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SEOUL (Reuters) – South Korean cryptocurrency exchange Bithumb said 35 billion won ($ 31.5 million) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.
Bithumb said in a notice on its website on Wednesday that it had stopped all trading after ascertaining “some cryptocurrencies worth about 35 billion won were seized between late yesterday and early morning today.”
The exchange, the sixth busiest in the world according to Coinmarketcap.com, said it had stored “all clients’ assets in safe cold wallets,” which operate on platforms not directly connected to the internet.
It added that the company would fully compensate customers.
The Bithumb theft highlights the security risks and the weak regulation of global cryptocurrency markets. Global policymakers have warned investors to be cautious in trading the digital currency given the lack of broad regulatory oversight.
In Ho, a professor at Korea University’s Blockchain Research Institute, said the stolen coins were most likely to be from the more insecure ‘hot wallets.’
“Since coins in the cold wallets are not at all wired to the internet, it would have been impossible for hackers to steal those in cold wallets unless they physically broke in,” said In, a blockchain expert at the research center.
Bithumb did not immediately respond to Reuters’ request for comments, and its statement did not say whether the stolen coins were stored in its ‘hot wallets’.
Mun Chong-hyun, chief analyst at ESTsecurity, said digital coins would continue to be juicy targets for hackers around the world.
“No security measures or regulations can 100 percent guarantee safety of virtual coins. It is held anonymously and in lightly-secured systems, which makes them an irresistible target,” Mun said.
On the Luxembourg-based Bitstamp, bitcoin BTC=BTSP was down 1.8 percent at $ 6,612.92 by 0351 GMT, extending losses as a series of intrusions on cryptocurrency exchanges in recent weeks sparked concerns over security.
It has fallen roughly 70 percent from its all-time peak hit around mid-December 2017.
On June 11, another South Korean cryptocurrency exchange Coinrail said it was hacked. The cyber attacks come after a high-profile theft of over half a billion dollars worth of digital currency at Japan’s exchange Coincheck earlier this year.
In January, South Korea banned the use of anonymous bank accounts for virtual coin trading to stop cryptocurrencies being used in money laundering and other crimes. But the government said it does not intend to go as far as shutting down domestic exchanges.
Bithumb trades more than 37 different virtual coins, according to Coinmarketcap.com
Editing by Shri Navaratnam and Jacqueline Wong
Business figures, government officials, and international magnates invested more than $ 700 million in an ambitious company promising to revolutionize blood testing—Theranos.
The Wall Street Journal’s John Carreyrou got his hands on previously sealed documents that show just how much capital has sunken with the Theranos ship. The documents are part of a lawsuit alleging that the company made false and misleading claims about its operations and technology while soliciting money from investors. (Theranos has denied the suit’s allegations.) The following groups and individuals have lost a considerable sum of money following their investments:
— $ 150 million: The Walton Family, heirs to Walmart Founder Sam Walton
— $ 125 million: Rupert Murdoch, executive chairman of News Corp
— $ 100 million: Betsy DeVos & her family, Secretary of Education
— $ 100 million: The Cox family, owners of media properties
— $ 96 million: Partner Fund Management, investment management firm
— $ 70 million: Shareholders who invested through venture funds
— $ 30 million: Carlos Slim, media investor
— $ 25 million: Andreas Dracopoulos, Greek shipping heir
— $ 20: The Oppenheimer family, former owners of De Beers
— $ 6.2 million: Riley Bechtel, former chairman of Bechtel Corp
— $ 1 million: Robert Kraft, owner of New England Patriots
(*Not included: Earlier investors who invested nearly $ 100 million in Theranos before 2013.)
I feel uneasy every time I see a star-studded investor list for a startup that has raised hundreds of millions of dollars. The uneasy factor goes up when you realize none of the investors have deep medical or biotech expertise. Remember when GV’s Bill Maris said the firm passed on investing back in 2013 because it had a lot of questions about the company’s technology?
Maris said, “We looked at it a couple times, but there was so much hand-waving — like, Look over here!— that we couldn’t figure it out. So, we just had someone from our life-science investment team go into Walgreens and take the test. And it wasn’t that difficult for anyone to determine that things may not be what they seem here.”
At Fortune’s 2016 Brainstorm Tech conference, TPG’s David Trujillo made the point that people were simply not doing their diligence. “It’s just taking what a management team says at face value and not being able to follow up with it,” he said. “Part of it is the competitive dynamic of sources chasing opportunity that has created companies not having to share quite as much as they would outside this bubble we’ve been in.”
The hand-waving. The trade secrets. The competitive advantage. The revolutionary technology. For years, Holmes successfully dazzled investors, reporters, and the public.
As Fortune has previously noted, the notoriously private company would use the sanctity of trade secrets as an excuse to run an operation shrouded in secrecy. When hundreds of millions of dollars are on the line, however, investors should expect transparency — not slippery and confusing language masquerading as industry jargon.
One Term Sheet newsletter reader asked, “How are these not lessons that [Silicon Valley] should not already know? Do your diligence, understand the tech, don’t accept ‘trade secret’ BS, and check out board oversight.”
As we now know, it was a very, very expensive lesson to learn.
This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.
OpenAI, a nonprofit research lab started by Tesla founder and CEO Elon Musk released the salary details of it’s employees–and they are striking. The organization’s top researcher was paid more than $ 1.9 million in 2016, and another leading researcher who was only recruited in March was paid $ 800,000 that year, according to a recent article in the New York Times.
Salaries for top A.I. researchers have skyrocketed because there is high demand for the skills–thousands of companies want to work with the technology–and few people have them. So even researchers at a nonprofit can make big money.
It likely has more to do with competition than interest in the field itself, however. The Times points out that both of the researchers employed by OpenAI used to work at Google. At DeepMind, a Google-owned A.I. lab in London, $ 138 million was spent on the salaries of 400 employees, translating to $ 345,000 per employee including researchers and other staff, the Times reports.
OpenAI was started by Musk who recruited several engineers from Google and Facebook, two companies pushing the industry into artificial intelligence. People who work at major companies told the Times that while top names can expect compensation packages in the millions, even A.I. specialists with no industry experience can expect to make between $ 300,000 and $ 500,000 in salary and stock as demand for the skills continues to outstrip supply.
(Reuters) – Apple Inc on Wednesday appointed a new executive to oversee its Apple Music streaming business and hit 48 million subscribers, the company said.
Apple said it had appointed Oliver Schusser as vice president of Apple Music and international content. Schusser, who joined Apple 14 years ago, will report directly to Apple senior vice president Eddy Cue and will also oversee Apple’s services outside the United States, including the App Store and iTunes.
Apple’s top streaming music rival Spotify Technology SA has 71 million so-called premium subscribers, a figure that includes users who have given the company a credit card number for a free trial. Spotify became a public company earlier this month after holding a so-called direct listing on the New York Stock Exchange.
On a comparable basis, the Apple Music service has 48 million subscribers, 40 million of whom are paying subscribers and 8 million of whom are on a free trial, Apple said. Both firms charge $ 9.99 a month for streaming music but provide discounts for student and family plans.
Variety magazine earlier reported the new subscriber figures and Schusser’s promotion. He previously built up Apple’s services businesses outside the U.S. in 155 markets, including China, Japan and Latin America, Apple said.
Apple’s services business, which includes Apple Music, the App Store and iCloud, is becoming increasingly important to the Apple’s financial outlook because the smart phone market has matured and iPhone sales growth has slowed. In its most recent quarter, Apple’s services business grew 18 percent to $ 8.4 billion, missing analyst expectations of $ 8.6 billion.
(This version of the story corrects paragraph 1 to Wednesday instead of Thursday)
Reporting by Stephen Nellis; Editing by Bernadette Baum
Chinese customs officers have arrested smugglers who attempted to drop millions of dollars worth of iPhones from drones into China.
Twenty-six suspects were arrested in China recently after they tried to use drones to fly two 660-foot cables from Hong Kong to Shenzhen, according to Reuters. Those cables were going to be used to lift iPhones worth 500 million yuan ($ 79.6 million) to the mainland, where they could be sold via the black market for a hefty profit, according to the report. A local Chinese report from the Legal Daily said it was the first time drones were employed to smuggle phones.
The operation was set to go off at night, where smugglers would pack small bags with approximately 10 iPhones and attach them to the drones. Those drones would then fly from Hong Kong to the mainland in just a matter of seconds. According to Reuters, the smugglers had the ability to transport up to 15,000 iPhones each night.
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Smuggling of high-value products—like iPhones, jewelry, and luxury products—is nothing new in China. In fact, the government has been working hard to crackdown on the practice and do a better job of breaking up what has become an increasingly powerful black market.
Smuggling gangs often steal devices or buy them at a deeply reduced rate and sell them for a higher price in China. They’re careful, however, to keep their prices below the going rate for those who purchase products legitimately. The result is a profitable business for smugglers and an opportunity for Chinese consumers to get authentic goods at a cheaper price.
Despite breaking up the drone attempt, Shenzhen officials warned that smuggling would continue. According to Reuters, the customs officers are planning to use several types of equipment to thwart other attempts by the smugglers.
(Reuters) – Spotify Technology SA (SPOT.N) said on Friday it uncovered 2 million users of its free service who had blocked advertising without paying, highlighting a potential revenue risk for the soon-to-be public company.
In an amended version of the share prospectus filed last month, the Swedish company said it continues to be impacted by third-party attempts to gain unauthorized access to its premium service.
The music-streaming company previously included the 2 million users in calculations for some of its key performance indicators, including MAUs, ad-supported users, content hours, and content hours per MAU. More here
Spotify said it currently does not have the data to adjust previously provided key performance indicators, and as a result certain metrics may be ‘overstated’ in its prospectus.
The company had 157 million active users as of Dec. 31, of which about 71 million were paid subscribers who access ad-free versions of the service, according to its website.
Spotify had filed this week for a direct listing of its shares, instead of a traditional IPO.
The direct listing will let investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.
Reporting by Arjun Panchadar in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta
WASHINGTON (Reuters) – The U.S. Justice Department on Wednesday announced indictments of 36 people in a global internet identity theft scheme that caused more than $ 530 million in losses to consumers, businesses and financial institutions.
International law enforcement authorities arrested 13 defendants from the United States, Australia, the United Kingdom, France, Italy, Kosovo and Serbia.
“Today’s indictment and arrests mark one of the largest cyberfraud enterprise prosecutions ever undertaken by the Department of Justice,” said Acting Assistant Attorney General John Cronan.
Reporting by Sarah N. Lynch; Writing by Doina Chiacu; Editing by David Alexander
HONG KONG (Reuters) – China’s Leshi Internet said about 5.62 billion yuan ($ 890 million) of its debts would be due by the end of this year, or almost two-thirds of the company’s total loans and liabilities, sending its shares down for a ninth day.
This is the first time the video-streaming firm – which is battling the fallout from a severe cash crunch at its founder Jia Yueting’s embattled technology conglomerate LeEco – has provided an estimate for its debt in 2018.
Earlier, the company had said that a part of its total loans and financial liabilities of 9.29 billion yuan ($ 1.5 billion)would be due this year, without giving any further details.
Leshi shares plunged by the daily limit of 10 percent on Monday. Nine days of declines, since the stock resumed trading in January after a nine-month suspension, have knocked 37.5 billion yuan off the company’s market capitalization, that is currently at 23.7 billion yuan.
At its peak in 2015, Leshi was valued at 153 billion yuan.
Just last week, Leshi flagged that it expected a loss of 11.6 billion yuan for 2017, more than five times its combined profits since listing on the Shenzhen stock exchange in 2010, due to the ongoing crisis at LeEco.
LeEco was once China’s Netflix-to-Tesla contender but ran into a cash crunch since late 2016 after expanding too fast. Leshi used to be the main listed unit of the conglomerate.
But under the control of property developer Sunac China – its second-largest shareholder, Leshi is now trying to distance itself from the LeEco brand.
Leshi says its largest shareholder Jia and related LeEco units owe it 7.5 billion yuan ($ 1.19 billion). LeEco disputes the figure.
Shares of Sunac plunged as much as 6 percent, lagging a nearly 2 percent fall for the benchmark index.
Reporting by Sijia Jiang; Editing by Himani Sarkar
SEOUL (Reuters) – South Korea has uncovered illegal cryptocurrency foreign exchange trading worth nearly $ 600 million, a sign authorities are tightening the regulatory screws on the digital asset that many global policymakers consider to be opaque and risky.
The country’s customs service said in a statement on Wednesday that about 637.5 billion won ($ 596.02 million) worth of foreign exchange crimes were detected.
“Customs service have been closely looking at illegal foreign exchange trading using cryptocurrency as part of the government’s task force,” it said, underscoring stepped-up efforts by Seoul to crack down on illegal trade in the digital asset.
Illegal foreign currency trading of 472.3 billion formed the bulk of the cryptocurrency crimes, Customs said, but gave no details on what action authorities were taking against the rule breaches.
South Korea has adopted a tough stance on regulating cryptocurrency trading as many locals, including students and housewives, jumped into a frenzied market despite warnings from policy makers around the world of a bubble.
Effective from Jan. 30, authorities will allow only real-name bank accounts to be used for cryptocurrency trading designed to stop virtual coins from being used for money laundering and other crimes.
Among other breaches, Customs said there were also cases where investors in Japan sent their yen worth 53.7 billion won to their partners in South Korea for illegal currency trade.
It said authorities will continue to monitor for any violations of foreign exchange rules or of money laundering activities.
Seoul previously said that it is considering shutting down local cryptocurrency exchanges, which threw the market into turmoil and hammered bitcoin prices. Officials later clarified that an outright ban is only one of the steps being considered, and a final decision was yet to be made.
Bitcoin stood at $ 9,800.00 as of 0502 GMT on the Luxembourg-based Bitstamp exchange. The heightened regulatory scrutiny around the world, however, has seen bitcoin dive about 31 percent so far this month, on track for its biggest monthly decline since December 2013.
Cryptocurrencies got another jolt last week after Tokyo-based exchange Coincheck said hackers stole over $ 500 million in one of the world’s biggest cyber heists.
($ 1 = 1,069.6000 won)
Reporting by Dahee Kim and Cynthia Kim; Editing by Sam Holmes & Shri Navaratnam
TOKYO (Reuters) – Tokyo-based cryptocurrency exchange Coincheck Inc said on Sunday it would return about 46.3 billion yen ($ 425 million) of the virtual money it lost to hackers two days ago in one of the biggest-ever thefts of digital money.
That amounts to nearly 90 percent of the 58 billion yen worth of NEM coins the company lost in an attack that forced it to suspend on Friday withdrawals of all cryptocurrencies except bitcoin.
Coincheck said in a statement it would repay the roughly 260,000 owners of NEM coins in Japanese yen, though it was still working on timing and method.
The theft underscores security and regulatory concerns about bitcoin and other virtual currencies even as a global boom in them shows little signs of fizzling.
Two sources with direct knowledge of the matter said Japan’s Financial Services Agency (FSA) sent a notice to the country’s roughly 30 firms that operate virtual currency exchanges to warn of further possible cyber-attacks, urging them to step up security.
The financial watchdog is also considering administrative punishment for Coincheck under the financial settlements law, one of the sources said.
Japan started to require cryptocurrency exchange operators to register with the government only in April 2017. Pre-existing operators such as Coincheck have been allowed to continue offering services while awaiting approval. Coincheck’s application, submitted in September, is still pending.
Coincheck told a late-Friday news conference that its NEM coins were stored in a “hot wallet” instead of the more secure “cold wallet”, outside the internet. Asked why, company President Koichiro Wada cited technical difficulties and a shortage of staff capable of dealing with them.
In 2014, Tokyo-based Mt. Gox, which once handled 80 percent of the world’s bitcoin trades, filed for bankruptcy after losing around half a billion dollars worth of bitcoins. More recently, South Korean cryptocurrency exchange Youbit last month shut down and filed for bankruptcy after being hacked twice last year.
World leaders meeting in Davos last week issued fresh warnings about the dangers of cryptocurrencies, with U.S. Treasury Secretary Steven Mnuchin relating Washington’s concern about the money being used for illicit activity.
Reporting by Takahiko Wada and Chang-Ran Kim; Editing by Stephen Coates