tiff_macklem.jpg

Whether it’s cash or cryptocurrency, Canadians are worried about their money

There were warning signs aplenty back in February that Canadians’ trust in money is especially fragile right now.

The so-called “Freedom Convoy” was blocking the streets around Parliament Hill, and the federal government had just imposed the Emergencies Act, vowing to “follow the money” and put the squeeze on organizers who were threatening public safety.

The big banks were all given a few days’ heads-up that they would have to co-operate with Ottawa, dig through their records and stop the flow of contributions that was discretely paying — through digital, cryptocurrency or traditional means — for the increasingly intransigent protesters to stay in the streets.

But credit unions — those smaller, provincially regulated institutions so popular in the same little towns and rural areas — were taken by surprise, not just by the government measures but also by their own customers.

They raced to their local branches and withdrew millions of dollars, fearing the government was about to seize their savings.

“The government was less than clear about the intended targets of financial measures under the Emergencies Act,” Martha Durdin, president and CEO of the Canadian Credit Union Association, told parliamentarians recently.

“Many of our members expressed this concern, and many Canadians made significant withdrawals from credit unions as a result, sometimes in the hundreds of thousands of dollars, and on a few occasions, millions,” Durdin said.

Fortunately, the credit unions were able to absorb the sudden withdrawals, and there wasn’t a full-fledged run on them. But as one credit union leader told Durdin, “We had a tremendous amount of members very seriously concerned regarding the government’s ability to seize accounts; it brought forward a large sense of mistrust with the government that they could just seize individuals’ accounts.”

That rough period has passed, and in the end, credit unions temporarily blocked about 10 accounts worth less than half a million dollars. The federal measures were meant to target illicit donations to a cause deemed out of bounds, and most Canadians steered clear of that kind of activity.

But it’s clear from the parliamentary committee hearings that customers’ trust in their savings was rattled, even if they weren’t swept up in a crackdown that may well have been warranted and well-intentioned.

The Emergencies Act isn’t the only thing that has Canadians looking hard at where they keep their money. The world is awash in financial sanctions against Russian oligarchs. And while few Canadians have any connection to that kind of activity, it’s a reminder that the state can, and will, seize assets and money if it sees a good reason to.

At the same time, digital currencies are sending our traditional banking systems into conniptions. A new assessment of financial system risks in Canada, issued for the first time this week by the country’s banking regulators, shows that innovations such as cryptocurrencies, stable coins and open banking are a challenge to the way most Canadians have always viewed money, how to store it and how to build a nest egg.

“Technology-driven disruptive forces continue to pose significant threats to financial institutions’ business models, in virtually all aspects of their activity and value chain,” says the report from the Office of the Superintendent of Financial Institutions (OSFI).

But don’t worry. OSFI says it is involved in international organizations, thinking about expanding its regulatory reach and will have more to say this year.

The underlying message of the authorities is: trust us, and if you’re not doing anything wrong, we won’t touch you.

Which brings us to inflation. At a record-setting 6.7 per cent in March, it erodes the value of savings substantively, federal authorities haven’t been able to wrestle it down — they may even have exacerbated it — and it touches everyone.

The Bank of Canada is keeping a close eye on just how much the public trusts the central bank to eventually get it under control. And the answer is, less and less. Recent surveys show consumers believe inflation will settle down over the long term, but they’re losing faith in the near future.

That’s fertile ground for the dangerous pitch coming from Conservative leadership candidate Pierre Poilievre. The front-runner is drawing huge crowds while urging supporters to reject the authority of the Bank of Canada and to “opt out” of inflation by investing in bitcoin.

With all of that in mind, Bank of Canada governor Tiff Macklem is on the offensive these days, raising interest rates, talking about even more to come in June and the rest of the year, and explaining why Canadians should keep the faith.

But he won’t mention Poilievre’s name, let alone discuss his anti-institution arguments or their populist appeal. But while there’s a case to be made for ignoring Poilievre and hoping he goes away, it’s not a likely scenario, given the atmosphere of mistrust and uncertainty around the value of money.

Over the next few weeks, we will see many post-convoy recommendations from parliamentarians about how government can better manage financial security risks and cryptocurrencies. We will hear from Macklem about the eventual stability of prices. We will get reassurances from Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland about the underlying strength of our economy.

They’ll need to keep in mind that the public trust is earned, and in this atmosphere of disbelief, action will speak much louder than words.

JOIN THE CONVERSATION

Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.




Source link

load_safe.jpg

Citizens group wins court-ordered freeze of Freedom Convoy accounts, cryptocurrency

OTTAWA An Ottawa judge has frozen the bank accounts and digital “wallets” of convoy leaders believed to hold more than $1 million in bitcoin and cryptocurrency after an extraordinary secret hearing.

Late Thursday, Ontario Superior Court Justice Calum MacLeod granted an injunction to a private citizens’ effort to stanch the flow of money that was a lifeline for the 21-day occupation of Ottawa.

MacLeod issued the sweeping order freezing all the digital assets and bank accounts of convoy leaders, several of whom are directors of a corporation they created three weeks ago.

He ordered any banks, financial institutions, money service businesses, fundraising platforms or websites, cryptocurrency exchanges or platforms, and custodians of any cryptocurrency wallets to halt transactions related to the organizers’ accounts and digital wallets.

And the institutions and platforms must disclose the assets held within to the court.

Lawyer Paul Champ, acting on behalf of a group of Ottawa residents who have launched a class-action lawsuit for damages caused by the protest, won the injunction during an unusual “ex-parte” hearing, held “in camera” — without public notice or access. The targeted defendants did not receive advance warning, nor did they have an opportunity to get a lawyer to court to contest the claims.

It was a calculated effort to halt the flow of funds after a private investigator and a bitcoin expert hired by Champ flagged that the “Freedom Convoy” organizers were moving cryptocurrency funds out of digital wallets and into new ones faster than the RCMP could keep up, and outpacing the federal government’s efforts to track them, Champ said.

At last count, according to information in the court order, at least 146 different digital wallets were believed to be in play. Most were listed as containing bitcoin, but other digital currencies were also identified.

Champ, his co-counsel, and a group of Ottawa citizens have filed a broader class-action lawsuit seeking $306 million in damages against the convoy organizers, but fear the ability to recover any reparations would be lost without the order. Champ is the same lawyer who won an injunction last week halting the trucks parked downtown from blaring their horns.

The federal government says it has been freezing accounts related to the convoy, under the Emergencies Act invoked Monday. But Champ said the government is moving too slowly.

“They keep moving to bitcoin and other shadowy fundraising platforms to avoid the reach of authorities,” said Champ in an interview.

Justice MacLeod’s order freezes all assets up to a value of $20 million.

It says the individuals and the corporation are “restrained from directly or indirectly” selling or moving any of the assets or money around, and from instructing or compelling any other person to do so, and from facilitating or “aiding and abetting” any act that has the effect of moving the money and cryptocurrency beyond reach.

It targets the accounts of individuals, specifically Patrick King, Tamara Lich, Christopher Garrah, Nicholas St. Louis and Benjamin Dichter — all key players in the convoy.

The court order names a corporation called Freedom 2022 Human Rights and Freedoms that Champ said was set up Jan. 30 to collect money from GiveSendGo, the U.S.-based online platform that collected more than $10.7 million in donations for what it said was food, fuel and shelter for convoy participants.

That flood of money poured in after another platform GoFundMe halted fundraising because of “police reports of violence and other unlawful activity” and said it would give more than $10 million raised at that point to charity. It later agreed to return donations to donors.

Late Thursday night, as arrests of Lich and Chris Barber, a director of Freedom 2022 Human Rights and Freedoms, were being made on the streets of Ottawa, the targets of the order were being served notice of the court order via their lawyers.

The order is broad.

Within a week, the court says the defendants have to provide an affidavit declaring their worldwide assets “whether solely or jointly owned, which are being used, have been earmarked for, or are intended to be used to fund, directly or indirectly, activities associated with the Freedom Convoy protests in or around the City of Ottawa … including but not limited to any digital assets (and any associated cryptocurrency wallet addresses),” it says.

If they refuse to do so, they could be facing a contempt-of-court charge, the judge says.

Deputy Prime Minister Chrystia Freeland told reporters earlier Thursday that an unspecified number of accounts related to the protests had already been frozen, but she would not say how many, citing operational concerns.

“The names of both individuals and entities as well as crypto wallets have been shared by the RCMP with financial institutions and accounts have been frozen, and more accounts will be frozen,” she said.

“We will have zero tolerance for the establishment of new blockades or occupations. We now have the tools to follow the money. We can see what is happening and what is being planned in real time and we are absolutely determined that this must end now and for good.”

She said online crowdfunding platforms and payment service providers “have started the registration process with (the federal financial intelligence agency) FINTRAC.

The federal government has not publicly spoken about its own analysis of the convoy’s fundraising totals.

But in documents justifying the declaration of a national emergency, the government cited a CBC analysis that showed 55 per cent of donations made public came from donors in the U.S compared to 39 per cent of donors located in Canada.

JOIN THE CONVERSATION

Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.




Source link