Geopolitics

Brexit: Europe's Silver Lining On An Epic Mess

The Brexit debacle has had at least one virtue: Eurosceptic leaders from other countries are no longer pushing to leave the EU. But that is only part of the story.

Protestors lay on European Union flag at citizens' march in Brussels, Belgium
Protestors lay on European Union flag at citizens' march in Brussels, Belgium
Eric Le Boucher

PARIS — Amid the general bewilderment that surrounds Brexit, there is at least one strong certainty: leaving the European Union has lost any possible attractiveness. Those who feared that the British example would be followed by other countries exiting the EU, leading to its progressive disintegration, have been spectacularly incorrect. Even hardened Eurosceptic leaders avoid any declarations of plans to leave the Union.

The most emblematic are Matteo Salvini in Italy and Marine Le Pen in France. Though they have not renounced the demolition of Europe to restore their respective national sovereignties, they want to do so from the inside, not from the outside. The European construction will overcome Brexit, which has so far without a doubt been the greatest threat in the history of the EU. Whether Britain leaves or not, the Union will survive.

Will it be better off? The EU will survive but it will be weakened. The amputation will include the UK's population (66 million inhabitants, or 13%), military (the only other professional army than France), economy (15% of GDP), financial muscle and ideology. A weakened EU is a gift made for Donald Trump (who speaks of it as a "foe") and for Xi Jinping (who wants to put a ‘belt" around the entire continent from Beijing to Rome).

The British were at the forefront in many areas.

Hobbled, will the EU grow more united? That's the French gamble: without the British systematic blocking in Brussels, further integration will finally be possible. Cleared of the third "big", France and Germany find themselves in a position to lead and strengthen the "Berlin-Paris' axis. The road is clear for a Europe that is less free-market driven, a project built more around "protection", the deeper development of a finance cemented in the euro and an economy oriented toward supporting its own industries and technologies and the construction of an autonomous defense. In short, a transformation toward real sovereignty.

Still, the British will be missed. They were at the forefront in many areas such as the environment, genetic technologies, and of course, finance and defense. If military cooperation with France should survive, a fundamentally pacifist Germany will likely refuse to increase its budget. As for building a Europe of capital, as fluid and global as The City of London, it is a challenge that seems out of reach.

Merkel_Macron_Berlin_Conference

French President Macron and German Chancellor Merkel speak at a press conference in Berlin — Photo: Shan Yuqi

Moreover, among the EU's remaining 27, unity does not seem easier than 28. The departure of Britain leaves small countries that are not part of the Eurozone without their leader. They represent 24% of the bloc's habitants, but are marginalized. Others fear a "French Europe," a pessimistic budgetary framework and interventionist economy, and have revived the Hanseatic League to defend themselves under the banner of The Netherlands.

The most disappointing is the tension within the Franco-German duo. Emmanuel Macron is convinced that Europe has not moved forward in 30 years, and wants a significant European budget with oversight on asylum, climate change, innovation and defense. Germany instead is sticking to the idea of an inter-state rather than super-state Europe. And there looks to be little chance of reconciling the two contrasting visions.

This leads to the second certainty that comes with the departure of the UK: Europe will continue to advance, but very, very slowly.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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