Blockchain Bites: KPMG Canada collects crypto into Treasury; Blockchain Traceability Leads To Collapse Of Criminals In $3.6 Billion USD Bitcoin Seizure; Facebook/Meta Loses Privacy Act Appeal; Nike says ‘no’ to NFT receipts of stored sneakers
KPMG Canada collects cryptos in cash
As the first direct investment in crypto-assets, KPMG in Canada allocated an investment in crypto-assets to its corporate treasury. Crypto-assets include Bitcoin, Ethereum and carbon offsets, which support the company’s ESG commitments. KPMG Canada acquired the cryptoassets on its balance sheet through the execution and custody services of Gemini Trust Company LLC.
Benjie Thomas, Managing Partner of Advisory Services at KMPG Canada, said:
Crypto-assets are a maturing asset class.
This investment reflects our belief that institutional adoption of crypto-assets and blockchain technology will continue to grow and become an integral part of the asset mix.
A KPMG governance committee has been established to provide oversight and approve the award. The committee includes stakeholders from various fields who have completed an intense evaluation process.
The investment reflects the company’s perspective on blockchain and emerging technologies. Kareem Sadek, KPMG Canada Consulting Partner and Co-Leader of Crypto-Asset and Blockchain Services, said:
The crypto-asset industry continues to grow and mature and should be considered by financial services and institutional investors.
We have invested in a strong crypto-asset practice and will continue to improve and grow our capabilities across DeFi, NFT and the Metaverse to name a few. We expect to see a lot of growth in these areas in the years to come.
Like Australia, Canada is making an outsized contribution to crypto and blockchain projects, with Ethereum co-founder Vitalik Buterin from Toronto. KPMG offices operate quite separately at the country level, but surely KPMG Australia must be feeling some pressure with the Canucks taking the lead in treasury innovation!
Blockchain Traceability Leads To Collapse Of Criminals In $3.6 Billion Bitcoin Seizure
the US Department of Justice arrested 2 individuals in New York, alleging they were conspiring to launder stolen cryptocurrency in the 2016 Bitfinex hack. At the time, the hack involved the theft of 119,754 bitcoins (worth $70 million US dollars at the time). As part of the arrest, the DoJ seized bitcoins and other cryptocurrencies worth US$3.6 billion at today’s prices, including more than 94,000 bitcoins.
Thanks to the traceability of transactions on the bitcoin network, the wallets where the stolen bitcoin was moved have been look at for years, and the movements of wallets over a month ago were the subject of online speculation, but it turns out that those movements were the DoJ transferring the seized assets. The DoJ complaint includes diagrams exposing the alleged laundering methods used by the accused.
Deputy Attorney General Kenneth Polite said:
Today Federal Law Enforcement is once again demonstrating that we can track money through the blockchain and will not allow cryptocurrency to be a safe haven for money laundering. or an area of anarchy within our financial system.
Homeland Security’s Steve Francis said:
[the accused] attempted to subvert legitimate commerce for their own nefarious purposes, operating with perceived anonymity. Today’s action demonstrates HSI’s commitment and ability to work with a group of volunteers to unravel these technical fraud schemes and identify the perpetrators, regardless of where they operate.
It is interesting how the DoJ press release both references tracking “money” through the blockchain and the importance of ensuring consumer confidence in the financial system. It follows other bankruptcies, including the dismantling of the Welcome to Video site, the return of most of the colonial pipeline ransom paid in this ransomware incident, sanction of a Russian stock exchange implicated in money laundering as well as reports showing that crypto-crime is concentrated in a very small number of wallets relative to the overall market size.
The way the cookie crumbles: Facebook/Meta loses Privacy Act appeal
The Full Federal Court of Australia recently delivered its decision dismissing an appeal by Meta (formerly Facebook) challenging the validity of service of a lawsuit against Meta on the grounds that Meta was conducting business or collecting personal information in Australia.
The litigation against Meta stemmed from alleged “serious and repeated interference with privacy in breach of Australian privacy law” stemming from the 2018 Cambridge Analytica scandal. Cambridge Analytica collected the personal data of millions of consumers from Facebook without their consent using a personality testing app called ‘This is your digital life.’ The data collected was used in particular for the Brexit campaign in 2016 for targeted advertising.
The Australian Information Commissioner’s Office (CATO) announced proceedings in 2020 in the Federal Court of Australia against Facebook Inc – the US-based parent company – as well as its Irish subsidiary, Facebook Ireland Limited.
The latest proceedings saw the full Federal Court sensationally reject Facebook’s argument that because it did not carry on business or collect and hold personal information in Australia, it could not be prosecuted. under the Privacy Act 1988 (Cth). Chief Justice Allsop and Justices Perram and Yates noted (at ) that Facebook’s arguments were
divorced from reality
The full Federal Court held that it was sufficient for Facebook to place cookies on the physical devices of Australian consumers on behalf of its parent company and other subsidiaries – a core operational mechanism for the Facebook platform, where these cookies stored a variety of data used in the platform.
The Court also rejected Meta’s claim that finding that any website accessible in Australia is doing business in Australia would “open the floodgates” for litigation against technology service providers, Perram noting (at  and ) that the case concerned a narrow appeal of an interlocutory question and that the facts would guide the analysis, in particular a simple password cookie was identified as something that can be treated differently than a complex cookie (like the one used by Facebook).
The Court also rejected Facebook’s argument that it equated their activity with sending mail through the post office. Facebook relied on the fact that its data centers transmitted signals to Facebook users’ devices, and subsequently the transmission changed the digital state of those devices. Facebook likened this to an international post model, where the recipient of an international letter acts in such a way that an economic benefit may accrue to them. Facebook argued that this model meant it couldn’t work in Australia.
Importantly, the Federal Court noted at :
Whether a particular foreign company providing goods or services in that country conducts business here will depend on the nature of the business being conducted and the activity taking place in that country. There is no single answer to this question. Likewise, the threat of the open floodgates from which Facebook Inc was commendably keen to protect the Australian legal system, is in my view greatly exaggerated.
The decision can be seen as an expansion of the test of when a company does business in Australia, the Court has tried to qualify the position and emphasize that the facts determine each case. However, potentially being subject to the full weight of another jurisdiction’s laws is a serious matter and requires careful consideration for every business, especially given our globally connected and increasingly decentralized world.
Nike says ‘no’ to NFT receipts of stored sneakers
Apparel giant Nike has filed a lawsuit against StockX, accusing the resale market of using Nike trademarks to mint and sell non-fungible tokens (NFT) without authorization. StockX sells NFTs that are tied to popular Nike shoes, which would make it easier for consumers to purchase and “return” the shoe without having to worry about shipping costs.
The “StockX Vault” is the Marketplace’s NFT project allowing customers to buy and sell similar sneakers, linked to NFTs, running on a public blockchain. Although the project was a creative use of technology and potentially a sign of things to come, it was unable to sneak past Nike.
The lawsuit was filed in federal court in New York and outlines the extent of StockX’s violation:
Nike has not endorsed or authorized StockX’s Nike-branded NFT Vaults. These unauthorized products are likely to confuse consumers, create a false association between these products and Nike, and dilute famous Nike brands.
Nike blames StockX’s purchase terms for being “murky” while accusing the market of inflating stock prices, going so far as to allege the NFT Vault is a “scam”.
Part of Nike’s complaint relates to a concern that the market is claiming an association with Nike, and that this would negatively impact Nike’s reputation in the digital space:
Given Nike’s longstanding use of this space, StockX’s unsanctioned and unauthorized branding of NFT Vaults with Nike trademarks is all the more likely to confuse consumers, create a false association between the parties, to compromise the ability of famous brands of Nike to identify its own digital products in the metaverse and beyond
Takeover of RTFkt by Nike, a digital art and collectible studio, demonstrated in December 2021 Nike’s intention to enter the virtual space and begin issuing NFTs itself. Nike has set up a dedicated team to facilitate this project:
On or about January 18, 2022, Nike announced to its employees the creation of Nike Virtual Studios, a new division that will operate as an independent studio to further develop Nike’s business around virtual products and to partner with its core business. to deliver the best Web3 classrooms, metaverse, and blockchain-based experiences.
In addition to damages for set-off and profits, Nike is seeking orders restraining StockX from selling NFT products that fall under trademarks claimed by Nike, as well as an order that all NFT Vaults in StockX’s possession be delivered to Nike. for destruction.
It remains to be seen whether Nike’s claims will go the distance or whether an NFT showing a photo of a product stored and redeemable by the holder will rush into legal certainty. What is clear is that big brands are increasingly willing to protect their brands in the NFT space, as they seek to capture a share of the growing market for these digital products, with recent examples , in particular a DAO mistakenly thinking they could use the rights to a purchased manuscript to create a cartoon, Hermes sues MetaBirkins for counterfeiting and Miramax argues with Quentin Tarrantino over NFT movies.