Iran, July 18 (AP/UNB) — Iranians feeling the squeeze from U.S. sanctions targeting the Islamic Republic's ailing economy are increasingly turning to such digital currencies as Bitcoin to make money, prompting alarm in and out of the country.
In Iran, some government officials worry that the energy-hungry process of "mining" Bitcoin is abusing Iran's system of subsidized electricity; in the United States, some observers have warned that cryptocurrencies could be used to bypass the Trump administration's sanctions targeting Iran over its unraveling nuclear deal with world powers.
The Bitcoin craze has made the front pages of Iranian newspapers and has been discussed by some of the country's top ayatollahs, and there have been televised police raids on hidden computer farms set up to bring in money by "mining" the currency.
Like other digital currencies, Bitcoin is an alternative to money printed by sovereign governments around the world. Unlike those bills, however, cryptocurrencies are not controlled by a central bank. Bitcoin and other digital currencies like it trade globally in highly speculative markets without any backing from a physical entity.
As a result, computers around the world "mine" the data, meaning they use highly complex algorithms to verify transactions. The verified transactions, called blocks, are then added to a public record, known as the blockchain. Any time "miners" add a new block to the blockchain, they are rewarded with a payment in bitcoins.
To work, the expensive specialized computers require a lot of electricity to power their processors and to keep them cool. In Iran, "miners" have an edge because electricity is cheap thanks to longtime government subsidies. "Miners" also buy cheaper Chinese ready-made computers to do the work.
But the constant raids and authorities' conflicting statements on the issue have Bitcoin "miners" in Iran incredibly leery of being identified. Those contacted by The Associated Press refused to speak about their work or to say how much they earn from their "mining."
But they acknowledge they do this to make some money at a time when Iran's currency, the rial, tumbled from 32,000 rials to $1 at the time of the 2015 nuclear deal, to around 120,000 rials to $1 now.
"It is clear that here has turned into a heaven for 'miners,'" Mohammad Javad Azari Jahromi, Iran's minister for information and communications technology, recently told AP in an interview. "The business of 'mining' is not forbidden in law but the government and the Central Bank have ordered the Customs Bureau to ban the import of (mining machines) until new regulations are introduced."
Ali Bakhshi, the head of the Iran Electrical Industry Syndicate, said earlier this month that the country's Energy Ministry likely would boost costs for Bitcoin "miners" to 7 cents for each kilowatt of electricity they consume, a massive increase from the current half-cent but still almost half the cost of electricity in the United States, according to the semi-official Fars news agency.
Still, there are concerns, especially among Iran's religious leaders, that people might try to circumvent paying extra for the electricity as well as using digital currency to hide or move money illicitly.
Tabnak, a hard-line news website associated with a former commander of the country's paramilitary Revolutionary Guard, quoted three ayatollahs describing Bitcoin as either problematic or "haram," meaning forbidden. Islam prescribes strict rules about finance.
But Jahromi said clerics became more receptive to the idea after his staff briefed them that Bitcoin had a value in the real world, which is required under Islamic finance. Islamic finance also prohibits gambling, the payment of interest and misleading others.
"Some of our top clerics have issued fatwas that say Bitcoin is money without a reserve, that it is rejected by Islamic and cybercurrencies are haram," Jahromi said. "When we explain to them this is not a currency but an asset, they change their mind."
Iran has tried to keep its economic situation in check by controlling foreign currency rates and cutting down on those moving their money from the rial to other currencies, including Bitcoin. Last year, the semi-official Mehr news agency quoted Mohammad Reza Pour-Ebrahimi, the head of the Iranian parliament's economic commission, as suggesting that about $2.5 billion left Iran through digital currency purchases. He did not elaborate and authorities have not discussed it since.
The U.S., meanwhile, has been keeping a close watch on Iranians holding bitcoins. In November, a federal grand jury in Newark, New Jersey, accused two Iranian men of hacking and holding hostage computer systems of over 200 American entities to extort them for Bitcoin, including the cities of Newark and Atlanta.
"As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers and other providers of digital currency services harden their networks against these illicit schemes," said Sigal Mandelker, Treasury's undersecretary for terrorism and financial intelligence.
Not so, said Jahromi.
"Cybercurrencies are effective in bypassing sanctions when it comes to small transactions, but we do not see any special impact in them as far as mega-transactions are concerned," he said. "We cannot use them to go around international monetary mechanisms."
France, July 18(AP/UNB) — Finance ministers from the Group of Seven rich democracies are sounding the alarm on the dangers of cryptocurrencies and pouring cold water on Facebook's Libra as they wrap up a two-day meeting in Chantilly, France.
Officials from the US, France and others have sounded skeptical so far about Libra and cryptocurrencies, which have the potential to make the financial system more efficient but also carry risks.
"The sovereignty of nations cannot be jeopardized," said French Finance Minister Bruno Le Maire, referring to private companies such as Facebook.
Facebook has proposed creating Libra as a cryptocurrency that is pegged to existing currencies to make it more stable than the likes of Bitcoin and would have the backing of numerous major companies. Governments around the world are rushing to assess how that would affect the economy.
Le Maire said that the G-7 officials noted that while stable cryptocurrencies like Libra could reduce costs for transfers and help provide financial services to underserved communities, they also pose concerns and would need to be accountable to governments, not just corporations. Libra could, for example, facilitate money laundering and terrorist financing and influence the value of established currencies.
While the G-7 countries, a group of longtime allies, seemed to agree on the risks of cryptocurrencies, their meeting is also exposing differences on views on how to tax digital businesses.
The U.S. and France in particular are at odds after Paris said it planned to put a 3% tax on tech giants like Facebook and Google.
U.S. Treasury Secretary Steven Mnuchin has objected to the plan when meeting with his French counterpart, host Bruno Le Maire.
France says that if an international agreement on such a tax is made, it will withdraw the tech tax plan. The proposal was approved by the French parliament last week and provoked a strong rebuke from the White House.
The rift risks feeding into broader disagreements, including on trade, after the U.S. imposed tariffs on some EU goods last year, drawing retaliation from Europe.
The G-7 finance meeting will set the stage for a summit of the countries' heads of state and government in August. Beyond the US and France, the G-7 includes Germany, Britain, Italy, Japan, Canada and representatives from the European Union.
New Delhi, Jul 18 (AP/UNB) — India's space agency said it will launch a spacecraft to the south pole of the moon on Monday after an aborted effort this week.
The Indian Space Research Organization said that the Chandrayaan-2 launch is now rescheduled at 2:43 p.m. on Monday. It said Thursday that an expert committee identified the root cause of the previous technical snag and all corrective actions were now implemented.
The mission was called off less than an hour before liftoff of the 640-ton, 14-story rocket launcher on Monday.
Chandrayaan, the Sanskrit word for "moon craft," is designed to make a soft landing on the lunar south pole and send a rover to explore water deposits that were confirmed by a previous orbiting Indian space mission.
The new launch schedule came sooner than expected.
Pallava Bagla, a science editor of the New Delhi Television news channel, had earlier said that launch windows would have to meet several technical criteria and it could take weeks or months for a new date.
Dr. K. Sivan, chairman of the Indian Space Research Organization, said that the around $140 million Chandrayaan-2 mission was the nation's most prestigious to date, in part because of the technical complexities of soft landing on the lunar surface — an event he described as "15 terrifying minutes."
If India did manage the soft landing, it would be only the fourth country to do so after the U.S., Russia and China.
Dhaka, Jul 18 (AP/UNB) - Microsoft says it has detected more than 740 infiltration attempts by nation-state actors in the past year targeting U.S.-based political parties, campaigns and other democracy-focused organizations including think tanks and other nonprofits.
A company spokeswoman would not name or further characterize the targets. All subscribe to Microsoft's year-old AccountGuard service. It provides free cyberthreat detection to candidates, campaigns and other mostly election-related groups.
Microsoft did not say how many infiltration attempts were successful but noted in a blog post Wednesday that such targeting similarly occurred in the early stages of the 2016 and 2018 elections.
A year ago, Microsoft said it had detected attempts to infiltrate the networks of U.S. senatorial candidates and think tanks.
Wednesday's announcement was timed to coincide with the annual Aspen Security Forum in Colorado.
Washington, Jul 18 (AP/UNB) — Facebook endured a second day of criticism from Congress over its plan to create a digital currency as senior House Democrats asked Facebook to scale back the project and threatened legislation that would block big tech companies from getting into banking.
Facebook's massive market power and its record of scandals, fines and privacy breaches were on trial at a hearing Wednesday of the House Financial Services Committee. Lawmakers from both parties insisted they cannot trust the social network giant.
"I think you're pretty low on the trust spectrum right now, and understandably," Rep. Vicente Gonzalez, D-Texas, told David Marcus, the Facebook executive leading the project. It was Marcus' second straight day of tough questioning by lawmakers.
Among their concerns is the risk that the new currency, to be called Libra, could be used for illicit activity such as money laundering or drug trafficking. Lawmakers also worry that the massive reserve created with money used to buy Libra could supplant the Federal Reserve and destabilize the financial system, and that consumers could be hurt by Libra losses.
The committee's leader, Rep. Maxine Waters, D-Calif., has asked Facebook to suspend its plan for the new currency until regulators and lawmakers have a chance to fully review it. She renewed that demand to Marcus.
Rep. Carolyn Maloney, D-N.Y., asked that Facebook commit to starting with a pilot project with no more than a million users, overseen by the Federal Reserve.
If Facebook cannot meet that request, Maloney said, "then Congress should seriously consider stopping this project from moving forward."
Waters held out the prospect of legislation that would prohibit big tech companies such as Facebook, Google, Amazon and Apple from becoming chartered or licensed as U.S. financial institutions, and thus able to offer banking services, and specifically from establishing a digital currency.
Facebook, marshaling its more than 2 billion users around the world, "is apparently trying to create a new global financial system that will compete with the U.S. dollar," Waters said.
The congressional criticism thickened the cloud over Facebook's plan, coming after negative statements and expressions of concern from the two most powerful financial regulators , Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin, as well as from President Donald Trump himself.
In a rare endorsement of Trump's views, committee Democrats projected his negative tweets last week about cryptocurrencies and Libra on a giant electronic screen in the hearing room. Trump said Libra "will have little standing or dependability."
As he did at Tuesday's hearing by the Senate Banking, Housing and Urban Affairs Committee, Marcus repeatedly took pains to assure lawmakers that Facebook would not launch the currency project until it had received all the necessary approvals from regulators and secured safeguards to protect the privacy of users' data. He said Facebook will not control Libra because Facebook will be only one of about 100 companies and nonprofits in an association that will manage the currency.
Marcus said the plan would open low-cost online commerce to millions of people around the world who lack access to bank accounts and would make it cheaper to send money across borders.
He did not agree to a suspension of the plan or a pilot project.
"We will take the time to get this right," Marcus said.
He said Facebook isn't looking to base the Libra project in Switzerland in order to evade oversight, but because that country is recognized as an international financial center.
Acknowledging lawmakers' concerns over Facebook's record on data privacy , Marcus said, "I think trust is essential and it's clear we've made mistakes. We're owning these mistakes."
The committee's senior Republican, Rep. Patrick McHenry of North Carolina, said skepticism over the project is justified but the effort should not be prohibited outright. A thorough review is needed, "instead of a knee-jerk reaction of banning something before it begins," McHenry said.
Rep. Tom Emmer, R-Minn., said the legislation Waters is proposing to ban big tech companies from banking "has no constitutional basis."
Marcus' assurance that Facebook won't control Libra failed to convince Rep. Brad Sherman, D-Calif., who focused on Facebook CEO Mark Zuckerberg.
"This is the Zuck buck," Sherman insisted. "This is a godsend to drug dealers" and other criminals. "Zuckerberg has billions but he doesn't have the authority to print more. ... This is an attempt to transfer enormous power from America to Facebook and its allies."
The planned digital currency is to be a blend of multiple currencies, which means the exchange rate will fluctuate.