Regulations needed after cryptocurrency CEO takes passwords to his grave

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Canadian CEO Gerald Cotten died in December, taking to his grave the passwords to unlock his cryptocurrency clients’ millions. Dmitry Moraine/Unsplash

Lisa Kramer, University of Toronto

A high-stakes legal drama featuring cryptocurrencies has been unfolding in a Canadian court recently.

The antics that led to the litigation almost defy credulity, and they highlight the need for new regulations to better suit a financial marketplace that includes virtual currencies.

News broke in early February that Canadian cryptocurrency exchange QuadrigaCX was seeking creditor protection, leaving in financial limbo about 115,000 people who had entrusted the firm to maintain their deposits of cash, Bitcoins and other digital tokens worth an estimated C$250 million.

The company’s need for bankruptcy protection arose when its founder and chief operator, Gerald Cotten, died suddenly in December while vacationing in India. Normally, if a financial institution’s executive officer meets an untimely demise, he or she doesn’t bring to the afterworld the only keys to the vault. And thus clients maintain continued access their deposited funds all the while.

In the case of Quadriga, unfortunately, Cotten was the only living soul who knew the password to an encrypted offline repository, known as cold storage, where the firm had enshrined the vast majority of clients’ cryptocurrency deposits. Without the password, no one can access those holdings.

Murky or absent regulations

While the Nova Scotia Supreme Court wades its way through some very novel and complex issues, the question that comes to my mind is: How has one bad decision about password custodianship caused more than 100,000 people to lose access to their deposits?

The answer lies in the murky and mostly lacking regulations that govern the cryptocurrency world. Nothing stops entrepreneurs like Cotten from running companies like Quadriga with no independent oversight.

Had he ever raised equity capital from investors in return for tokens or coins, that process would have been governed by Canadian securities regulations. But because Quadriga is an exchange — maintaining deposits and facilitating conversions between regular cash and cryptocurrencies, but not issuing cryptocurrencies in exchange for ownership shares — it operates in a regulatory vacuum.

Stakeholders show up at Nova Scotia Supreme Court as Canada’s largest cryptocurrency exchange seeks creditor protection in the wake of the sudden death of its founder and chief executive in December. THE CANADIAN PRESS/Andrew Vaughan

In Canada, the Office of Superintendent of Financial Institutions (OFSI) oversees banks that take regular dollar deposits. One might argue that the OFSI umbrella ought to be adapted to include oversight of virtual exchanges like Quadriga, even though such institutions are not technically banks and their deposits are non-traditional in nature.

That oversight would impose accounting standards and reporting requirements that would help prevent the sorts of irresponsible missteps that put Quadriga depositors in such a precarious position.

A likely side benefit of regulatory supervision would be the eventual development of standardized safeguards against hackers and other cybercriminal activity that plagues the cryptocurrency world.

Lack of regulations attractive to some

A feature that draws many crypto enthusiasts to the virtual currency sector is the very fact that it lacks government oversight, and those individuals will bristle at any hint of new regulations.

Members of the general public might also be leery of new laws lest they grant an undeserved sheen of legitimacy to cryptocurrencies, which are not suitable investments for anyone except the most risk-loving of speculators.

But in Canada, we regulate many industries that are risky or distasteful to some, including gambling, alcohol, tobacco and marijuana. The underlying calculus is that providing standards for certain illicit activities is preferable to driving those activities to the black market, where the risks would be amplified.

For instance, a benefit of buying my beloved guilty pleasure of choice, craft gins, from a regulated marketplace is that I can imbibe confident in the knowledge that my cocktails are free from wood alcohol. Three cheers for avoiding blindness!

We cannot protect Canadians from all possible risks, especially when it comes to financial markets. And to be clear, I am not suggesting that we indemnify cryptocurrency speculators against losses that may arise from taking calculated risks, such as the beating that some fortune-seekers have taken since Bitcoin valuations plummeted from stratospheric heights.

Rather, I propose that depositors ought not to be penalized for the indiscretions of the custodians to whom they entrust their financial holdings.T

Lisa Kramer, Professor of Finance, University of Toronto

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Prince George woman raises issues of racism, Islamophobia in House of Commons

Seek first to understand, then to be understood.

Lila Mansour kept that saying in mind when when some unexpected controversy flared up in the House of Commons this week.

She was among the 338 young women from across the country who were in Ottawa as part of the Daughters of the Vote program and, on Wednesday, they were in the chamber to give speeches on issues that mattered to them.

But perhaps the biggest statements were made when dozens of them turned their backs on Prime Minister Justin Trudeau and walked out on Conservative leader Andrew Scheer.

Mansour was not among them.

“I prefer to keep the dialogue open and if I don’t agree with someone’s point of view I prefer to listen to them and hear their perspective and voice my opinion and be able to have a conversation with that person,” Mansour said in a telephone interview.

“And so I preferred not to walk out, I preferred not to turn my back, but instead to listen.”

Mansour said those who chose to turn their backs on the PM did so in protest of the decision to eject former cabinet minister Jody Wilson-Raybould out of the Liberal caucus.

“It was a critical issue especially for the Indigenous women who felt it was inappropriate that he removed an Indigenous minister speaking truth to power,” Mansour said. “They felt that was kind of threatening them and how they are going to speak to power.”

About the same number walked out on Scheer when he addressed the delegates just prior to Trudeau. Mansour said they did so because he did not want to fund the Daughters of the Vote program, which is run by Equal Voice, an organization that advocates for equal representation of women in parliament.

The second-year UNBC student said in a post on social media that the opportunity to speak with other strong, confident women from across the nation was incredible.

“Without Daughters of the Vote and Equal Voice, I could not have had such an inspiring experience, and I am so thankful for your efforts to make this happen and to allow the women of today have a voice to shape tomorrow,” Mansour explains.

She’s originally from Syria and explained in her speech of how grateful she was to the Canadian government for accepting over 40,000 refugees from her country.

While the feat is a milestone for the nation, Mansour also included the issues facing Syrians, Muslims, and other minorities that she wishes to tackle.

“Despite this, I’ve still seen many newcomers in my community [of Prince George] struggling and need support,” said Mansour to the other delegates. “Like us, they want freedom, security, and opportunity. They want to be a part of this country, but yet, problems like racism and Islamophobia persist and nobody should be afraid to worship and believe as they wish.”

She also included the issues she’s seen among Prince George’s Indigenous community and called upon the Federal government to act.

“As passionate as I am about immigrants, refugees, and Islamophobia, we must not forget the people of this country. As I’ve witnessed in Prince George, which is known for its Highway of Tears, I have watched the Indigenous people mistreated and I have seen how they are disproportionately represented in the justice system and its time for this to be fixed.”

Mansour helped organize a vigil in front of Prince George City Hall on March 16 for the New Zealand mosque shooting a day earlier, a terrorist attack where 50 people were killed and 50 mre were injured.

“Racism and discrimination are very real,” Mansour said to a crowd of more than 50 people that afternoon. “Hatred and extremism are present in the world around us, these things can’t be ignored. It is our job to spread love and peace no matter who we are, what our background is or what our religion is. Every life is important, whether it is a Muslim life, a Christian life or Jewish or anyone’s faith, we must look past our differences and instead look at the things that connect us and bring us together.”

As far as she could remember, Mansour also said she’s never felt like she had to pretend to be someone else.

“I’ve never been afraid to show I’m Muslim. I’m very thankful for that and the wonderful Prince George community that has always supported me and I’m very fortunate.”

Cariboo-Prince George MP Todd Doherty praised Mansour for her courage to speak in Ottawa this week and for her passion for uplifting local residents.

“I’m very proud to have the opportunity to watch one of our young community champions [Lila Mansour] stand in parliament today and deliver a powerful message,” explained Doherty in a social media post. “Lila, thank you for being a great ambassador for our community!”

When she’s not speaking in parliament or studying economics at UNBC, Mansour helps organize the Relay for Life youth activities, teaches Sunday school at the B.C. Muslim Association’s mosque in Prince George, and volunteers with the Justice Education Society at the Prince George Court House.

Closing the Canada-U.S. Asylum Border Agreement Loophole? Not So Fast

According to media reports, Bill Blair, Canada’s minister of border security, is attempting to close a loophole in the Canada-U.S. Safe Third Country Agreement (STCA).

The agreement allows Canada to send asylum-seekers back to the United States without hearing their refugee claims (and allows the U.S. the same option for those going in the other direction). The loophole is that the STCA only applies to asylum-seekers who present themselves at official land ports-of-entry.

Since President Donald Trump was elected, around 40,000 asylum seekers have used this loophole by crossing into Canada from the U.S. at places other than official ports-of-entry. They are not trying to sneak into Canada undetected. Rather, they cross the border irregularly to avoid being turned away under the STCA and then approach Canadian authorities to make refugee claims.

The number of irregular border-crossers has declined recently, with fewer than 1,000 in January 2019. What’s more, while the overall number of refugee claims made in Canada has been higher than usual in the past two years, it is not far off historical norms.

Nonetheless, the additional 40,000 refugee claims have produced pressures on the refugee determination system and on provincial social programs. There has also been political pushback, with calls from the Conservative party for the government to stem the flow.

However, closing the STCA loophole is a complicated proposition.

Blair reportedly wants irregular border-crossers to be taken to official ports-of-entry and processed as if they had presented themselves there directly. In other words, the STCA would apply both at official ports-of-entry and elsewhere.

To make this work, the U.S. would need to agree, which is the first complication.

More asylum-seekers come to Canada

The purpose of the STCA from a Canadian perspective was to force the U.S. to take responsibility for asylum-seekers who travel to Canada via the United States. Canada had long wanted the STCA because the flow of asylum-seekers is asymmetrical. Far more asylum-seekers come to Canada from the U.S. than the reverse.

For the same reason, the United States has long refused to agree to the STCA. That only changed after 9-11, when Canada offered the U.S. greater border security integration in exchange for the STCA.

Canada now wants to expand the STCA, so the question is: What will Canada have to give the U.S. to get them to agree?

One might expect quite a lot, given that Trump has shown little interest in taking steps that would result in thousands of asylum-seekers who would otherwise go to Canada remaining in the U.S.


The need for a quid pro quo raises a second complication. The STCA is being challenged in Canadian courts by human rights organizations who say that the U.S. is not safe for refugeesand that the STCA violates the Canadian Charter of Rights and Freedoms.

Given the anti-refugee policies of the Trump administration, there is a good chance that courts will strike down the STCA. By negotiating expansions to the STCA without waiting to see whether the regime is upheld, there is a real risk that anything Canada gives to the U.S. in exchange will be for naught.

A third complication: Even if Canada gets the U.S. to agree to expand the STCA, and even if the regime is upheld by the courts, the impact of any expansion is likely to be both counterproductive and dangerous.

A dangerous incentive

If asylum-seekers who are intercepted at irregular border crossings are returned to the U.S., this will create a strong incentive for such asylum-seekers to cross the border without being intercepted.

Currently, irregular border crossings are manageable and organized. Most occur in a single, well-monitored location in Québec. That crossing is not dangerous. Border officials and RCMP are present. Irregular border-crossers immediately enter into immigration and refugee processing, which includes health, criminality and security screening.

Other countries that have tried to stem flows of asylum-seekers by closing off safe and manageable routes have had a common experience. The flows do not stop but are instead diverted into more remote and hence more dangerous routes. Organized crime gets involved, bringing increased security risks and violence. The inevitable result is lost lives and decreased border security.

In the end, the political pressure on the government to be seen doing something on this file may outweigh these policy considerations. But politics lead to a fourth complication.

During the last federal election campaign, Justin Trudeau distinguished himself from former prime minister Stephen Harper partly through a more compassionate response to the Syrian refugee crisis and the death of Alan Kurdi — himself a tragic victim of cat-and-mouse games between smugglers and governments seeking to keep refugees at bay.

Shortly after Trump’s inauguration, Prime Minister Trudeau further sought the moral high ground when, in response to the president’s anti-refugee policies, he famously tweeted Canadians will welcome those fleeing persecution.

There is no way to close the STCA loophole without the Liberal party turning its back on those progressive values, on the eve of a federal election campaign.

In this context, attempting to expand the STCA may not only be bad policy, it may also be bad politics.

The Death of the CWHL Presents a New Opportunity for Women’s Professional Hockey

The sudden announcement by the Canadian Women’s Hockey League (CWHL) that it was ceasing operations has generated controversy and confusion. But as an academic who researches sport organizations, I have a different take — the CWHL closure opens the door for new and innovative women’s professional hockey opportunities.

On the surface, this ordeal reads as a tale of two leagues – one non-profit, the CWHL, and one for-profit, the National Women’s Hockey League (NWHL).

When the CWHL announced it was shutting down, the league’s board of directors stated“the business model has proven to be economically unsustainable.” Many fans and media took this to mean the non-profit model won’t work and the only option is the NWHL’s for-profit approach.

But this is a shortsighted view.

Closure is a catalyst for change

The closure of the CWHL is a catalyst for other key stakeholders to enter the scene — which has happened many times in the past for men’s professional hockey, where leagues have come and gone.

As my early doctoral research shows, many different stakeholders — including players, hockey federations, government and industry officials — have influenced the development of hockey over time.

The Canadian Amateur Hockey Association, created in 1914, initially resisted popular pressure to allow pay-to-play leagues to emerge. But as players opted for independent leagues that paid them, the CAHA loosened its regulations and accommodated a degree of professionalism while at the same time overseeing the development of hockey in the country.

This shift opened the market to hockey boosters and entrepreneurs, some of whom owned rinks and needed to have an attractive product in order to entice customers.

Money-making activity was fast and furious. Leagues came (the National Hockey League started in 1917) and went (the professional National Hockey Association lasted from 1909-18).

Rivalry between leagues

In his account of the emergence of the NHL, academic John Wong says separate camps jockeyed for position and profit as commercial hockey gained public interest. This is no different than the interplay — or as some note, the business rivalry — between the CWHL and NWHL that has unfolded since 2015, when the U.S.-based NWHL formed.

Women’s hockey also attracted economic interests during the early part of the 20th century. In his review of American women’s hockey in the First World War era, Andrew Holmannotes that sports entrepreneurs sought new ways to sell the game, and as a result, women’s hockey was positioned as a commercial venture. The key point Holman makes about this historic time, though, is the rise and fall of the women’s game, including its professional form. It is important to note the CWHL story has happened before.

In his examination of hockey capital and the sports industry, historian Andrew Ross notes the complex men’s professional hockey landscape has included single-ownership leagues. He points out the NHL was once an unincorporated, non-profit organization.

Not a new model

The key lesson, then, is to recognize the CWHL model was not new and that this approach, as well as others, has existed and failed in the past. More importantly, these models, and the individuals that spearheaded them, pave the way for new and viable professional women’s hockey approaches to emerge.

Which brings us to the next phase of the story.

In my work on the global development of women’s hockey, I note there is no one “best” model, and that each country must develop at its own pace through a method that best suits its unique hockey system. The same is true for a professional women’s hockey league.

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However, the CWHL’s shutdown created a vacuum. Just over 48 hours after the CWHL released news of its decision to close, the NWHL’s board announced an investment plan to establish two teams in Canada, and that it received a financial sponsor commitment from the NHL. And so, in a similar fashion to how the NHL and World Hockey Association, a rival men’s professional hockey league that existed from 1972-79, merged, one league shuts down while the others acquires some of its franchises and moves on as the lone commercial player in the female game.

Looking back to 2015 when the NWHL was formed, it’s interesting to reflect upon the CWHL’s response. The CWHL commissioner at the time, Brenda Andress, commented that the NWHL model was wrong and “that for us, it’s about sound operational and financial foundations first because we want to ensure the viability of the long term.”

During its 12 years of operation, the CWHL took this approach and in so doing, shaped the professional women’s hockey landscape. It’s now time for the next stage.

Seeing the smart city: Mapping technologies in Canada

The plan for Google’s Sidewalk Labs in Toronto has continued to attract criticism. The plan for Google’s Sidewalk Labs in Toronto has continued to attract criticism. The company has yet to release a clear picture or detailed explanation of what the “smart neighbourhood” on Toronto’s waterfront will include. So far, it looks as though there will be various forms of sensor technology to collect and analyze data, as well as versatile and shifting buildings and novel transportation systems — all of which seems difficult to imagine.

One thing about smart cities that makes them a challenging topic to engage with is their slippery definition. Another challenge is the inability to visualize them and understand the ubiquity of their reach. This is propagated by technology firms that often fail to share details of their products or their implementation and use by cities.

Most of the publicity on smart cities has been focused on high impact examples, such as Sidewalk Labs. However, the smart city exists all around us, in various forms and in various spaces, and it is critical that we come to understand the “actually existing smart city.”

Mapping smart cities

Our team of researchers from McMaster University and the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic have created an interactive map that allows viewers to navigate through various smart-city technologies in Canada.

The map makes visible the scope of smart-city strategies that have been implemented across Canada. The map filters results based on location and type of smart-city technology, and allows users to read through the details of each technology including any potential privacy concerns. Residents can also upload their own experiences and encounters with smart-city technologies.

Invisible technologies

Mapping out smart city technologies has demonstrated that many types are invisible to the public eye. For example: traffic noise monitors (Edmonton); sensors that count people and analyze their movements in built environments (Toronto); trash bins that alert city waste management of their status (Winnipeg); and smart benches which potentially track data from users (Newmarket).

A smart bench in Edmonton. These public benches provide access to wi-fi and charging, but also collect data from nearby devices. Mack Male/TwitterCC BY

Many such technologies are not broadly disclosed or understood, putting the public at risk of privacy violations and unwanted surveillance. It is not even clear to researchers what data is being collected by these devices, making the task of understanding their possible negative impacts nearly impossible.

This impossibility is a key setback in the attempt to foster a democratic deliberative process around the creation of smart-city spaces across the country. In order to further the conversation in a meaningful and inclusive way, it becomes imperative to pursue strategies of education and exploration around smart-city practices.

The need for public awareness

In light of these developments, it is important for researchers to point to the ways in which one can see what smart-city technologies are and where they exist within city space. Having this knowledge affords people a tangible awareness regarding the places within which these technologies live — spaces that might otherwise feel invisible or elusive. The map we created was compiled with a view to expand on this sentiment and contribute to the public education on smart cities in Canada.

Outside of academia, there is an emerging advocacy network which does thorough and important work regarding smart cities and their potential negative effects. The Digital Justice Lab and Tech Reset Canada are both working on multiple campaigns to both broaden public awareness of smart cities and highlight the concerns that are born of these emergent urban technologies. Both groups have been critical of Sidewalk Labs and continue to provide a much-needed voice in the debate.

Most recently, these criticisms have coalesced around #BlockSidewalk, a campaign that looks to prevent Sidewalk Labs from developing Toronto’s waterfont while encouraging a citizen-centred and democratic process around alternative development goals.

A screenshot of the Smart City map showing smart city technologies in Edmonton, AB.

Advocacy and activism in the smart city is an important endeavour and comes at a critical time that sees smart city development outpace any deep awareness of their defining logic or process of implementation. It is therefore necessary that those who have access and proximity to the smart city landscape — researchers, policymakers, journalists, advocates — continue to attach a public awareness component to their broader work.

Our map attempts to expose some of the smart-city technologies that have been placed in cities and hopefully this work can be expanded upon in the future. There cannot be any meaningful public discussion or process of consent when smart city technologies are rolled out to a public that remains largely unaware of their existence.