Just as monetary policymakers couldn’t appear to be more hypocritical by singling out the emerging cryptocurrency industry for being too loosey-goosey, fate has stepped in. When things seemingly couldn’t get any worse for Deutsche Bank, the Wall Street firm is now troubleshooting a possible security breach involving sensitive client information, according to a report in the Financial Times. It’s reminiscent of Facebook’s data security issues, with the common theme being that these companies had nothing to do with crypto at the time of these failures. In fact, crypto will no doubt appear even more attractive to Deutsche clients who can no longer trust the banks.
After shuttering its equities division in recent weeks, not to mention thousands of jobs across New York and London, Deutsche Bank’s IT department apparently forgot to shut down the email accounts of those individuals who were affected.
Dozens of disgruntled laid-off employees could still access their accounts even after being terminated from the company, as per the FT. One fired trader in particular reportedly sent more than 400 emails in the wake of the incident, the details of which are unclear. While access to those accounts has since been removed, the damage appears to already be done, exacerbating an already precarious situation for the German bank whose reputation has already been tarnished among clients.
Deutsche Bank, which is deemed “too big to fail”, has a laundry list of compliance issues that it is dealing with, one that extends to insufficient anti-money-laundering procedures that let unchecked payment transactions to be completed, according to the FT. Also, The New York Times reports that financier Jeffrey Epstein, who is accused of sex trafficking, is suspected of using his Deutsche Bank account for nefarious activities.
As clients wrestle with moving assets to another bank, hundreds of customers stand to lose their accounts with Deutsche Bank anyway amid a failure to comply with know-your-customer requirements. Meanwhile, crypto exchange ShapeShift, which has only been around for half-a-decade vs. nearly 150 for Deutsche Bank, performed a complete overhaul of its business in order to support greater AML and KYC standards. Who is it that needs “very, very strong” regulatory oversight, Mr. Mnuchin?
Treasury Secretary Steven Mnuchin recently stated:
“We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts, which were a risk to the financial system. There are billions of dollars of transactions going on in bitcoin and other cryptocurrencies for illicit purposes.”
The gatekeepers of traditional finance sure have a lot of trouble running a tight ship, and yet they conveniently forget this by attempting to turn the tables on the crypto industry. In the interim, all they are doing is sending tech innovation to other jurisdictions that choose to embrace rather than stifle innovation.
Last modified (UTC): July 29, 2019 13:09