Report: Cryptocurrency Exchanges at Risk of Manipulation

Several cryptocurrency exchanges are plagued by poor market surveillance, pervasive conflicts of interest and lack sufficient customer protections, the New York Attorney General’s office said in a report published on Tuesday.

The study found that online platforms where virtual currencies such as bitcoin can be bought and sold by individuals operate with lower safeguards than traditional financial markets, are vulnerable to market manipulation and put customer funds at risk.

“As our report details, many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges,” Attorney General Barbara Underwood said in a statement.

As a result of the findings, the attorney general asked New York’s Department of Financial Services (NYDFS) to review whether three exchanges might be operating unlawfully in the state.

The attorney general’s office launched its Virtual Markets Integrity Initiative in April 2018, asking 13 platforms to voluntarily share information about their practices.

Four platforms did not participate, claiming they did not allow trades from within New York State. The Attorney General’s office investigated whether the platforms did operate in the state, and has referred three – Binance, Kraken and Gate.io – to NYDFS. The three platforms could not immediately be reached for comment.

U.S. and international regulators have begun clamping down on malpractices in the cryptocurrency market over the past year as trading in the nascent asset class boomed.

Two Wall Street regulators last week announced a series of actions, including levying fines, against companies involved with cryptocurrencies, while a New York federal judge ruled a case could proceed in which U.S. securities law was being used to prosecute fraud cases involving cryptocurrency offerings.

The attorney general’s report detailed how some of these platforms conduct overlapping lines of business that present “serious conflicts of interest,” including trading for their own account on their own venues. Some platforms also issue their own virtual currencies or charge companies to list their tokens.

The study also found that “trading platforms lack a consistent and transparent approach to independently auditing the virtual currency purportedly in their possession”, making it “difficult or impossible” to confirm that the exchanges are responsibly holding customer accounts.

Although some platforms police their markets for trading abuses, others do not, the report found.

“Platforms lack robust real-time and historical market surveillance capabilities, like those found in traditional trading venues, to identify and stop suspicious trading patterns,” the report said.

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Argentina’s Fernandez: ‘Dig Up My Home But You Won’t Find Illicit Funds’

Argentina’s ex-President Cristina Fernandez said on Tuesday that she never received corrupt payments and challenged investigators to scour her home region of Patagonia if they believed she had hidden cash, a day after she was indicted on graft charges.

Using her immunity as a senator to refuse to answer any questions, Fernandez handed a written statement to the federal judge investigating a sprawling bribery scandal that has ensnared dozens of former officials and construction company executives. The statement was published on her party’s website.

“They can dig up all of Patagonia, but they will never find anything because I never received any illicit money,” the statement said, citing official allegations that cash was kept in underground vaults at Fernandez’s private residence or hidden in containers in the southern Argentina countryside.

Federal Judge Claudio Bonadio said in the indictment that officials had found empty vaults under the house, but no money.

Fernandez, president from 2007 through 2015, is accused of heading a network in which officials in her administration accepted bribes from construction companies in exchange for public works contracts.

Known as the “notebooks” scandal, the allegations arose in August after a local newspaper published diaries kept by a former government chauffeur, who said his notes documented hundreds of millions of dollars delivered to the offices of Fernandez and her late husband and presidential predecessor Nestor Kirchner.

“There is no evidence that links me to this alleged network,” Fernandez’s statement said.

Fernandez was previously indicted on corruption charges in 2016 after her former public works secretary was caught trying to hide bags of cash in a convent.

Fernandez’s current position as a senator grants her immunity from arrest, but not from investigation.

The probe has implications for next year’s presidential election. President Mauricio Macri is expected to run for a second term in October 2019, and his arch political rival Fernandez is among his possible challengers from the country’s Peronist movement. But the scandal is expected to limit her chances.

Some 85 percent of Argentines expect corruption to “decrease substantially within the next five years,” a recent survey by the International Federation of Accountants said.

“The optics do not look good for Fernandez’s re-election prospects,” said Jose Arnoletto, President of the Argentine Federation of Professional Economic Scientists.

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Venezuela Doubles Down on Chinese Money to Reverse Crisis

Venezuelan President Nicolas Maduro said Tuesday that new investments from China will help his country dramatically boost its oil production, doubling down on financing from the Asian nation to turn around its crashing economy.

 

Already a major economic partner, China has agreed to invest $5 billion more in Venezuela, Maduro said following a recent trip to Beijing, adding that the money would help it nearly double its oil production.

 

“We are taking the first steps into a new economic era,” he said. “We are on track to have a new economy, and the agreements with China will strengthen it.”

 

A once-wealthy oil nation, Venezuela is gripped by a historic crisis deeper than the Great Depression in the United States. Venezuelans struggle to afford scarce food and medicine, many going abroad in search of a better life.

 

Venezuela’s inflation this year could top 1 million percent, economists predict.

 

After two decades of socialist rule and mismanagement, Venezuela’s oil production of 1.2 million barrels a day is a third of what it was two decades ago before the late President Hugo Chavez launched the socialist revolution.

 

Maduro says under the deal, Venezuela will increase production and the export of oil to China by 1 million barrels a day.

 

However, China is taking a strong role in its new agreements. Over the last decade China has given Venezuela $65 billion in loans, cash and investment. Venezuela owes more than $20 billion.

 

The head of the National Petroleum Corporation of China will soon travel to Venezuela to finalize plans on increasing oil exports.

 

Russ Dallen, a Miami-based partner at brokerage Caracas Capital Markets, said the influx of money appears to be investments China will control.

 

“The Chinese are reluctant to throw good money after bad,” Dallen said. “They do want to get paid back. The only way they can get paid back is to get Venezuela’s production back up.”

 

Venezuela also agreed to sell 9.9 percent of shares of the joint venture Sinovensa, giving a Chinese oil company a 49 percent stake. The sale will expand exploitation of gas in Venezuela, the president said.

 

Maduro also recently launched sweeping economic reforms aimed at rescuing the economy that include a creating new currency, boosting the minimum wage more than 3,000 percent and raising taxes.

 

Economist Asdrubal Oliveros of Caracas-based firm Econalitica said he doubts that Venezuela can reach the aggressive goal to boost oil exports to China by one million barrels a day given problems faced by the state corporation PDVSA.

 

“Increased production I see as quite limited,” Oliveros said. “The Chinese companies alone have neither the muscle nor the size to prop up production.”

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European Nations Plan to Use More Hydrogen for Energy Needs

Dozens of European countries are backing a plan to increase the use of hydrogen as an alternative to fossil fuels to cut the continent’s carbon emissions.

 

Energy officials from 25 countries pledged Tuesday to increase research into hydrogen technology and accelerate its everyday use to power factories, drive cars and heat homes.

 

The proposal, which was included in a non-binding agreement signed in Linz, Austria, includes the idea of using existing gas grids to distribute hydrogen produced with renewable energy.

 

The idea of a “hydrogen economy,” where fuels that release greenhouse gases are replaced with hydrogen, has been around for decades. Yet uptake on the concept has been slow so far, compared with some other technologies.

 

Advocates of hydrogen say it can solve the problem caused by fluctuating supplies of wind, solar, hydro and other renewable energies. By converting electricity generated from those sources into hydrogen, the energy can be stored in large tanks and released again when needed.

 

Electric vehicles can also use hydrogen to generate power on board, allowing manufacturers to overcome the range restrictions of existing batteries. Hydrogen vehicles can be refueled in a fraction of the time it takes to recharge a battery-powered vehicle.

 

On Monday the world’s first commuter train service using a prototype hydrogen-powered train began in northern Germany.

 

The European Union’s top climate and energy official said hydrogen could help the bloc meet its obligations to cut carbon emissions under the 2015 Paris accord. Miguel Arias Canete told reporters it could also contribute to the continent’s energy security by reducing imports of natural gas, much of which currently comes from Russia and countries outside of Europe.

 

Kirsten Westphal, an energy expert at the German Institute for International and Security Affairs, said encouraging the use of hydrogen as a means of storing and transporting energy makes sense, but added the overall goal for should be reducing fossil fuels rather than pushing a particular energy alternative.

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Audi Launches Electric SUV in Tesla’s Backyard

German luxury car brand Audi this week staged the global launch of a new electric sport utility vehicle on the home turf of rival Tesla, and highlighted a deal with Amazon.com Inc. to make recharging its forthcoming e-tron models easier.

The Audi e-tron midsize SUV will be offered in the United States next year at a starting price of $75,795 before a $7,500 tax credit. It is one of a volley of electric vehicles coming from Volkswagen AG brands, as well as other European premium brands including Daimler-owned Mercedes-Benz, BMW, Volvo Cars and Jaguar Land Rover.

All aim to expand the market for premium electric vehicles and also to grab a share of that market from Palo Alto, Calif.-based Tesla, which has had the niche largely to itself.

“I want Audi to be the No. 1 electric vehicle seller in America over the long term,” Audi of America President Scott Keogh told Reuters in an interview on Monday.

Audi dealers, particularly those from California, where Tesla has made significant inroads, cheered the e-tron at Monday night’s crowded event.

Analysts on Tuesday expressed concern that the vehicle’s driving range may not measure up to that of the Tesla Model X. Audi officials said they do not have official range estimates for the e-tron SUV under U.S. testing procedures. They said the vehicle should achieve a range under less rigorous European testing standards of roughly 250 miles or 400 kilometers.

Keogh told attendees at Monday’s event that an e-tron had made a 175-mile journey over the mountains east of San Francisco with range to spare. He also emphasized that the e-tron is designed to recharge more rapidly than rival electric vehicles.

UBS analyst Patrick Hummel said in a note on Tuesday that the e-tron “fails to set new benchmarks in the premium EV segment, even though we consider it better than the Mercedes EQC.” The EQC is a rival electric SUV the Daimler AG brand plans to launch in 2020.

The e-tron’s 95 kWh battery has less capacity than the 100 kWh battery used in the Tesla Model X 100D model, but more than the base Model X 75D.

The Model X 100D is rated at 295 miles (475 km) of range by the U.S. government.

​Recharging

Audi and Volkswagen are using the U.S. launch of the e-tron SUV in mid-2019 to take aim at one obstacle to expanding electric vehicle sales: the lack of convenient ways to recharge their batteries.

Audi will partner with online retailer Amazon to sell and install home electric vehicle charging systems to buyers of the e-tron, the companies said on Monday. Amazon will deliver the hardware and hire electricians to install them through its Amazon Home Services operation.

Amazon’s partnership with Audi marks the first time the online retailer has struck such a deal with an automaker, and signals a new front in Amazon’s drive to expand its reach into consumers’ homes beyond the presence of its Alexa smart speakers in living rooms and kitchens.

“We see charging installation as a very important business,” Pat Bigatel, director of Amazon Home Services, told Reuters at Audi’s launch event in San Francisco’s Bill Graham Civic Center.

Audi executives said home charging stations would cost about $1,000, depending on the home’s electrical system.

Tesla offers wall connectors for home charging at a $500 list price, and will arrange for installation, according to the company.

At the same time, Electrify America, a company funded by Volkswagen as part of its settlement of U.S. diesel emission cheating litigation, plans to launch next year the next round of installations of public charging stations, Electrify America executives told Reuters.

Tesla has developed its own network of Supercharger charging stations with more than 11,000 chargers in North America.

Electrify America plans to have 2,000 chargers installed by mid-June next year. Those will be open to any vehicle, and customers can swipe a credit card to recharge.

“We want to work with all” automotive brands, said Giovanni Palazzo, Electrify America’s chief executive.

​Lifting the curtain

Audi has been heralding the launch of the e-tron SUV for some time, but until Monday it had not shared many details of the vehicle.

The e-tron is electric, and has two electric motors — one in the front and one in the rear — driving all four wheels. The Hungarian factory building motors for the e-tron will start with a production pace equivalent to 200 vehicles a day, Audi officials said.

In Europe, the vehicle will use cameras instead of conventional mirrors to give drivers a view to the rear. That feature is still not approved by U.S. regulators.

However, in many other respects the e-tron is a conventional, mainstream luxury SUV. It offers seating for five, and its length and wheelbase position it in the center of the market for midsize, five-passenger luxury SUVs such as the BMW X5. The e-tron is 5 inches (13 cm) shorter than the Tesla Model X, and it has conventional doors. The Model X uses vertically opening “falcon wing” doors.

The e-tron will have an advanced cruise-control system that can keep the car within a lane and maintain a set distance behind another vehicle, but the system will be designed so that drivers must keep hands on the wheel.

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