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Daily fraud update: 9th October

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Senior Fed figure calls crypto a “farce”

A leading figure within the US central banking system has caused a stir after he remarked that cryptocurrencies are, in his view, a “farce”.

Neel Kashkari, who is the president of the Federal Reserve, has long been a critic of crypto.

The Federal Reserve in the US is in some ways a decentralised body, meaning that its constituent parts all come together to form the national interest rate-setting arm of the institution.

He was asked about crypto again recently following a tirade back in May in which he also said he was seeing “more noise and more fraud” in the crypto world.

During the recent question and answer session, which was supposed to be primarily about monetary policy, he once again described crypto as a “fraud”.

In May, he said that “ridiculous extremes” were now visible in the crypto world.

“It’s a clever idea that some people came up with, but now it’s being taken to ridiculous extremes”, he said at the time.

“The barrier to entry to creating a new cryptocurrency is zero.

“If you can dupe enough people to buy it, you can pretend that you’ve launched something. And you can say, ‘Look, I’m a billionaire because I sold you one. And I own the other 999 million of them, so that means I’m a billionaire!’

“So it has become a farce…I’m seeing more noise and more fraud than I’m seeing anything useful”, he added.

Class action lawsuit set up over Nano case

Two law firms have brought a class action lawsuit to a court in California over claims that the promoters of the Nano coin committed a series of fraud-related crimes.

According to a filing presented to the district court of Northern California, firms Silver Miller and Levi Korsinsky are acting on behalf of everyone who paid out to BitGrail, a cryptocurrency exchange which is now out of business, in order to invest in Nano coins during a defined time period.

The period in question is believed to be 24th October 2015 to 8th February 2018.

BitGrail was based in Italy, and it lost almost $175m in Nano coins.

Nano stands accused of both fraud and misrepresentation, and there are believed to be lots of potential victims.

In the court case, the emphasis is largely on the role played by social media.

It is alleged that one of the people behind the Nano coin manipulated the coin’s online presence to ensure that negative reviews were not widely circulated.

According to the text of the filing, those behind the coin “created and managed the XRB network and used social media channels such as Twitter, Medium, and Reddit to recruit unsuspecting investors in the United States and abroad to purchase XRB investments and allow the liquidation of XRB coins and/or store those valuable assets at the inherently unsafe BitGrail exchange”.