The Davos Contradiction

World leaders can agree on the same ambitious goals for encouraging a more global economy, but not the means for arriving there

Russian President Medvedev

DAVOS - There is true consensus at Davos: it can no longer be business as usual. Heads of state, corporate leaders and intellectuals gathered here share the belief that we must establish "shared norms for a new reality," to borrow the title theme of this year's edition of the World Economic Forum. That's planning for the long haul!

We've needed new rules for finance after the terrible mess of the 2008 meltdown. Moreover, food security must be improve; it would be criminal not to push forward on negotiations for climate change; and dwindling natural resources will be our next great challenge. And, above all, no country can continue working in its own little corner, according to its own particular interests, a point that has been made in different ways by figures as varied as Russian President Dmitry Medvedev, Indonesian President Susilo Bambang Yudhoyono and French President Nicolas Sarkozy. The last century was that of the nation-state, until their mortal, repeated clashes. The new century is that of globalization, so often celebrated in Davos.

And yet…while we see much convergence towards the ends, there is much less agreement on the means, as happens when we suddenly find we are no longer in a hurry. In finance, bankers argue that the essential is done, and deploy all their powers of persuasion to explain that the next crisis will come from others who are less well monitored. In food, countries like Russia and Ukraine blocked their exports last year. On the climate front, preparations for the Durban conference leave no hope for a more triumphant outcome than the summits in Cancun or Copenhagen.

Nicolas Sarkozy embodied the contradiction. Having come to speak at Davos as chair of the G8 and G20, he wanted to put forward practical solutions. But finding solutions means forcing change. And this affects short-term interests. To finance the $120 billion annually that developed countries have pledged to poor countries beginning in 2020, in order to help finance a greener economy, the French president spoke of micro taxation of financial transactions. The message fell on deaf ears in Davos.

The pessimists will draw the conclusion that the G20 is heading toward "G0", a term coined by the American scholar Ian Bremmer to indicate a world without leadership. The optimists will respond that the new ideas must to be repeated often enough to find their way inside to each one of our heads.

Read the original article in French

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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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