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Bitcoin thieves threaten real violence for virtual currencies

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The currency they were after was virtual, but the guns they carried were anything but.

In the beach resort of Phuket, Thailand, last month, the assailants pushed their victim, a young Russian man, into his apartment and kept him there, blindfolded, until he logged onto his computer and transferred about $100,000 worth of Bitcoin to an online wallet they controlled.

A few weeks before that, the head of a Bitcoin exchange in Ukraine was taken hostage and only released after the company paid a ransom of $1 million in Bitcoin.

In New York City, a man was held captive by a friend until he transferred over $1.8 million worth of Ether, a virtual currency second in value only to Bitcoin.

The rich have always feared robbery and extortion. Now, big holders of Bitcoin and its brethren have become alluring marks for criminals, especially since the prices of virtual currencies entered the stratosphere last year.

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Virtual currencies can be easily transferred to an anonymous address set up by a criminal. While banks can stop or reverse large electronic transactions made under duress, there is no Bitcoin bank to halt or take back a transfer, making the chances of a successful armed holdup frighteningly enticing.

Thieves have taken advantage of this system in a startling number of recent cases, from Russia, Ukraine and Turkey to Canada, the United States and Britain.

“This is now becoming more pervasive and touching more law enforcement divisions that deal with organized crime and violent crime on a local level,” said Jonathan Levin, the founder of Chainalysis, which has worked with several law enforcement agencies on virtual currency crimes.

Mr. Levin’s company specializes in tracking criminal transactions on the blockchain, the computerized ledger where every Bitcoin transaction is publicly recorded.

Chainalysis has helped police attempt to track down criminals in several recent cases, including some that have not been made public, according to Mr. Levin.

But even when a transaction can be tracked, the design of Bitcoin means that criminals do not have to associate their identity with their Bitcoin address — as is necessary with most traditional bank accounts. That has stymied police in several cases.

“For this, the advantage of Bitcoin is that it’s hard to verify,” said Chanut Hongsitthichaikul, an investigator with the Chalong Police Station, which investigated the case in Phuket. “We asked the victim how to track it since they know Bitcoin better than us. We asked them how to check the receiver. They said there is no way. It is hard to do.”

The Thai police tracked the victim’s laptop, which was also stolen, to Kuala Lumpur. That’s where the trail went cold.

While the recent crime wave has brought a new level of violence, virtual currency holders have been targets for several years. Criminals have been staging a long-running campaign to remotely hijack the cellphone numbers of prominent virtual currency holders in order to gain control of their digital wallets.

A few years ago, some of Bitcoin’s earliest proponents had SWAT teams called to their homes by people who demanded big Bitcoin payments to stop the harassment — a tactic called “SWATing” in some online communities.

There have also been many documented holdups around the world at in-person meetings where people were looking to convert cash into virtual currency, including one last year in Palm Beach, Fla., where the thief made off with $28,000 before being arrested.

But criminals have grown much more brazen as the price of Bitcoin has spiked.

The most audacious attack hit Exmo, the virtual currency exchange in Ukraine. The chief executive of the exchange, Pavel Lerner, was abducted the day after Christmas and freed a few days later after the company made a ransom payment of Bitcoin worth around $1 million.

A spokeswoman for Exmo said the money came from Mr. Lerner’s personal funds. Mr. Lerner was on leave from the company but would return.

A month earlier, a Turkish businessman was forced to hand over the passwords to his virtual currency wallets — containing nearly $3 million worth of Bitcoin — after having his car stopped by an armed gang in Istanbul that appeared to know about his Bitcoin holdings, according to local news reports.

Many big virtual currency holders privately say that they will no longer travel to Russia, Turkey or other countries where they assume that attacks may be easier to pull off because of organized crime.

But armed attackers have also hit a Canadian Bitcoin exchange in Ottawa, the Ether investor in New York City and a prominent virtual currency trader living near Oxford, England.

In a number of cases, the assailants have been caught — and forced to return money — because of video footage. In other cases, the criminals are still at large.

The unsolved crimes have sown fear among the ranks of the so-called crypto rich, which have grown considerably over the past year.

At a conference for about 170 leaders in the virtual currency industry this month, there was a panel discussion about how to deal with the threat of robbery, extortion and kidnappings in which the criminals seek Bitcoin or other virtual currencies.

Organizers of the conference, known as the Satoshi Roundtable and held near Cancun, Mexico, brought in a security force and instituted significant privacy measures for guests to protect them from criminals while they were in attendance.

During the group discussion at the conference, attendees talked about having a “duress wallet” at home that can be handed over to throw an assailant off the trail of a bigger fortune, as well as several other security measures that can be used to deal with the threat.

Most of the crypto rich are loath to speak publicly about the risk of physical attacks, for fear of making themselves targets.

But Jameson Lopp, a longtime Bitcoin engineer and virtual currency holder, said the community should be proactive in confronting the threat, to let criminals know that people are taking steps to protect themselves.

Last summer, someone called a SWAT team to Mr. Lopp’s house to harass him. Since then, Mr. Lopp has installed closed-circuit cameras around his property and posted photos on Twitter of the automatic weapon he has at home.

In a more technical defensive measure, Mr. Lopp has long kept his virtual currency in so-called multisignature wallets created by the company he works for, BitGo. These wallets require multiple people to sign off on a transaction before the money can move.

Mr. Lopp will go even further later this year when he, his girlfriend and his dog move to a new home. He plans to “go dark” — not providing the address to anyone and using a post office box for deliveries. But he said even that will not fully banish his concerns.

“If you are rich and you own real estate, or stocks or a sports team, somebody can’t mug you and take your sports team away,” he said. “Having liquid crypto assets makes you much more attractive for that type of criminal attack.”

Mr. Levin said programmers are working to develop methods of signing virtual currency transactions that can quietly alert the authorities that a transaction is being made under duress — something like the hidden button under the bank teller’s desk.

But he said the most obvious way to thwart attackers is with wallets that require multiple signatures, and with less public discussion about owning virtual currencies.

Mr. Lopp said it is important to publicize the many ways in which virtual currency holders can fend off assailants so that criminals reconsider the likelihood of a successful attack.

“We’re in the very early days of this becoming a problem,” Mr. Lopp said. “The attackers are still trying to figure out what the risk-reward really is.”

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Evergrande’s electric car unit gets funding to compete with Tesla, Nio in China

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Evergrande Group Chairman Xu Jiayin attends Evergrande New Energy Auto Global Strategic Partners Summit on November 12, 2019 in Guangzhou, Guangdong Province of China.

VCG | Visual China Group | Getty Images

GUANGZHOU, China — Shares of the electric vehicle unit of Chinese property giant Evergrande surged as much as 67% on Monday after the company raised significant funding through a new share sale.

China Evergrande New Energy Vehicle Group surged to an all-time-high of 50 Hong Kong dollars before paring some of those gains. Shares of the company closed at 45.35 Hong Kong dollars.

The stock rocketed after the Chinese electric car company issued 952.38 million shares to six investors at a price of $27.30 Hong Kong dollars and raised net proceeds of 26 billion Hong Kong dollars ($3.35 billion).

The funding is another sign that China’s electric car market is heating up, and Evergrande could pose a challenge to Tesla as well as domestic rivals such as Nio and Xpeng Motors.

Last year, Evergrande showed off six new electric vehicles under a brand called Hengchi, with the hope of starting production this year. The company has not sold a single car yet.

In September, the company raised around 4 billion Hong Kong dollars through the sale of shares to investors including Chinese internet giant Tencent and ride-hailing service Didi.

China Evergrande New Energy Vehicle Group is also preparing for a listing on Shanghai’s Nasdaq-style Science and Technology Innovation Board, or the Star Market.

China’s electric car companies have been aggressively raising capital to ramp up production and take a lead in the competitive market.

Xpeng Motors raised $1.5 billion in an initial public offering in the U.S. last year and this month secured a credit line of 12.8 billion yuan ($1.98 billion).

This month, BYD — the Chinese electric carmaker backed by American billionaire Warren Buffett — said it raised 29.9 billion Hong Kong dollars through the issuance of new shares.

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What PIMCO’s John Studzinski thinks of markets

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Traders on the floor of the New York Stock Exchange.

Source: New York Stock Exchange.

LONDON — Market valuations are strong but we’re “comfortable” with them, John Studzinski, vice chairman of asset management firm Pimco told CNBC, as they reflect expectations for an economic recovery in the second half the year.

“There’s no question the current market reflects what people feel is going to be a reasonable amount of fiscal and monetary purchasing program support,” Studzinski told CNBC’s “Squawk Box Europe” Monday.

“The issue will be if the fiscal support continues well beyond this year — the impacts that might have on things like inflation, or asset valuations. But I think right now we’re comfortable that the valuations in the market, which are strong, reflect the recovery certainly in the third and fourth quarter of this year in the United States, really led globally, of course, by China.”

There have been some concerns that stock market valuations are currently too high, over-inflated by ongoing fiscal and monetary stimulus measures. Governments and central banks have been desperate to mitigate the impact of the coronavirus pandemic, which has disrupted global trade and shut down businesses for extended periods of time.

However, others believe that the market rallies reflect optimism that the global economy will soon recover once restrictive measures are lifted and the pandemic is brought under control, particularly as coronavirus vaccines are rolled out.

U.S. stocks finished mixed on Friday, although all three posted a gain for the week. The Dow registered its fifth positive week in six, while the S&P posted its third positive week in four. The Nasdaq advanced 4.19% last week for its best week since November as shares of Big Tech names pushed the index to a new all-time high.

Nonetheless there has been a surge in coronavirus cases in recent months. This was partly expected, due to the winter season, but has also been attributed to more virulent strains of the virus that have emerged in the U.K. and Europe, South America and South Africa.

Despite highlighting expectations of a recovery later this year, Studzinski did concede that “it’s going to be an uneven recovery, it’s going to be fraught with uncertainty … over mutations (in the coronavirus) and uneven distribution of the vaccines around the world.”

His comments come as the World Economic Forum kicks off this week. The annual event usually takes place in the Alpine town of Davos in Switzerland, bringing together political leaders and heads of business with the aim of discussing global challenges, and trying to find solutions. This year, however, the event has gone virtual. In 2021, a key theme of the forum is rebuilding the global economy on a fairer footing.

Studzinski said there had so far been a lack of global cooperation in tackling the pandemic, but that there could be a renewal in multilateralism under U.S. President Joe Biden.

– CNBC’s Pippa Stevens contributed reporting to this story.

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What happened when one Chinese city shut down after new Covid outbreak

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Volunteers in protective suits disinfect in a residential area of Tonghua, China on January 24, 2021.

Visual China Group | Getty Images

BEIJING — One small Chinese city’s rush to control the coronavirus has left some residents without food, and some officials without jobs.

The fallout shows the extreme lengths to which local Chinese authorities will go to try to contain the coronavirus. While new cases in China so far this year remain far below that of other countries, the stringent prevention measures can quickly cause greater disruptions to work and daily life.

After a spike in Covid-19 cases in mid-January, Tonghua city, about a 10 hour drive northeast of Beijing, announced on Wednesday that no one could leave the city. Authorities added that all apartment complexes were essentially locked down.

People stuck at home and with little time to stock up on food turned to smartphone-based delivery apps, but many complained online that they couldn’t get their orders, according to posts on Weibo, China’s version of Twitter.

On Saturday, the local Communist Party discipline and inspection commission dismissed three officials for their poor performance in the oversight of the pandemic situation, state media said. Eleven other officials received severe warnings, the report said.

Then on Sunday, Tonghua city apologized to its roughly 500,000 residents for “untimely” delivery of daily necessities and general inconveniences. The city added there was a severe shortage of workers but sufficient food.

More than 11,000 people left mostly angry comments on a national state media post about the apology on Weibo. Some users described how they or neighbors were going hungry and hadn’t received their orders for three or four days.

Many user comments noted an inability to place orders on Eleme, a food delivery app backed by Alibaba. The company did not immediately respond to a CNBC request for comment.

Nasdaq-listed Dada, a grocery delivery company which saw a surge in growth during the lockdowns of the initial coronavirus outbreak last year, said neither of its two apps operate in Tonghua city.

Covid-19 first emerged in late 2019 in the Chinese city of Wuhan. Chinese authorities shut down more than half the country in February 2020, and the outbreak stalled domestically within several weeks. Meanwhile, the virus accelerated its spread overseas in a global pandemic.

In the last two months, new domestically transmitted cases have emerged in China amid cold winter weather and a continued trickle of visitors from overseas. The northeastern province of Jilin where Tonghua city is located has become the third-hardest hit region, reporting 273 new confirmed coronavirus cases for January alone.

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