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West Virginia Secretary of State Reports Successful Blockchain Voting in 2018 Midterm Elections

The West Virginia Secretary of State has announced that 144 voters successfully cast their ballots in the 2016 midterm elections on a mobile, blockchain-based platform.

The Secretary of State of the U.S. state of West Virginia Mac Warner reported a successful first instance of remote blockchain voting in an official announcement Nov. 15.

Warner stated that in the 2018 midterm elections, 144 military personnel stationed overseas from 24 counties were able to cast their ballots on a mobile, blockchain-based platform called Voatz, adding:

“This is a first-in-the-nation project that allowed uniformed services members and overseas citizens to use a mobile application to cast a ballot secured by blockchain technology.”

Voting for the general elections on the platform started in September, when absentee balloting opened in West Virginia.

The first trial of the new platform took place during the state’s primary elections in April. Blockchain-based ballots were then restricted to a select group of voters such as deployed military members and other citizens eligible to vote absentee under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) and their spouses and dependents.

The Voatz system was initially developed to address the issue of low voter participation among members of the military. According to Symantec — the firm behind the Voatz system — only 368,516, or 18 percent of the 2 million service members and their families serving overseas received ballots in 2016. After counting rejections and tardy ballots, only 11 percent of said votes were counted.

While Warner noted the project’s success, his deputy chief of staff Michael Queen told the Washington Post that they have no plans for expanding the program beyond military personnel serving overseas:

“Secretary Warner has never and will never advocate that this is a solution for mainstream voting.”

According to data from the United States Elections Project, West Virginia ranks 44th of 50 states in voter participation at 42.6 percent.

Some experts have expressed concern over the safety of mobile voting. Joseph Lorenzo Hall, the Chief Technologist at the Center for Democracy and Technology, claimed:

“Mobile voting is a horrific idea. It’s Internet voting on people’s horribly secured devices, over our horrible networks, to servers that are very difficult to secure without a physical paper record of the vote.”

Conversely, Bradley Tusk of Tusk Montgomery Philanthropies has encouraged mobile voting, stating that it can turn out more voters, and as a result, “democracy would work a lot better.” Tusk Montgomery Philanthropies helped fund the Voatz app’s development.

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Law Firm Perkins Coie Adds Ex-CFTC Counsel to Dedicated Crypto, Blockchain Group

Law firm Perkins Coie has hired Kari Larsen after identifying her “understanding of the impact that blockchain and crypto will have” on the legal sector.

U.S. international law firm Perkins Coie (PC) announced it had hired a former counsel for the country’s commodities regulator to work in its blockchain practice in a press release Nov. 6.

Kari Larsen, who previously worked at the Division of Enforcement of the Commodity Futures Trading Commission (CFTC), will now be based at PC’s Blockchain Technology & Digital Currency industry group.

The group originally formed in 2013, with PC keen to gain an understanding of the complex legal landscape which continues to evolve around cryptocurrency and related tokens in the U.S.

“I’m confident that Kari has a true understanding of the impact that blockchain and crypto will have on our industry,” Molly Moynihan, co-chair of the firm’s investment management practice and member of the firm’s management committee commented in the release, adding:

“Her extensive experience representing clients in a wide range of commodity and transactional matters, and regularly providing counsel on global matters related to U.S., U.K. and E.U. commodity laws and regulations, will be a significant advantage to our national practice.”

The move comes as legal advice concerning cryptocurrency handling remains highly sought-after in the weeks leading up to the emergence of fresh offerings targeting institutional investors.

As Cointelegraph reported, Dec. 12 should see the launch of the Intercontinental Exchange’s Bakkt platform, which will offer one-day physical Bitcoin futures. Earlier this week, the  U.S. Chicago Board Options Exchange (CBOE) noted that their BTC futures offering hit record volatility lows in October.

The path to regulatory certainty for Bakkt is complex, commentators have noted this week, some seeing the launch as a crucible for what is possible under the current U.S. climate.

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Bitcoin Trader Pleads Guilty Over Unlicensed Exchange Business

A 21-year-old bitcoin trader from California has pleaded guilty to operating an unlicensed money transmission business and now faces a maximum of five years in prison.

According to a news release issued Monday by the Attorney’s Office of the Southern District of California, the trader, Jacob Burrell Campos, admitted as part of a plea deal that he had operated a bitcoin exchange without registering the business with the Financial Crimes Enforcement Network (FinCEN).

Furthermore, Burrell had no anti-money laundering or know-your-customer procedures in place.

“Unlicensed money transmitting businesses, especially those operating at or near the border, pose a serious threat to the integrity of the U.S. banking system, and provide an ‘open door’ for criminals to utilize such businesses to launder the proceeds of their illicit activities,” said U.S. Attorney Adam Braverman in the report.

Burrell reportedly sold hundreds of thousands of dollars in bitcoin to over 1,000 customers throughout the U.S. from January 2015 to April of 2016. He initially bought bitcoin through a regulated crypto exchange in the U.S., but later shifted to a Hong Kong-based exchange after his U.S. account was closed over suspicious transactions.

From March 2015 to April 2017, he bought bitcoins worth $3.29 million from the Hong Kong exchange in separate transactions, the report says.

Burrell has now agreed to forfeit a total of $823,357 to the U.S. and will be sentenced in February of next year.

Braverman said:

“The Department of Justice will continue to investigate and prosecute all individuals and businesses that seek to evade the licensing and anti-money laundering requirements under federal law.”

Bitcoin and gavel image via Shutterstock

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Cryptocurrency ‘Illegal’ In India Says Trade Organization Head

The head of Indian IT trade organization NASSCOM reportedly stated that cryptocurrency is “illegal” in the country, after two men installing a Bitcoin ATM were arrested

The head of an Indian nonprofit trade organization said cryptocurrency is “illegal,” and urged businesses to obey the law, local news daily the Hindu reported Thursday, Oct. 25.

Debjani Ghosh, the president of the National Association of Software and Services Companies (NASSCOM), was cited by the Hindu saying that cryptocurrencies are illegal from NASSCOM’s perspective. NASSCOM is a nonprofit trade association of over 2,000 member companies for the Indian IT and business process outsourcing industries.

“It is [the] law of the land and hence, we have to work with it,” Ghosh claimed about cryptocurrency’s ‘illegal’ status. She added, “If we do not agree, we have to go back to the government and speak about why cryptocurrencies aren’t correct.” However, Ghosh noted that the “illegal” status of crypto is the result of the government’s failure to keep up with innovation:

“The genesis of this problem, however, lies in the failure of policy making not keeping pace with rapid technological changes. NASSCOM’s focus would be to say, how do you synergize technological development and policy making. I think that will be our focus.”

Cryptocurrency is currently legal in India, but in July the Reserve Bank of India (RBI) banned the country’s banks from servicing businesses involved in exchanging or processing digital assets. At the time, RBI cited risks to financial stability and the security of investors as being the main reasons behind the ban.

Following the crackdown, commentators were quick to note that, while banking activities for crypto business were suspended, it was not a ban on crypto in India outright. The country’s supreme court continues to uphold the ban even after hearing a raft of petitions.

Since July, the ban has had severe repercussions for the industry. Exchanges in particular have faced difficult conditions, with major platform Zebpay halting operations and relocating to crypto-friendly Malta.

Ghosh’s comments come after police clamped down this week on a project from crypto exchange Unocoin, arresting its co-founders after they installed a Bitcoin ATM in a Bangalore shopping mall.

Various media outlets have cited authorities who reportedly explained that the ATM “had not taken any permission from the state government and is dealing in cryptocurrency outside the remit of the law.” According to a police official quoted by the Times of India, the central bank considers cryptocurrency “illegal.”

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Judge Orders Trading Firm, CEO to Pay $2.5 Million in Bitcoin Ponzi Case

The Commodity Futures Trading Commission has won a legal battle against a New York resident and his company for running a Ponzi scheme centered around bitcoin.

Between 2014 and early 2016, Gelfman Blueprint, Inc. (GBI) and its CEO Nicholas Gelfman ran a scheme wherein they successfully solicited $600,000 from 80 customers, claiming that customers would earn money through the company’s proprietary trading algorithm.

Instead, client funds were used to repay previous clients, thereby perpetuating the scheme with the newly-accrued money. This was the first anti-fraud enforcement action that the CFTC brought related to bitcoin, according to statements.

On Thursday, a federal judge ruled in favor of the CFTC, ordering Gelfman and GBI to pay $2.5 million in penalties and restitution.

In a statement, CFTC director of enforcement James McDonald said that “this case marks yet another victory for the [CFTC] in the virtual currency enforcement arena.”

He added:

“As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable. I’m grateful to the members of Enforcement’s Virtual Currency Task Force for their tireless work on these matters.”

The court specifically ordered GBI to pay $555,000 and Gelfman to pay $492,000 in restitution to clients, as well as $1.85 million and $177,000 in penalties, respectively. The court also imposed permanent trading and registration bans on the two.

That being said, the CFTC noted in its release that the scheme’s victims may not recover any of their lost funds as it is possible Gelfman and GBI will not have sufficient liquidity to pay the restitution or penalties.

Justice statue image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.