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US penalises developer of virtual currency XRP

      

6 May7:57 AM

[WASHINGTON] San Francisco company Ripple Labs agreed to pay a US$700,000 penalty Tuesday for running a market for XRP, the world's second largest virtual currency after Bitcoin, outside of US financial regulations.

The Justice Department said Ripple, a developer of banking payment technologies backed by leading Silicon Valley investors, had not adhered to rules governing money services businesses, especially to prevent money laundering.

Resolving a criminal investigation into its subsidiary XRP II LLC, the Justice Department said Ripple agreed to pay the penalty and bring its XRP exchange within existing regulations for money exchanges.

The agreement "will resolve allegations that Ripple and its subsidiary failed to follow the law while engaging in the exchange of virtual currency and that the entities failed to establish and maintain an appropriate anti-money laundering program," the agency said.

Ripple has developed XRP into the second largest virtual currency by market capitalization, estimated at US$253 million by Coinmarket.com.

That is less than a tenth the size of Bitcoin, but the company developed it for its own Ripple exchange network, an open-standard technology for banking transaction clearance based on a distributed network.

Ripple says the technology allows banks to make faster payments "in more currencies to more markets - all with lower risks and costs than is possible today." The company is backed by top venture capital firms including Andreessen Horowitz, Google Ventures, IDG Capital and Lightspeed Venture Partners.

"Ripple Labs Inc. and its wholly-owned subsidiary both have acknowledged that digital currency providers have an obligation not only to refrain from illegal activity, but also to ensure they are not profiting by creating products that allow would-be criminals to avoid detection," US Attorney Melinda Haag said in a statement.

"We hope that this sets an industry standard in the important new space of digital currency." While not regulating the existence of virtual currencies, the US government has already cracked down on several Bitcoin markets for allowing money laundering and drug purchases using it.

AFP

      

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Dollar drops as poor trade data cloud rate hike outlook

The dollar slid against the euro on Tuesday after US data showed a sharp rise in the trade deficit that raised questions about the outlook for an increase in interest rates. 

PHOTO: AFP

6 May6:32 AM

[NEW YORK] The dollar slid against the euro on Tuesday after US data showed a sharp rise in the trade deficit that raised questions about the outlook for an increase in interest rates.

The US trade deficit swelled more than 40 per cent to US$51.4 billion in March, the largest gap since October 2008, the Commerce Department reported.

The stronger dollar in March, coupled with the end of the West Coast port shutdowns, largely unleashed the record flood of imports that far offset a small gain in exports.

"The greenback is softer, with lower US Treasury yields and soft trade data restraining the US currency," said Eric Viloria, a currency strategist at Wells Fargo Securities.

The euro bought US$1.1185 around 2100 GMT, up from US$1.1146 late Monday.

The large deficit was expected to force the government to lower its estimate for the first-quarter economic growth rate, originally put at 0.2 per cent.

It also cast a question mark over the timing of the Federal Reserve's plan to raise near-zero interest rates. A rise in rates is typically supportive of the dollar.

But analysts said the market was waiting for Friday's US jobs report for April to gauge the economy's strength to weather a rate hike.

"The labor market numbers are much more important to the Fed than GDP growth, which is much more volatile than employment and is revised forever," said Ian Shepherdson of Pantheon Macroeconomics.

The euro gained despite a spike in tensions over Greece's debt crisis, with the Greek government blaming its creditors - the European Union and the International Monetary Fund - for holding up an agreement that would unblock 7.2 million euros in bailout cash.

"There have been some improvements in eurozone data but we believe that EUR/USD should be trading lower especially since higher yields will hurt Europe at a time when the US is expected to grow more swiftly," said Kathy Lien of BK Asset Management in a note.

AFP