Tuesday, March 19, 2019

Canada allows extradition process to continue against Huawei Chief Financial Officer

(March 2) The Canadian government will allow the extradition process to the US of Meng Wanzhou Chief Financial Officer (CFO) of the Chinese tech giant Huawei to proceed after what it called a thorough and diligent review of the evidence in the case.

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The next step in the process is for a judge to determine if the extradition process should continue.
Charges against Meng
Meng is the daughter of the founder of Huawei Ren Zhengei. She was arrested in Vancouver last December at the request of the US on charges of fraud. Meng served on the board of Skycom, a Hong Kong based company that is alleged to have done business with Iran in 2009 and 2014 in violation of US sanctions. A separate case involves Huawei allegedly stealing intellectual property associated with a phone testing robot developed by T-Mobile. The arrest of Meng in Canada has strained relations between Canada and China.
The arrest of top Huawei executive Meng Wanzhou has sparked an escalating diplomatic crisis between...
The arrest of top Huawei executive Meng Wanzhou has sparked an escalating diplomatic crisis between Ottawa and Beijing
-, CTV/AFP/File
US regarded Huawei as a potential threat to national security
President Trump is expected to issue an order that will limit that sales of Huawei 5G equipment within the US shortly. Huawei has denied any wrongdoing or inappropriate dealings with the Chinese government. As reported in a recent Digital Journal article the US has also tried to convince European countries not to use Huawei technology.
Meng is out on bail while she waits to next process to continue. If she is extradited she will face trial in the US. Meng's attorney told The Verge: “Our client maintains that she is innocent of any wrongdoing and that the U.S. prosecution and extradition constitutes an abuse of the processes of law.” Another Digital Journal article also covers the Meng extradition process.
The next steps
A government article notes: "The next step is the judicial phase where a judge hears the case. If the judge decides a person should be committed for extradition, then the Minister of Justice must decide if the person should be surrendered (extradited) to the requesting country. The Minister of Justice will not comment on the facts of this case given he may need to make a decision later in this process.
Under the Extradition Act and the Treaty, Canada must review the alleged conduct and determine whether it could have resulted in a jail sentence of 1 year of more if it had taken place in Canada. The conduct for which extradition is sought must also be considered criminal in both the United States of America and in Canada. This is known as “dual criminality”. Canada’s extradition process protects the rights of the person sought by ensuring that extradition will not be granted if, among other things, it is contrary to the Canadian Charter of Rights and Freedoms, including the principles of fundamental justice."
Meng is to appear at the British Columbia Supreme Court on March 6 to confirm that an Authority to Proceed has been issued. At that time a date will be scheduled for the hearing. At the hearing the Canadian government will make its detailed arguments available to the Court. The evidence will become part of the public record. The extradition hearing is not a trial. If there is a trial it will be in the US after she is extradited. Meng will remain on bail during court proceedings. The process could take months or even longer.

Previously published in Digital Journal

Thursday, February 28, 2019

Canadian crypto-exchange in big trouble after founder reported dead in India

(February 5)_Gerald Cotten, founder of large Canadian crypto exchange QuadrigaCX is reported to have died in India back in December. Since then the company has been in deep trouble as Cotten did not leave information on how to access cryptocurrencies held in storage.

The Wallets
A recent article notes: "Any user who wants to transfer bitcoin requires a wallet — located on a server. So-called hot wallets are for live transactions — while so-called cold wallets are for storage to keep coins safe from hackers. Robertson's affidavit says that assets tallied in those wallets show that Quadriga owes clients approximately $250-million as of Dec. 17, 2018. But court documents say the company can only access "hot" wallets at this time."
Jennifer Robertson is Cohen's widow and executor of his estate. Robertson has said she has hired a security expert to aid her recover information about Quadriga Fintech Solutions Corp. and several other companies Cotten registered in BC. She claimed that Cotten's companies had more than 115 thousand clients who had invested more than $70 million. She estimates they are now worth about $250 million in December 2018.
Nova Scotia court issues a stay of proceedings
The Nova Scotia Supreme Court has granted QuadrigaCX an order for credit protection after the reported sudden death of founder Gerald Cohen in India. Cohen was just 30 years old. His death was said to be due to complications of Crohn's disease. The 30-day stay is a bid to stop lawsuits against the company at this point. The hope is that the key to the wallet will be found.
Maurice Chiasson, the company's lawyer, told the court he wanted time to search for about $250 million Canadian in assets that has been inaccessible since his death. The death of Cohen has left about 115,000 users without access to their funds. Court filings indicate that some users have large balances with the largest affected user's balance valued at almost $70 million. Understandably, some users are in panic mode.
QuadrigaCX employees say the only way to access much of the cash was lost when Cotten died. This is rather strange. Usually there is some arrangement such as is described on the appended video in which several people have the keys and at least two of them need to sign on at the same time. This allows for access when someone is not available and also serves as a check against one individual getting access without the other knowing. The appended video argues that Cohen is probably not dead and that there is a scam involved with him transferring coins out of the wallet. Cotten apparently was the only person with the recovery code to access the secure "cold wallets". However, as the video pointed out Cohen had said in an earlier interview that there was a three person arrangement with two being needed to open the wallet.
Access to the cold wallet
Quadriga customer Elvis Cavalic said to CBC: "With a cold storage wallet, it's completely offline. It's not connected to the servers or the infrastructure set up by the exchange. It's usually a physical device that you would plug into a computer and requires a button to be pressed and it might need a password."
Apparently the way to access that wallet was not left with his wife Jennifer. It is passing strange why Cohen would not leave this information with others or that others do not have they keys with several being required to sign in at the same time to the device. He surely should have been aware of the problems should he die or be incapacitated.
Nikhilesh De, a CoinDesk reporter, said that money in the cold wallet could be gone forever if no one can find the key saying: "The idea behind cold storage is that they're inaccessible unless you have the appropriate keys and the access and coins have been lost in the past. There will only be a finite number of bitcoins ever issued, and any bitcoins that are lost are lost forever."
The coins could be lost forever too if Cotten is still alive and is able to withdraw the coins without detection.
Cotten's encrypted laptop will be handed over to lawyers acting for the creditors. Eventually it will be given to a court-appointed monitor. A Nova Scotia RCMP spokesperson confirmed to the CBC that they are assisting an investigation into QuadrigaCX that is being led by the RCMP of Toronto West. Lawyers for the company say that they are considering a possible sale of the company to cover their debts. Given that a considerable amount of their assets cannot be accessed no company might be interesting in buying it.

Previously  published in Digital Jouirnal