Will there be crash on the way to utopia, Blockchain Fraud
Blockchain is the new buzzword. But what is it? For the uninitiated, it’s a must have technology, its new to everyone, everybody wants it, and everyone wants to know how in links with bitcoins.
A blockchain is a computerized ledger or database spread across several computers which records information virtually immediately. For example, person can enter Hong Kong and the data regarding his/her entry will appear almost immediately on the same documents recording such data anywhere in the world. It simple use would be for example: a transportation company which is moving goods from A to B on a worldwide basis, everyone will be working of the same document at the same time. Essentially, it can be considered to be a spreadsheet that is duplicate of thousands of times across a network of computers, which is designed to regularly update this spreadsheet. In an ideal situation, you need identity verification, instant money transfer and transaction verification to be able to ensure that the spreadsheet or document is being properly utilized and accessed.
However, as with all utopian developments, unless blockchain technology is set up properly and securely, fraudsters will take advantage especially when there are decentralized autonomous organization operating the technology.
Legal issues are bound to arise such as what is the jurisdiction arrangements for enforceability, and what is the legal status of a decentralized autonomous organization.
In short, where there is an opportunity for independent control with any new technological advance and where there is a lack of checks and balances, sharp/unfair/questionable business practices and outright fraud will commence then spiral out of control.
Market watchdogs around the world will want protect the end users and constrain any idea of independent operation and self-policing. The Courts will also want certainty as to the legal rights of those involved. Included, there is a growing sense that, while blockchain technology is ultimately a beneficial tool, its growth must be properly managed and regulated with a view towards ensuring that (i) the technology is properly used and (ii) the general public is not overly / negatively exposed to the technology. The legislature will need to carefully consider the status of any new technology and business model which changes the traditional way of doing business and which in effect is attempting to do business without proper compliance. A number of blockchain enthusiasts have recognized and appreciated the necessity of ensure the technology and the products it is helping to develop do in same shape or form, comply with existing legal and regulatory frameworks.
It is important therefore if you are in the process of investing in any blockchain venture or setting up an advisory service to take proper legal advice from a commercial lawyer in order to protect your interests and investments both present and future. If you are in the early wave in investing in blockchain technology, you should be worry of the potential pitfalls.
As yet critics are of the view that, there is insufficient protection for consumers of this new e-commerce platform, which no doubt in the coming years will mature enough to be widely implemented and safely used.
Robertsons' corporate and commercial team has advised a number of companies which have develops products that have harnessed the power and prospects of blockchain technology that are eager to ensure that there is sufficient compliance with existing legal and regulatory frameworks.
At the same time, if you are the victim of fraud in relation to a blockchain investment, our firm is ready and able to assist and advise you.
In this regard, contact Mr. Kevin Steel of our Criminal department or Mr. Chris Lambert and Mr. Avinash Hotachandani for any commercial issues.