Each year, cyber criminals steal billions of dollars from hard-working small business owners around the world. It’s been one of the big downsides of the entire internet revolution.
As a result, laundering the ill-gotten proceeds of online crime has grown to be a multi-billion dollar, global industry.
And, as Alexis Madrigal’s investigation in The Atlantic reveals, the internet has made the process of hiding and transferring large sums of filthy lucre easier than most people would imagine:
Winging currency across the globe and routing it through the places that have the weakest regulations and regulators. It turns out that, for a few years, money laundering hasn’t been that hard—more like clicking around PayPal than contracting with the Yakuza.
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The door to this secret online world has been pried open slightly by a recent lawsuit against an online money transfer service called Liberty Reserve:
A recent Justice Department indictment of the founders of Liberty Reserve, a digital currency company, allows us a rare peek into the mechanics of cleaning criminal lucre. One of those founders, Vladimir Kats, pled guilty on Friday in a New York court.
In the past, money launderers needed Swiss bank accounts or suitcases filled with unmarked bills to move their ill-gotten gains. The secret to an organisation like Liberty Reserve, however, is that no currency ever has to cross international borders:
Here’s how it worked: Liberty Reserve created a digital currency, LR credits. People could open an account with Liberty Reserve and then store their money in the form of these credits. When they wanted to get money in or out, they couldn’t just send a wire or go to an ATM. Instead, Liberty Reserve contracted with other companies they controlled known as “exchangers” which bought and sold regular money in exchange for LR credits. These outfits, like AsianaGold, Swiftexchanger, and MoneyCentralMarket, were not licensed to transmit money, but operated seemingly sneakily in Malaysia, Russia, Nigeria, and Vietnam. As money travelled the system, each company took a cut. The exchangers often took 5%.
The rise of online money laundering services is another reminder – as if one were needed – to anyone doing business on the internet of the need to always stay vigilant about cybersecurity.
Meet the turnaround expert who thinks he can save BlackBerry
John Chen has just accepted perhaps the most unenviable executive position in the tech sector – he’s the new interim chief executive of BlackBerry.
Earlier this week, Fairfax Financial’s $US4.7 billion bid to take over the one-time smartphone powerhouse fell through. Blackberry chief executive Thorsten Heins stepped down in the process.
It was the latest in a string of setbacks for the embattled Canadian smartphone maker, including large quarterly losses, mass layoffs, collapsing market share and weak sales of the very BlackBerry 10 smartphones that were supposed to save the company.
So just who is the man who would save BlackBerry? Jacob Kastrenakes from The Verge has this profile:
Chen is known for turning around failing companies, and he’ll soon be tasked with doing that yet again as BlackBerry’s interim CEO. His appointment comes alongside a failed takeover by Fairfax capital that couldn’t manage to attract any outside capital. Instead, Fairfax and a small group of investors are now pouring $1 billion more into the struggling phone maker, and betting big on Chen for a turnaround.
Chen has built a reputation as a tech sector turnaround expert, overseeing database management software company Sybase’s return to profitability in 2000. His strategy was to focus on growing the company in the then-emerging mobile market:
Today, Chen’s plan for moving Sybase into profitable markets seems all too logical, but it wasn’t an obvious bet at the time… ‘People were laughing at us for getting into mobility so early and they were saying there’s no money there, wireless is just a dream and everyone’s losing so much money. We are now the largest enterprise-software provider in wireless technology,’ [Chen says].
Can Chen repeat it? Kastrenakes says don’t count him out:
Chen is now back in the technology game and likely with more eyes on him than ever before. But if you’re in the business of betting on who could turn BlackBerry around — and Fairfax Financial definitely is — Chen’s not a bad choice to put your money on.
Lessons from the Healthcare.gov fiasco
At the heart of the Obama Administration’s ambitious healthcare reform package – commonly known as ObamaCare – is a website called Healthcare.gov.
After going live on October 1, the website has been plagued with various bugs, issues, and the revelation of poor IT practices in its development.
Evan Burfield, the co-founder of high-profile start-up incubator 1776 has previously developed a number of US federal government websites, including Recovery.gov. In the Washington Post, Burfield shares his insights into the situation.
HealthCare.gov was launched Oct. 1 with bugs that made it impossible for many Americans to purchase insurance. Although these problems are the focus of many tirades and jokes, it’s not a disaster – in a few months the site will work as expected.
The core of the issue, Burfield notes, is one of complexity. Tech start-ups tend to develop simple websites and add complexity as it’s needed. In contrast, large bureaucracies try to undertake complicated IT projects in one big hit:
What start-ups understand but the government often fails to appreciate is that having more money and time can often impede building great technology because it allows people to make things more complex than they need to be. Most federal IT projects continue to bet on methodologies and approaches that have long been discredited for commercial enterprises.
To Burfield, the key to building a successful website – including for an organisation as large as the US government – is to apply start-up methodologies to development:
Recovery.gov succeeded because it acted like a start-up in the face of almost every structural impediment in the federal IT contracting system. That would have been impossible without government officials who were willing to find creative solutions.
It’s a valuable lesson for anyone looking at undertaking a major IT project.