Bank of Thailand: Cryptocurrencies Are Not To Blame For Recent Bitcoin Fraud Case

  • Bank of Thailand's governor has clarified that the recent bitcoin fraud case involving Thai actor Jiratpisit Jaravijit had nothing to do with "crypto trading."
  • The governor also noted that the $24 million bitcoin scam was a case of "misuse of money."
  • Three major banks in Thailand are suspected of being involved in the bitcoin fraud case.

Thailand’s central bank recently issued a statement regarding the fraud case involving Jiratpisit Jaravijit, a Thai actor who allegedly swindled a Finnish investor out of $24 million in Bitcoin (BTC). The nation’s central financial institution, Bank of Thailand (BoT), clarified that although the fraud was a serious crime, it did not occur “during crypto trading.”

Veerathai Santiprabhob, the governor of BoT, noted that the bitcoin scam was a case where “the money is used for the wrong purpose.” The high-profile fraud case is now being investigated by Thailand’s Crime Suspension Division (CSD) as eight suspects including Jaravijit, his family members, two local businessman, and an ex-military officer were interrogated by the authorities on Thursday.

Major Banks "Complicit" In Bitcoin Fraud

According to local news reports, Thailand’s three major banks including Kasikornbank, Bangkok Bank, and Siam Commercial Bank “are suspected of being complicit” in the bitcoin fraud case. A “whale” investor named Prasit Srisuwan, who works at the Stock Exchange of Thailand (SET), might also have been involved in the scam, media sources noted.

Additionally, CSD’s investigation revealed that the whale investor and the banks “handled transactions involving part of the swindled money.” Local authorities added that several employees working at the banks did not report many transactions of over 2 million baht ($61,000).

Failure to report such transactions is a major violation of Thailand’s anti-money laundering laws, the the Bangkok post noted. Despite the serious nature of this recent bitcoin fraud, Thailand’s government considers it to be a case mainly involving the “misuse of money” and not necessarily related to its local crypto industry.

Progressive Crypto Regulations

As CryptoGlobe reported, Thailand’s Securities and Exchange Commission (SEC) legalized seven cryptocurrencies in June for initial coin offerings (ICOs). They include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Stellar (XLM), and Ripple (XRP).

Additionally, Thailand’s SEC gave the green light to seven local crypto companies, which included five digital currency exchanges, to conduct business operations in the country. At present, the nation’s regulators are in the process of reviewing various other crypto-related applications.

More recently, as CryptoGlobe reported on August 5th, the BoT authorized all local banks to launch subsidiaries, which may provide certain banking services to digital currency investors. These services include offering brokerage services to crypto firms and investing in blockchain startups. The banks’ subsidiaries were also authorized to operate their own crypto businesses.

U.S. Congressman McHenry Calls Bitcoin ‘An Unstoppable Force’ at Libra Hearing

As far as cryptocurrency fans are concerned, one U.S. Congressman, Patrick McHenry, was the star of the House Financial Services Committee hearing on Libra on Wednesday (July 17). 

Before we talk about what happened at this hearing, and more specifically, how Congressman McHenry managed to endear himself to all blockchain and cryptocurrency fans, it might be helpful to present a very brief biography of him here.

Patrick Timothy McHenry is the U.S. Representative for North Carolina's 10th congressional district. He is serving his eight term at the U.S. congress, where he is currently the Republican Leader of the House Financial Services Committee, "a committee he has served on since he was elected to Congress" (in 2004, when he was just 29 years old).

On Wednesday (July 17), a day after Facebook's David Marcus, who is a co-creator of Libra and the head of the Calibra project, faced tough questions at the U.S. Senate Committee on Banking, Housing, and Urban Affairs (aka "Senate Banking Committee"), came the real grilling at a full hearing (titled "Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System") of the U.S. House Committee on Financial Services.

Committee Chairwoman Maxine Waters (D-CA), who had previously implored Facebook to stop working on the Libra project until Congress could understand better the implications of what Facebook's proposed cryptocurrency, started the hearing by delivering a prepared statement, during which she, once again, expressed her "serious concerns with Facebook’s plans":

This venture is slated to be based in Switzerland, which has a history as a monetary haven for criminals and shady corporations. Facebook’s plans raise serious privacy, trading, national security, and monetary policy concerns, not only for Facebook’s over 2 billion users, who will have immediate access to these products, but also for consumers, investors and the global economy.

 Congressman McHenry's gave his opening remarks around 11:00 (Eastern Time). Here were the main highlights:

  • "Washington must go beyond the hype and ensure that it's not the place where innovation goes to die."
  • "Just because we may not fully understand a new technology proposal does not mean we should immediately call for its prohibition, especially when that proposal is just that — a proposal."
  • "The reality is whether Facebook is involved or not, change is here. Digital currencies exist. Blockchain technology is real. And Facebook's entry in this world is just confirmation, albeit at scale."
  •  "The world that Satoshi Nakamoto, author of the Bitcoin whitepaper, envisioned—and others are building—is an unstoppable force."
  • "We should not attempt to deter this innovation, and governments cannot stop this innovation. And those that have tried have already failed."
  • "Instead of a knee jerk reaction of banning something before it begins, my Replication colleagues and I want to first try an understanding. An in turn, based off what we learn, determine whether or not our current regulatory framework meets the demands of this new technology."  

Then, around 15:30 (ET), McHenry began his questioning of David Marcus about Libra; some of his most interesting questions are listed below.

McHenry: Is it a security?

Marcus: We don't believe it is, Congressman.

McHenry: Is it a commodity?

Marcus: Congressman, based on current U.S. law, it might be a commodity, but we see it as a payment tool.

McHenry: Is it an exchange traded fund?

Marcus: It is not, Congressman.

Congressman McHenry repeated his claim about Bitcoin being an unstoppable force during an interview with Andrew Ross Sorkin on CNBC's morning news and talk program "Squawk Box":

I think there is no capacity to kill Bitcoin. Even the Chinese with their firewall and their extreme intervention in their society could not kill Bitcoin.

Sorkin then told McHenry that although it might not be possible to technically "kill" Bitcoin, it was possible for governments to create legislation that made access to Bitcoin illegal for their citizens at fiat on/off ramps such as exchanges (e.g. Coinbase) and custodial wallets (e.g. Calibra), and that would "effectively make it very very difficult for the mainstream to use it." Sorkin then said that's why investors in Bitcoin were worried, which explained the recent drop in price.

McHenry replied:

Yes, so the price has come down to roughly $10,000... But you are talking about something that... people were giving away for free. It's now trading at $10,000... But the essence of Bitcoin is what Libra, Facebook, and corporates are trying to mimic.