceeds from sources such as Silk Road and Hydra Market, as well as from various wire fraud and computer fraud schemes, including a web-server intrusion and a spearphishing scheme. They are also alleged to have been involved in schemes to defraud multiple decentralized finance protocols.

Rodriguez was arrested and is expected to appear before a U.S. Magistrate Judge in the Western District of Pennsylvania, while Hill was arrested in Portugal, and the United States intends to seek his extradition for trial. In coordination with law enforcement authorities in Iceland, Samourai’s web servers and domain were seized, and a seizure warrant for Samourai’s mobile application was served on the Google Play Store. As a result, the application will no longer be available for download in the United States.

U.S. Attorney Damian Williams emphasized that Rodriguez and Hill are accused of operating a cryptocurrency mixing service that enabled criminals to engage in large-scale money laundering.

FBI Assistant Director in Charge James Smith explained that Rodriguez and Hill allegedly operated a mobile cryptocurrency mixing platform for almost a decade, providing a virtual haven for criminals to exchange illicit funds. Smith stated that Samourai’s services facilitated over $2 billion in illegal transactions and $100 million in dark web money laundering.

According to the indictment, from around 2015 to February 2024, Rodriguez and Hill developed, marketed, and operated the cryptocurrency mixing service known as Samourai. While promoting wallet as a “privacy” service, persecutors argue that the defendants were aware that it was used by criminals to launder large amounts of money and evade sanctions. The indictment alleged that Samourai processed over $100 million of criminal proceeds.

Illegal Samourai features

Samourai’s mobile application, allowed users to store their private keys for Bitcoin (BTC) addresses. Although Samourai employees did not have access to these private keys, the company operated a centralized server that facilitated transactions between users and created new BTC addresses. The indictment highlighted two features of Samourai that were allegedly designed to assist individuals engaged in criminal conduct to conceal the source of their proceeds. The first feature, called “Whirlpool,” was a cryptocurrency mixing service that coordinated batches of exchange between Samourai users to prevent law enforcement tracing on the Blockchain. The second feature, known as “Ricochet,” added unnecessary intermediate transactions, called “hops,” when transmitting cryptocurrency between addresses to prevent detection by law enforcement and cryptocurrency exchanges.

Over the years, over 80,000 BTC (worth over $2 billion at the relevant time) passed through these two services provided by Samourai. The defendants collected fees of approximately $3.4 million for Whirlpool transactions and $1.1 million for Ricochet transactions over the same period. Furthermore, Rodriguez and Hill operated Twitter accounts associated with Samourai.

Italy fines Amazon subsidiaries for unfair practices

Italy’s antitrust authority has fined two Amazon subsidiaries 10 million euros for alleged unfair commercial practices, a decision that Amazon plans to challenge through an appeal. The regulator accused Amazon of limiting consumers’ freedom of choice by automatically pre-setting a ‘Subscribe and Save’ option on its website for a wide range of products. This practice encouraged consumers to opt for recurring deliveries rather than one-off purchases, potentially restricting their ability to choose freely.

According to the authority, pre-ticking recurring purchases could lead consumers to buy products periodically, even without a genuine need, thus curtailing their freedom to choose. Amazon responded by contesting the decision and stating its intention to appeal. The company defended its ‘Subscribe and Save’ program, highlighting its benefits to customers regarding cost savings and convenience for routine purchases.

Amazon emphasised that the ‘Subscribe and Save’ option, which allows customers to schedule regular deliveries of essential items with a discount, has resulted in significant savings exceeding 40 million euros since its introduction in Italy. Despite the fine and regulatory scrutiny, Amazon maintains that its program continues to provide value to customers by simplifying their shopping experience and offering discounts on recurring purchases of everyday products.

Cryptocurrency exchange Binance faces class-action lawsuit in Canada

Cryptocurrency exchange Binance is facing a class-action lawsuit in Canada for allegedly violating local securities laws. The lawsuit, filed in the Ontario Superior Court of Justice, claims that cryptocurrency exchange sold crypto derivative products without proper registration, breaching the Ontario Securities Act and federal law.

Plaintiffs, are seeking damages and the rescission of unlawful derivatives trades. They argue that tens of thousands of Canadian users invested in Binance’s cryptocurrency derivatives products. The certification motion highlights the significant involvement of retail investors in cryptocurrency derivatives trading.

The class-action lawsuit follows Binance’s announcement in June 2021 to cease operations in Ontario after a warning from the Ontario Securities Commission. Despite Binance’s departure from Canada in May 2023, the investigation into its activities by local authorities has continued. The court motion confirms that the Ontario Securities Commission is actively examining the defendants.

Notably, no comment or response from Binance regarding the class-action lawsuit has been provided in the news text. Therefore, the official stance of Binance on the allegations remains undisclosed.

Thailand to block unauthorized cryptocurrency platforms

Thailand has announced plans to block “unauthorized” cryptocurrency platforms in order to enhance law enforcement efforts to combat online crime. The decision was made following a meeting of the Technology Crime Prevention and Suppression Committee, which instructed the country’s Securities and Exchange Commission (SEC) to submit information about unauthorised digital asset service providers to the Ministry of Digital Economy and Society. The goal is to block access to these platforms.

To facilitate a smooth transition, users will be provide with sufficient time to manage their accounts before losing access to the services. In an announcement, the SEC urged users of affected platforms to promptly withdraw their assets. The Thai SEC also cited previous actions taken by countries such as India and the Philippines, which have blocked unauthorized cryptocurrency platforms.

Thai regulators have been striving to strike a balance between supporting the cryptocurrency ecosystem and preventing fraud. While institutional investors and high-net-worth individuals have been allowed to invest in cryptocurrency exchange-traded funds (ETFs), and retail investors have been able to invest without limitations in digital tokens backed by real estate or infrastructure, custodians are required to have contingency plans in place in case of unforeseen issues.

The move to block unauthorized crypto platforms in Thailand reflects the global trend towards regulation in the cryptocurrency industry. The aim is to enhance the efficiency of law enforcement in addressing online criminal activities associated with cryptocurrencies, while also ensuring a secure and trustworthy environment within the crypto space.

EU users can now download iOS apps directly from developers

Apple is rolling out a significant change in its approach to distributing iOS apps in the EU. Starting Tuesday, developers will be able to offer apps for direct download from their websites. This move breaks from Apple’s traditional walled garden model and responds to new EU regulations to foster competition and consumer protection in digital markets.

Under these changes, developers meeting Apple’s criteria, including notarization requirements, can distribute iPhone apps directly to the EU users. However, this comes with new terms, including a ‘core technology fee’ of €0.50 for each first annual install over 1 million, regardless of distribution location.

The company has also made other adjustments in compliance with the Digital Markets Act (DMA), such as allowing marketplace apps where developers can run their own app stores on iOS and offering greater flexibility in in-app payments. However, Apple maintains its stance on security risks associated with sideloading apps, emphasising safety measures in the new distribution process.

Critics have raised concerns about the authorisation flow for direct web downloads, labelling them as ‘scare screens’ designed to discourage users from bypassing Apple’s App Store. The European Commission is investigating several aspects of Apple’s compliance with the DMA, including its fee structure and steering rules.

Why does it matter?

While this shift opens up new avenues for developers to reach users in the EU, its adoption remains to be determined. Apple acknowledges some interest from developers but emphasises that it’s a new capability, and the extent of its adoption is yet to be seen. This move adds to the evolving landscape of app distribution options in the EU alongside the existing App Store distribution and marketplace app submissions.

Apple under EU antitrust scrutiny over proposal for Spotify and App Store

The EU antitrust regulators are scrutinising a proposal by Apple to determine if it meets their directive allowing Spotify and other music streaming services to inform users of alternative payment methods outside of Apple’s App Store. This review follows the European Commission‘s recent order and hefty fine imposed on Apple for breaching competition rules. Under Apple’s proposal, services like Spotify can now include links on their apps directing users to their websites to purchase digital content or services, circumventing Apple’s payment system.

However, there’s a catch: any transactions resulting from these links will incur a 27% fee to Apple, including subsequent auto-renewing subscriptions. The European Commission is evaluating whether Apple’s proposal fully aligns with its decision. If there’s suspicion of non-compliance, the Commission may issue a Statement of Objections to address the concerns.

Apple insists that its plan adheres to the Commission’s decision, although Spotify has expressed frustration over Apple’s delay in complying with the EU order, which was issued five weeks ago. Meanwhile, the Commission is conducting a separate investigation into Apple’s App Store rules and its recent measures to comply with the Digital Markets Act (DMA) amid concerns that these could restrict developers from freely communicating and promoting their offerings.

Why does it matter?

The outcome of the EU’s assessment will determine whether Apple faces additional antitrust charges and penalties if its proposal is found to fall short of the Commission’s requirements. The ongoing dispute highlights the broader regulatory scrutiny facing tech giants like Apple over their market practices and dominance in the digital ecosystem, particularly concerning payment systems and app store policies.

Terraform labs and former CEO found liable for defrauding crypto investors

Terraform Labs PTE Ltd. and its former CEO, Do Kwon, have been found liable for defrauding investors in crypto asset securities by a jury in the United States District Court for the Southern District of New York. This verdict follows the court’s previous determination that the defendants unlawfully offered and sold these securities in violation of the registration provisions of the US Securities Act.

According to Gurbir S. Grewal, the Director of the Division of Enforcement at the Securities and Exchange Commission (SEC), this decision marks a victory in combating crypto fraud. The defendants allegedly deceived investors by misrepresenting the stability of the crypto asset security known as Terra USD, as well as providing false information about a popular payment application supposedly utilizing Terraform’s blockchain. These deceptions resulted in devastating financial losses for investors and caused the market value of Terra USD to plummet by tens of billions overnight.

“For all of crypto’s promises, the lack of registration and compliance has very real consequences for real people.” Grewal expresses the SEC’s commitment to utilizing all available tools to protect investors, while also urging the crypto market to align itself with regulatory requirements.

The defendants allegedly engaged in fraudulent activities by providing misleading information about the stability of a crypto asset security and the application of their blockchain technology. As a result, investors suffered significant financial losses and the market value of Terra USD experienced a sharp decline.

Google sues alleged scammers for distributing fraudulent crypto apps on Play Store

Google has initiated legal action against two alleged crypto scammers for distributing fraudulent cryptocurrency trading apps through its Play Store, deceiving users and extracting money from them. Based in China and Hong Kong, the accused developers uploaded 87 deceptive apps that reportedly conned over 100,000 individuals. According to Google, users suffered losses ranging from $100 to tens of thousands per person due to these schemes, which have been operational since at least 2019.

The lawsuit marks Google’s proactive stance against such scams since Google swiftly removed the fraudulent apps from its Play Store. The company’s general counsel, Halimah DeLaine Prado, emphasised that holding these bad actors accountable is crucial to safeguarding users and maintaining the integrity of the app store. The company claims it incurred over $75,000 in economic damages while investigating this fraud.

The scam reportedly enticed users through romance messages and YouTube videos, urging them to download fake cryptocurrency apps. The scammers allegedly misled users into believing they could profit by becoming affiliates of the platforms. Once users invested money, the apps displayed false investment returns and balances, preventing users from withdrawing funds or imposing additional fees, ultimately leading to more financial losses.

Google’s legal action accuses the developers of violating its terms of service and the Racketeer Influenced and Corrupt Organizations Act. The company seeks to block further fraudulent activities by the defendants and aims to recover unspecified damages. The legal move represents Google’s commitment to combating app-based scams and protecting users from deceptive practices on its platform.