Economic Archives | Page 375 of 708 | Digital Watch Observatory

Hong Kong breaks up cross-border crypto laundering ring

Hong Kong authorities have busted a cross-border crypto laundering network that processed around HK$118 million (US$15 million) in illicit funds. The crackdown led to a dozen arrests amid efforts to stop people from monetising personal banking credentials.

Raids led by the Commercial Crime Bureau on Thursday detained nine men and three women aged between 20 and 40 across several districts. Officials seized HK$1.05 million in cash, over 560 bank cards, multiple devices, and financial documents.

Investigators found the network had recruited mainland Chinese citizens since mid-2023 to open fraudulent bank accounts in Hong Kong. These accounts were used to channel criminal proceeds from scams, with cash withdrawn and converted into cryptocurrency.

Two Hong Kong residents were arrested as primary organisers, alongside ten mainland Chinese nationals who served as account fronts. The operation reportedly used more than 550 domestic bank accounts to launder about HK$118 million.

So far, authorities have linked HK$10 million of the laundered money to 58 fraud cases. Victims reported losses totalling HK$43.2 million. The network operated from a Mong Kok apartment, where recruits stayed while processing fraudulent transfers.

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China launches first AI satellites in orbital supercomputer network

China has launched the first 12 satellites in a planned network of 2,800 that will function as an orbiting supercomputer, according to Space News.

Developed by ADA Space in partnership with Zhijiang Laboratory and Neijang High-Tech Zone, the satellites can process their own data instead of relying on Earth-based stations, thanks to onboard AI models.

Each satellite runs an 8-billion parameter AI model capable of 744 tera operations per second, with the group already achieving 5 peta operations per second in total. The long-term goal is a constellation that can reach 1,000 POPS.

The network uses high-speed laser links to communicate and shares 30 terabytes of data between satellites. The current batch also carries scientific tools, such as an X-ray detector for studying gamma-ray bursts, and can generate 3D digital twin data for uses like disaster response or virtual tourism.

The space-based computing approach is designed to overcome Earth-based limitations like bandwidth and ground station availability, which means less than 10% of satellite data typically reaches the surface.

Experts say space supercomputers could reduce energy use by relying on solar power and dissipating heat into space. The EU and the US may follow China’s lead, as interest in orbital data centres grows.

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Coinbase hit by multiple data breach lawsuits

Coinbase faces multiple lawsuits after revealing a data breach involving bribed support agents leaking user information. At least six lawsuits were filed between 15 and 16 May, accusing the exchange of poor security and mishandling the breach.

One lawsuit filed in New York claims Coinbase failed to protect sensitive data of millions, including names, addresses, phone numbers, and partial Social Security numbers.

The complaint says the exchange’s response was slow and inadequate, putting users at risk of identity theft and fraud.

Other lawsuits allege Coinbase did not spend enough on security and demand compensation and stronger protections. One case asks the court to order Coinbase to delete sensitive data and hire third-party auditors.

Coinbase declined to comment on the lawsuits but confirmed it refused a $20 million ransom. It plans to reimburse users who lost crypto to phishing scams related to the breach. The company also fired involved customer support agents.

Following the breach announcement, Coinbase shares fell 7% but rebounded quickly, closing higher on 16 May.

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Elton John threatens legal fight over AI use

Sir Elton John has lashed out at the UK government over plans that could allow AI companies to use copyrighted content without paying artists, calling ministers ‘absolute losers’ and accusing them of ‘thievery on a high scale.’

He warned that younger musicians, without the means to challenge tech giants, would be most at risk if the proposed changes go ahead.

The row centres on a rejected House of Lords amendment to the Data Bill, which would have required AI firms to disclose what material they use.

Despite a strong majority in favour in the Lords, the Commons blocked the move, meaning the bill will keep bouncing between the two chambers until a compromise is reached.

Sir Elton, joined by playwright James Graham, said the government was failing to defend creators and seemed more interested in appeasing powerful tech firms.

More than 400 artists, including Sir Paul McCartney, have signed a letter urging Prime Minister Sir Keir Starmer to strengthen copyright protections instead of allowing AI to mine their work unchecked.

While the government insists no changes will be made unless they benefit creators, critics say the current approach risks sacrificing the UK’s music industry for Silicon Valley’s gain.

Sir Elton has threatened legal action if the plans go ahead, saying, ‘We’ll fight it all the way.’

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UK workers struggle to keep up with AI

AI is reshaping the UK workplace, but many employees feel unprepared to keep pace, according to a major new study by Henley Business School.

While 56% of full-time professionals expressed optimism about AI’s potential, 61% admitted they were overwhelmed by how quickly the technology is evolving.

The research surveyed over 4,500 people across nearly 30 sectors, offering what experts call a clear snapshot of AI’s uneven integration into British industries.

Professor Keiichi Nakata, director of AI at The World of Work Institute, said workers are willing to embrace AI, but often lack the training and guidance to do so effectively.

Instead of empowering staff through hands-on learning and clear internal policies, many companies are leaving their workforce under-supported.

Nearly a quarter of respondents said their employers were failing to provide sufficient help, while three in five said they would use AI more if proper training were available.

Professor Nakata argued that AI has the power to simplify tasks, remove repetitive duties, and free up time for more meaningful work.

But he warned that without better support, businesses risk missing out on what could be a transformative force for both productivity and employee satisfaction.

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UK to enforce strict crypto transaction reporting

Crypto firms operating in the United Kingdom will be required to report detailed customer transaction data from 1 January 2026. The move is part of the government’s wider plan to improve tax transparency in the crypto sector by aligning with international reporting standards.

Firms must collect and submit information on each transaction, including the user’s name, address, tax ID, the crypto used, and the amount transferred. Transactions involving companies, trusts, and charities must also be reported.

Penalties of up to £300 per user may apply for non-compliance or incorrect reporting.

The measures are part of the UK’s adoption of the OECD’s Cryptoasset Reporting Framework, aiming to support innovation while reducing fraud and abuse. Authorities have urged firms to begin gathering data now, although full guidance will be issued later.

While the UK’s approach focuses on integrating crypto into existing regulations, it differs from the EU’s MiCA rules. Unlike the EU, the UK will not require foreign stablecoin issuers to register or limit their transaction volumes.

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Coinbase hit by breach and SEC probe ahead of S&P 500 entry

Cryptocurrency exchange Coinbase has disclosed a potential financial impact of $180 million to $400 million following a cyberattack that compromised customer data, according to a regulatory filing on Thursday.

The company said it received an email from an unidentified threat actor on Sunday, claiming to possess internal documents and account data for a limited number of customers.

Although hackers gained access to personal information such as names, addresses, and email addresses, Coinbase confirmed that no login credentials or passwords were compromised.

Coinbase stated it would reimburse users who were deceived into transferring funds to the attackers. It also revealed that multiple contractors and support staff outside the US had provided information to the hackers. Those involved have been terminated, the company said.

In parallel, the US Securities and Exchange Commission (SEC) is reportedly investigating whether Coinbase previously misrepresented its verified user figures.

Two sources familiar with the matter told Reuters that the SEC inquiry is ongoing, though it does not focus on know-your-customer (KYC) compliance or Bank Secrecy Act obligations. Coinbase has denied any such investigation into its compliance practices.

The SEC declined to comment. Coinbase’s chief legal officer, Paul Grewal, characterised the probe as a continuation of a past investigation into a user metric the company stopped reporting over two years ago. He said Coinbase is cooperating with the SEC but believes the inquiry should be closed.

The news comes ahead of Coinbase’s upcoming addition to the S&P 500 index, potentially overshadowing what had been viewed as a major milestone for the industry. Shares fell 7.2% following the disclosure.

Coinbase has rejected a $20 million ransom demand from the attackers and is cooperating with law enforcement. It has also offered a $20 million reward for information leading to the identification of the hackers.

The firm is opening a new US-based support hub and taking further measures to strengthen its cybersecurity framework.

The cyberattack adds to broader concerns about digital asset platform vulnerabilities. In 2024, hacks have resulted in over $2.2 billion in stolen funds, according to Chainalysis. Bybit alone reported a $1.5 billion theft in February, the largest on record.

Coinbase is also facing a lawsuit filed in the Southern District of New York, alleging the company failed to protect personal data belonging to millions of current and former customers.

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Tron surpasses Ethereum in USDT supply

Tether has minted $1 billion in USDT on the Tron blockchain, pushing its authorised supply beyond Ethereum’s. The move signals a new phase in the competition between the two networks for stablecoin dominance.

According to Tether’s transparency data, Tron’s authorised USDT now exceeds $74.7 billion, overtaking Ethereum’s $74.5 billion. In terms of actual circulating supply, Tron also leads with $73.6 billion compared to Ethereum’s $71.8 billion.

Tether’s CEO Paolo Ardoino explained that such mints help maintain inventory and meet future issuance demands. By pre-minting tokens, the firm ensures liquidity for swaps and transfers across blockchains.

As the stablecoin market grows, networks like Solana and Avalanche continue to trail behind, with authorised supplies of $2.3 billion and $1.8 billion respectively.

Tether now commands 61% of the stablecoin market, with $150 billion in circulation. Rival Circle holds 24.6%, maintaining $60.4 billion in stablecoins across blockchains.

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AlphaEvolve by DeepMind automates code optimisation and discovers new algorithms

Google’s DeepMind has introduced AlphaEvolve, a new AI-powered coding agent designed to autonomously discover and optimise computer algorithms.

Built on large language models and evolutionary techniques, AlphaEvolve aims to assist experts across mathematics, engineering, and computer science by improving existing solutions and generating new ones.

Unlike natural language-based models, AlphaEvolve uses automated evaluators and iterative evolution strategies—like mutation and crossover—to refine algorithmic solutions.

DeepMind reports success across several domains, including matrix multiplication, data centre scheduling, chip design, and AI model training.

In one case, AlphaEvolve developed a new method for multiplying 4×4 complex matrices using just 48 scalar multiplications, surpassing a longstanding result from 1969. It also improved job scheduling in Google data centres, recovering an average of 0.7% of global compute resources.

In mathematical tests, AlphaEvolve rediscovered known solutions 75% of the time and improved them in 20% of cases. While experts have praised its potential, researchers also stress the importance of secure deployment and responsible use.

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JP Morgan backs Bitcoin’s upside over gold

JP Morgan analysts believe Bitcoin holds more upside potential than gold for the remainder of 2025, citing a range of crypto-specific catalysts. The bank highlighted corporate treasury allocations, state crypto laws, and a growing derivatives market as key growth drivers.

Bitcoin recently surged past $104,500—just shy of its January peak—leading a broader return to risk assets. While some still view it as a safe-haven investment, JP Morgan analysts stressed that Bitcoin continues to behave more like a risk-on asset, closely tracking equities.

The investment bank also highlighted major acquisitions signalling crypto’s evolution. Coinbase’s Deribit takeover, Kraken’s acquisition of NinjaTrader, and Gemini’s new EU derivatives licence show growing regulatory oversight and institutional interest.

Analysts expect this will boost confidence and participation from traditional investors.

Despite gold climbing amid tariff uncertainty with China, Bitcoin has consistently outperformed over the past year. ETF inflows reflect this trend, with Bitcoin ETFs now outpacing gold alternatives as interest shifts to digital assets.

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