Digital currencies - Consult Hyperion

The Missing Cryptoqueen

9th January 202410th January 2024by David G.W. BirchLeave a comment

You’ve probably heard about The Missing Cryptoqueen. It was one of the best podcasts of all time, a BBC series that explored the story of Dr Ruja Ignatova, a Bulgarian-born German entrepreneur who founded a fraudulent cryptocurrency scheme known as OneCoin, which The Times has described as “one of the biggest scams in history”. Since 2017 she has been on the run and in 2019 she was charged in absentia by U.S. authorities for wire fraud, securities fraud and money laundering. Currently one of the FBI’s “Ten Most Wanted”, she is also subject to an international Interpol warrant from the German authorities. In that podcast, Jamie Bartlett presents a story of “greed, deceit and herd madness” that is fascinating funny and frightening. I cannot recommend both the podcast series and his book highly enough.

Jamie has written about how Dr Ruja was a genius at brand association. Knowing credibility was critical to her scam, she made sure to place herself next to trusted brands. She famously gave a speech hosted by The Economist in 2015, for example, where she gave a platitude filled “keynote” that you can watch online here. Well, as it transpires, there was another trusted brand that OneCoin was, as Jamie puts it, “looking to snag”: Consult Hyperion!

Jamie writes that

In early 2017 OneCoin appointed someone to figure out what OneCoin needed to do to fix its growing technology mess. He asked Ruja’s London office, RavenR Capital, to come up with names. And the name suggested? ‘I would go for Consult Hyperion’ emailed one staffer, attaching a summary of the company.

When Jamie, an old friend, told me this, I was very pleased, as you can imagine. As one of the founders of Consult Hyperion, I have always been very proud of the culture of integrity that we built around our core deep subject matter expertise. We have such great people here and they have helped us to build a global reputation for being the best when it comes to helping scale players exploit new technology around secure electronic transactions.

(To be honest, even after all these years to still feels pretty good every time I see it confirmed and when I get a message on LinkedIn saying “hey , your team did a great job”, or someone says at a conference “those guys got us out of hole”, or a stranger in an airport lounge tells me what a superb analysis one of team delivered for them, I still get the same strange mixture of pleasure and pride that I did all those years ago!)

Jamie asked me what Consult Hyperion could have done for OneCoin, and I told him. We do due diligence on behalf of investors, we provide expert witnesses in lawsuits, we do risk analysis and penetration testing for some of the biggest names in financial services around the world. Having provided expertise in “crypto” to organisations ranging from Euroclear to the Department of Defense, there are all sorts of ways that we could have helped them prove that their scheme was awesome, their teams was great and they would storm the market.

But Dr. Ruja never called.

She never called for the obvious reason that we have some of the best electronic transactions consultants on the planet. It would have taken them at most around five minutes to discover that the supposed claimant to Bitcoin’s crown was nothing of the sort. As Global Ambassador for Consult Hyperion, it is henceforth my proudest claim that the cryptoqueen never called us and if we ever get a coat of arms, I intend to suggest “regina non vocavit” as our motto!

Here I am with Jamie and Erica Stanford (author of “Crypto Wars”, another great book!)

Identity really is the new money

16th September 202230th August 2023by Steve PanniferLeave a comment

Today is International Identity Day supported by the many organisations around the world seeking to address the huge inclusion issues caused by a lack of digital identity. It is tempting to think that this is a mainly developing world issue and that in the developed world the lack of digital identity services is more of an inconvenience than a real problem. Here in the UK, however there are still up to 5m people who struggle to access financial services because they do not have the right documents or data. More on that in our recent report.

Something I’ve been thinking about quite a bit this year is interplay between Digital Identity and Central Bank Digital Currency (CBDC). What’s that got to do with the pressing need to give effective digital identity to those that need it most? Two things really:

Firstly, a significant factor in the development of a CDBC will be to ensure it is inclusive. After all one of the main objectives in CDBCs is to provide a digital alternative to cash. The financially excluded rely on cash and so a CDBC may have an important role to play in addressing their needs.
Secondly, whilst the need is pressing, making it happen will take time. The UN Sustainable development goal 16.9 calls for the provision of legal identity for all by 2030. Many CDBC initiatives are operating on a similar timeframe.

The beauty of CDBCs is that, in the main, central banks are starting from a blank sheet of paper, which creates the opportunity to design something well from the start. A big problem in digital identity has been trying to retrofit it into a digital world after the fact.

Another interesting thing is that the emerging model for CDBCs has close similarities to the decentralised model for digital identity, which is the direction of travel in that space. Let me explain a little.

This following picture illustrates 2-tier model for CDBC:

Senders and receivers will have wallets that interact with each other. They will hold the identifiers (backed by private keys) that allow the parties to control the use of their CDBC value. The actual system of record will be a ledger provided by (or on behalf of) the central bank. Wallets will use tokens, which are cryptographic representations of the value managed by the ledger, which are bound to the identifiers (and keys) belonging to the parties.

Now look at the standard model for decentralised identity:

Identity information is sent from holders to verifiers. The information is sent in the form of cryptographic credentials (you could think of them as identity “tokens”) that are bound to identifiers which can be checked in a registry. Of course for those credentials to have any value they need to come from a trusted source – an issuer.

So you can see there is a strong correlation between CDBC and decentralised identity systems. The content of the two grey boxes is basically the same.

Furthermore, CDBC systems will have some very particular digital identity and privacy requirements:

There will need to be controls in place to prevent AML.
The CDBC must not become a mass surveillance system.
The system must allow anonymous transactions in some circumstances but not all.
Users must have control over how much data is shared (and in some cases if the user is not willing to share data the transaction will not be able to be completed).

These requirements could be met very well through the use of decentralised identity technologies such as those being developed in W3C, which support the presentation of verifiable identity information whilst employing strong privacy controls. There seems to be a strong case for the CDBC community to collaborate with the identity community. We have a foot in both camps and are working hard to ensure that the years of work put into decentralised identity is leveraged effectively in CDBCs.

It really is the case that Identity is the New Money.

CBDCs – wallets, liability and acceptance

26th July 202221st November 2022by Tim RichardsLeave a comment

CBDCs are everywhere – and nowhere. Everyone is discussing them, but almost no one is actually deploying them. Sure, this is in part due to the early stage thinking that is going into working out what is actually required but it’s also due to the tricky business of actually working out how they would be implemented. Developing a retail payment solution is a lot harder than creating a Central Bank backed payment instrument.

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Identity in the Metaverse

28th June 202228th June 2022by David G.W. Birch1 Comment

I had the privilege to chair a discussion about identity in the metaverse at the Identiverse conference in Denver in June 2022, and had great fun discussing the new landscape for identity with Heather Vescent, Jonathan Howle, Katryna Dow and Gopal Padinjaruveetil. In order to frame my thoughts and get the discussion about identity and privacy going, I needed a mental model.

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Do I need to upgrade my Fare Collection system to support CBDC?

17th May 202217th May 2022by Simon LakerLeave a comment

This week, a press release from China announced they had expanded acceptance of the digital Yuan onto public transport in 12 cities. China has led the way in the development of a Central Bank Digital Currency (CBDC), launching a trial in 2020 which has been expanding steadily. But what does this mean? What is a CBDC? And when will I need to consider accepting them in public transportation?

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Be on the smart side of the Great Reset

14th December 202110th February 2022by Lishoy FrancisLeave a comment

The human society is now at crossroads – demanding changes in our lifestyle, health choices, economics, and civil liberties. These changes are accelerated by climate change, political response to the pandemic, the need for racial and gender equality, human migration, and of course, a few break-through technologies such as digital automation, data analytics, and machine-learning (AI). So where are we heading? The call for “Great Reset” has been reverberating since the past few years and is now getting louder and louder. This was the topic of the virtual fireside chat by two visionaries on our Tomorrow’s Transactions webinar, Brett King and Dave Birch, discussing the societal and technological changes that are foreseen in the next few decades. This conversation was centered around Brett King’s (Richard Petty, co-author) book, “The Rise of Technosocialism” and aligns with Consult Hyperion’s engagement with think tanks on global issues. Our aim to is separate foresight and facts from fiction in trying to understand the trends in the market that our clients should watch-out for especially in payments, banking, transit, digital identity, and information security.

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Will 2022 start to drive the future of Interoperability and Inclusion?

13th December 202110th March 2022by Tim RichardsLeave a comment

Our overriding theme of this year’s Live5 is interoperability which will lead to inclusion. Whether this is in payments or transit, identity or as a generalised trend what we’re seeing is a collapsing of the barriers between silos. In some areas this is happening more quickly than in others.

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Payments are hard. That’s why the world’s leading payment organisations come to us.

12th October 202112th October 2021by Consult HyperionLeave a comment

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Big Tech, Financial Data … and resilience for critical infrastructure

17th September 202117th September 2021by Neil McEvoyLeave a comment

Victoria Saporta, BoE executive director for prudential supervision, has said recently that minimum resilience requirements should be required for the tech giants’ (and others’) hosting services, before they may process and store banking data. We strongly support these comments. We have identified this issue as one of a number of new risks arising from modern financial systems architecture, in recent Structured Risk Analyses that we have carried out for financial and retail organisations in North America, Asia-Pac and EMEA.

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On Mondex and CBDCs (again)

30th July 20213rd September 2021by Tim RichardsLeave a comment

Introduction

We were delighted to get a lot of good feedback on Neil’s previous blog on Mondex Memories and CBDCs and its relevance to CBDCs and thought it would be interesting to respond to some of the more interesting – and difficult – points raised in a follow-up blog. Before addressing those I wanted to put the Mondex program into some historical context. They were very different days – we didn’t have an intranet until 1996, let alone internet access. There were no SDKs – although actually we did build a precursor to one of those – or APIs and the idea of remote payments was still in its infancy (although we did that too).

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