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FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration/File Photo
April 26, 2019
By Tom Wilson and Dan Williams
LONDON/JERUSALEM (Reuters) – The armed wing of Hamas is using increasingly complex methods of raising funds via bitcoin, researchers say, highlighting the difficulties regulators face in tracking cryptocurrency financing of outfits designated by some as terrorist groups.
The Gaza-based Izz el-Deen al-Qassam Brigades, which is proscribed by the United States and the European Union, has been calling on its supporters to donate using the digital currency in a fundraising campaign announced online in late January.
Originally, it asked donors to send bitcoin to a single digital address, or wallet.
However, according to research shared with Reuters by leading blockchain analysis firm Elliptic, in recent weeks it has changed the mechanism, with its website generating a new digital wallet with every transaction.
This makes it harder for companies around the world to keep tabs on the group’s cryptocurrency financing, the researchers said. A single digital wallet can be red-flagged to cryptocurrency exchanges, in theory allowing them to prevent funds moving through their systems to that destination.
But a different wallet for each donation makes this so-called tagging far more complicated, Elliptic said.
Between March 26 and April 16, 0.6 bitcoin – worth around $3,300 – was sent to the website-created wallets, Elliptic’s research found. All told, the four-month fundraising campaign has raised around $7,400, the firm said.
A spokesman for Hamas, which has ruled the Palestinian territory of Gaza since 2007, declined to comment on Elliptic’s research.
Such funds are a fraction of the tens of millions of dollars in annual funding that Israel and the United States says Hamas receives from Iran. Yet the campaign gives insight into how a proscribed group has gone about bitcoin fundraising.
“They are still in experimentation stage – trying it out, seeing how much they can raise, and whether it works,” said Elliptic co-founder Tom Robinson.
Iran has not publicly detailed its funding of Hamas, though it has not denied its support for the group. Hamas has said Tehran is the biggest backer of the al-Qassam Brigades.
London-based Elliptic and U.S. rival Chainalysis are the most prominent blockchain analysis firms, and have gained traction as watchdogs, cryptocurrency companies and firms such as hedge funds seek tools to track digital coins.
Backed by investors including Banco Santander’s venture capital arm, Elliptic’s clients include financial firms, regulators and law enforcement agencies in Europe and the United States.
Since 2016 it has won contracts with the Federal Bureau of Investigation, Internal Revenue Service and Drug Enforcement Administration, according to USAspending.gov https://www.usaspending.gov/#/search/83bba7bc5a719c1da25ff95d41c4349e, a database of U.S. government contracts.
Examples of cryptocurrency funding campaigns by proscribed groups are rare. But the research underscores headaches for companies in the emerging sector in identifying and stamping out exposure to potentially tainted digital coins, even as tools for tracking and tracing cryptocurrencies grow more sophisticated.
Dealing with illegal usage is seen as vital if cryptocurrencies are to grow from niche, speculative tokens to assets embraced by the mainstream. Most big financial firms have steered clear of bitcoin and its kin, with money laundering chief among concerns.
STEP-BY-STEP INSTRUCTIONS
Hamas is designated a terrorist organization by the United States and the European Union. Others, including Britain, have proscribed only the al-Qassam Brigades.
Such a designation means that, in the United States for instance, it is illegal to provide money or training, with financial firms in control of related funds obliged to report them to the authorities.
A two-minute video on the al-Qassam Brigades website lays out step-by-step instructions in Arabic on how supporters can avoid the traditional financial system and donate cryptocurrency.
“How to support the Palestinian resistance via Bitcoin?” it asks.
With polished graphics and English subtitles, it explains how to send bitcoin directly, through a money-exchange office, or via a cryptocurrency exchange. “Use a public device so that the wallet is not linked to your IP address,” it says.
Elliptic uses a database of information linking digital coin addresses to exchanges, darkweb marketplaces, and proscribed groups to track cryptocurrencies.
It pinpointed wallets created by the website by tracking patterns in their unique addresses. The firm monitored these addresses, later identifying multiple transactions that sent funds from the addresses to a major Asia-based cryptocurrency exchange.
Thirteen of the donations were made from a separate exchange, also from Asia, said Elliptic, which declined to give further details of the exchanges. It was not clear whether the bitcoin had since been converted to traditional currencies, the firm said.
PATCHY REGULATION
Hamas’s finances are suffering. Egyptian President Abdel-Fattah Al-Sisi in 2013 closed hundreds of tunnels under the Gaza-Egypt border, preventing the smuggling of weapons and goods from cows to cars, depriving Hamas of tax income.
Funding from Iran has also declined following Hamas’s condemnation of the killing of Sunni Muslims in Syria’s civil war, analysts say.
Bitcoin could provide respite in that cash squeeze.
“It makes it difficult for such funds to be tracked by financial authorities,” said Lotem Finkelshtein, head of threat intelligence at Check Point Technologies, a cybersecurity firm in Tel Aviv.
“It’s not so simple to link wallets to organizations.”
Israel’s Shin Bet intelligence agency, defense ministry and military declined to comment.
Finance Minister Moshe Kahlon, who is also a member of the national security cabinet, told the website Ynet TV this month he was unaware of the fundraising.
Regulators and law enforcement agencies have long worried about the potential of digital money – relatively anonymous and easily available online – to finance terrorism.
Cryptocurrency regulations vary from country to country. The global watchdog for money laundering, aware of gaps in rules, is due to bring in the first international standards on cryptocurrency oversight by June.
But with regulation still patchy, the risk of exposure to tainted coins has kept most big investors away.
Even indirect exposure to tainted cryptocurrencies would present problems for financial firms, said Kyle Phillips, a lawyer at Fieldfisher law firm.
“There are real issues with establishing the beneficial owners,” he said.
(Reporting by Tom Wilson in London and Dan Williams in Jerusalem; Additional reporting by Nidal al-Mughrabi in Gaza; Editing by Pravin Char)
Source: OANN
FILE PHOTO: A HNA Group logo is seen on the building of HNA Plaza in Beijing, China February 9, 2018. REUTERS/Jason Lee
April 26, 2019
By Jennifer Hughes and Julie Zhu
HONG KONG (Reuters) – Shareholders summoned by Hong Kong Airlines this month for a meeting were greeted with some shocking news: the airline needed at least HK$2 billion in fresh funds or it would lose its operating license.
The carrier had lost HK$3 billion ($382.54 million) in 2018, they were told, and an infusion was crucial, according to people present.
Dialed in, but silent for the hour-long meeting on April 1, were executives for Hainan-based HNA Group,, which holds 29 percent of the airline’s shares.
Investors were blunt about HNA’s role in the company’s troubles, according to people at the meeting – including accusations that it was siphoning off cash, which the conglomerate denies.
“There’s no point raising fresh capital if we cannot solve the problem of (a) major shareholder pumping out HKA’s assets,” said Zhong Guosong, who holds 27 percent of the shares and is vying for chairmanship of the company.
Another shareholder echoed his views: “This is Hong Kong, not Hainan.”
In the last week, drama from the call has spilled into the open as HNA and a rival group battled for control of Hong Kong Airlines’ chairmanship. The airline declined to comment on shareholders’ activities and said its operations “remain normal.”
The infighting illustrates the convoluted nature of HNA’s holdings around the world, which range from real estate to banks and are often divided among opaque, related entities.
On paper, HNA gave up control of Hong Kong Airlines two years ago just as it began selling off assets collected in a $50 billion worldwide acquisition spree.
But the carrier has close ties with several HNA affiliates.
“HNA’s shareholding structure and how they structure investments has always been very complicated, and the HKA case isn’t any different,” said David Yu, adjunct professor of finance at New York University, Shanghai. “The issue now is that there is some distress at the parent group, and this is obviously having implications on the underlying companies, including HKA.”
HNA TANGLE
Since Beijing in 2017 began cracking down on Chinese conglomerates’ rapid debt-fuelled global expansions, HNA has sold about $26 billion in assets, according to Dealogic data and Reuters calculations.
Disposals include control of the Radisson hotel group; a quarter stake in Hilton Hotels; prime property in New York, Sydney, Shanghai, San Francisco and Hong Kong; regional Chinese airlines; a stake in aircraft lessor Avolon; and half of its stake in Deutsche Bank.
But the prices HNA has sought and the complex structures, loans and other business links that bind its holdings have made unwinding its investments difficult.
HNA’s wider Hong Kong interests are a case in point. This week, HNA-controlled CWT International said lenders had seized assets, including U.S. property and its Singapore-based commodity trading and logistics unit, because it failed to repay a HK$1.4 billion ($178 million) loan.
HNA said that it was monitoring the situation, but that it was a matter for CWT and its creditors. Yet HNA units own 51 percent of CWT’s shares, and each of CWT’s executive directors has ties to other HNA businesses. CWT’s co-chairman, Mung Kin Keung, is a shareholder in Hong Kong Airlines.
HNA’s involvement with the airline is just as complicated. The conglomerate took control of CR Airways in 2006 and renamed it Hong Kong Airlines. In July 2017 it cut its stake, according to filings, by selling 34 percent to Chinese private equity group Frontier Investment Partners.
According to Hong Kong Airlines’ 2017 accounts, seen by Reuters, the airline held shares in four unlisted HNA affiliates, worth $367 million at the end of 2017, and had loaned $300 million to two other HNA firms.
That year, the airline’s trade receivables – money owed to it but not collected – jumped 50 percent even as revenue rose only 11 percent. Of those payments due, the amount HNA companies owed the airline more than doubled to HK$1.3 billion, or 73 percent of receivables.
Zhong is closely linked with HNA as well, having been a director of the airline for almost four years until August 2018. Since 2017, he has also been chairman of Hong Kong Express, Hong Kong Airlines’ low-cost sister, which HNA recently agreed to sell to Cathay Pacific for HK$4.93 billion.
Cathay’s announcement of the deal contained a warning that an HK Express shareholder planned to contest it. That shareholder is Zhong, according to two sources with direct knowledge of the issue. They declined to be identified because they were not authorized to speak to the media.
In a further sign that the relationship between Zhong and HNA had soured, court papers show that HNA in December sued the company through which Zhong holds his 27 percent stake in the airline, seeking repayment of a HK$854 million debt from 2010.
A representative for Zhong did not provide comment.
CONTROL DISPUTES
Since the April 1 meeting, Frontier has aligned itself with Zhong, working to appoint him chairman of the airline as part of efforts to seize control and investigate its financial ties with HNA.
Late last week they won an injunction that blocked directors and executives from removing or destroying the airline’s documents.
That followed a week in which both Zhong and airline executive Hou Wei – still listed on its website as chairman – claimed control and fought over who had access to the company’s headquarters.
Adding to the confusion, a group called Grand City Investment Capital Limited this week said it owned the Frontier stake after a transfer dated April 11.
A spokesman for Grand City declined to discuss his company’s ownership. Frontier disputes Grand City’s claim to the stake.
Frontier and Zhong have also accused HNA of “embezzlement of HKA assets and serious financial misappropriation by HNA Group parties” – accusations that HNA has denied.
They and other shareholders are still demanding access to the airline’s 2018 accounts and details of how it lost so much money before they address its HK$2 billion capital shortfall.
Amid the court orders and competing statements uncertainty remains over who is in charge – although both sides have gone to lengths to ensure the airline keeps operating normally.
“There are so many moving parts that corporate control is under dispute because the changes are happening too rapidly for the company to organize coherently,” said Andrew Collier, managing director of Orient Capital Research, which focuses on China. He described HNA as “a poster child for overexpansion of China’s worst conglomerates.”
He added: “Because there is always a lack of transparency at HNA, this makes it twice as hard to figure out what the nature of the dispute is.”
(Reporting by Jennifer Hughes, Julie Zhu, Kane Wu and Alun John; Additional reporting by Shellin Li and Jamie Freed; Editing by Gerry Doyle)
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A man looks out at a flooded residential area in Gatineau, Quebec, Canada, April 24, 2019. REUTERS/Chris Wattie
April 25, 2019
MONTREAL/OTTAWA (Reuters) – Rising waters are leading to further evacuations in central Canada, with the mayor of the country’s capital Ottawa declaring a state of emergency, and Quebec authorities warning that a hydroelectric dam was at risk of breaking.
Ottawa Mayor Jim Watson declared a state of emergency for the city in response to rising water levels along the Ottawa River and weather forecasts that called for significant rainfall on Friday.
In a statement on Twitter, Watson asked for help from the Canadian province of Ontario and the country’s military.
He warned that “flood levels are currently forecasted to exceed the levels that caused significant damage to numerous properties in the city of Ottawa in 2017.”
Spring flooding has killed one person and forced more than 900 people from their homes in Canada’s Quebec province as of Thursday at 1 p.m., according to a government website.
Quebec’s Public Security Ministry warned on Thursday that the hydroelectric dam at Bell Falls on the Rouge River in the western part of the province was at risk of failure because of rising water levels.
Quebec’s provincial police said 250 people were protectively being removed from their homes as of late afternoon in case the dam breaks.
(Reporting by Allison Lampert and David Ljunggren; Editing by James Dalgleish)
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FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company Goldman Sachs (GS) is seen on the clothing of a trader working at the Goldman Sachs stall on the floor of the New York Stock Exchange, United States April 16, 2012. REUTERS/Brendan McDermid
April 25, 2019
By Elizabeth Dilts
NEW YORK (Reuters) – Goldman Sachs Group Inc is expanding a financial advisory service for top executives to target millions of other affluent employees at some of the biggest U.S. companies, as it seeks to build its retail and wealth management businesses.
Goldman’s Ayco unit provides high-end tax and wealth advice to top executives at some 400 companies, including 60 Fortune 100 companies. According to the bank’s estimates these firms employ at least 8 million people and Goldman now wants them as clients, too.
Goldman began rolling out a new Ayco personal finance website for rank-and-file workers in October and has so far signed up 70 companies. By the end of 2019, the bank hopes to have signed up around 100 companies, which employ 2 million employees, Larry Restieri, the unit’s chief executive, said in an interview this month.
In recent weeks, it has also started pitching high-yield savings accounts and personal loans from its online bank Marcus through the Ayco website, Restieri added.
The rollout is the latest effort of the Wall Street trading and advisory firm to reposition itself as a traditional bank.
Goldman seeks to reach a wider customer base. Its trading business has been shrinking. In the first quarter, the bank’s corporate clients helped it grow mergers and acquisitions revenue but overall revenue slumped.
Chief Executive David Solomon must deliver on a target of $5 billion in new annual revenue by 2020 or risk getting squeezed by rival behemoths like JPMorgan Chase & Co and Bank of America Corp . [https://tmsnrt.rs/2H81K9a]
The bank took its first step toward that goal with the creation of Marcus in 2016. In March, Goldman announced a co-branded credit card with Apple Inc, which will connect it to hundreds of millions of iPhone users.
Expanding Ayco is the next step into the $9 trillion U.S. mass affluent customer market and offers the bank an opportunity to gain new clients cheaply.
The primary cost to the bank – developing the online platform – will be offset by fees companies will pay to offer the service to their workers, Goldman executives said.
Some investors fret Goldman is expanding into an area where it has little experience. They worry the bank is making $40,000 personal loans and extending credit card debt to iPhone users when the economy is showing signs of slowing.
Goldman thinks otherwise. Executives there say the Ayco expansion is part of a bigger plan, culminating with the launch of a retail wealth management offering later this year.
Restieri said it is too early to put numbers on the contribution the expanded Ayco could make toward Goldman’s $5 billion goal.
In November, the bank said that it was halfway toward meeting that target and that Ayco, along with private wealth management and asset management, had so far contributed $400 million.
ONLINE QUESTIONNAIRE
Ayco’s website, called Financial Wellness, starts with an online questionnaire. Employees of corporate clients such as Google’s parent Alphabet Inc answer questions like, “Do you generally live within your means?” and “Do you have an emergency fund?”
After workers answer questions about their savings, credit card debt, student loans and other finances, Ayco offers what it calls solutions such as Marcus savings accounts, personal loans or products from other financial institutions.
Adoption rates are a question. One company that offered a financial incentive got as much as 60 percent of its employees to use Financial Wellness. Others have seen lower pick-up rates.
But as Ayco rolls out its mass-market offering, Restieri thinks it will benefit from brand cachet of having already served the bosses.
“When this offering is presented to employees, the top C-suite of those companies would have already been using us for 10-15 years,” Restieri said.
(Reporting By Elizabeth Dilts; editing by Neal Templin and Paritosh Bansal)
Source: OANN
The progressive organization Indivisible has asked the 20 candidates for the Democratic Party’s nomination to sign a pledge vowing to support the eventual nominee, BuzzFeed News reports.
Indivisible posted the pledge on their website last Tuesday. It states:
“We must defeat [President] Donald Trump. The first step is a primary contest that produces a strong Democratic nominee. The second step is winning the general election. We will not accept anything less.”
The group then lists three pledges: to “make the primary constructive” by focusing on issues and ideas, to “rally behind the winner,” and support the eventual nominee “whoever it is,” and to “do the work to beat Trump” by agreeing to help the Democratic nominee’s campaign.
As of Thursday morning, no candidate has signed the pledge, although the candidates did sign a pledge issued by the Democratic National Committee vowing to identify as members of the Democratic Party, to “run as a Democrat” and to “serve as a Democrat if elected.”
Source: NewsMax America
Earlier, the US formally designated Iran’s Islamic Revolutionary Guard Corps (IRGC) military unit a foreign terrorist organization, with Tehran responding by placing first US Central Command and then the entire US military on its own list of terrorist groups.
The US State Department has waived a ban on US travel to government officials, businessmen, and workers of non-governmental organizations that have dealings with the IRGC, two notices outlined by Secretary of State Mike Pompeo on the Federal Register’s website have indicated.
Specifically, the exceptions allow individuals working with the US in Iraq and Lebanon to also maintain contacts with the IRGC without repercussions. Iran and the US each engage in diplomatic and military efforts in both countries, including in the fight against ISIS and other widely recognized terrorist groups.
Pompeo specified that the travel ban waivers were based in US national security and foreign policy interests.
In one of the two explanatory notes, the secretary of state noted the sanctions wouldn’t apply “to any business, organization, or group, whether public or private, solely based on its provision of material support to any foreign government sub-entity that has been designated as a foreign terrorist organization.” In the other, he indicated that the sanctions wouldn’t apply “to any ministry, department, agency, division or other group or subgroup within any foreign government” unless they were already covered by existing US restrictions.
Greg Reese joins Harrison to speak on the Restart Iran topic.
The exemptions are significant and unusual, because under US law, foreigners believed to have provided “material support” to organizations designated as foreign “terrorist” groups are traditionally banned from entry into the country.
The notices confirm an earlier Reuters report, citing three officials familiar with the matter, which indicated that foreigners working with the IRGC wouldn’t necessarily face US travel restrictions.
The US IRGC ‘terrorist organization’ took effect on April 15, one week after President Trump announced that the US would be making the decision. The controversial move, which contradicts the traditional definition of a terrorist as a non-state actor, was the first time that Washington designated a portion of a foreign state’s military as a ‘terrorist’ group.
News of the exemption also comes amid a report by AP citing anonymous officials, congressional aides and advisors familiar with the matter who said that the administration may allow for loophole workarounds to Iranian oil exports if the White House doesn’t renew import exemptions on Iranian oil once the May 2 deadline granting waivers to countries including China, India, Japan, South Korea and Turkey expires.
Officials from China and Turkey have already indicated that they would look for ways to continue imports even if the sanctions waivers are not renewed.
Iranian Foreign Minister Mohammad Javad Zarif said Wednesday that he doesn’t think Trump wants a war with Iran, but warned that he might be ‘goaded’ into one by individuals like National Security Advisor John Bolton or Israeli Prime Minister Benjamin Netanyahu. Accusing the US of pursuing a “very dangerous” policy toward Tehran, Zarif said Trump was wrong if he thought sanctions could get Iran to change course, quipping that Iranians were “allergic to pressure.”
Traditionally poor diplomatic relations between Iran and the US took a turn for the worse in May 2018, after Washington unilaterally withdrew from the 2015 Iran nuclear deal and imposed several rounds of tough sanctions, including oil restrictions meant to drive the country’s energy exports down “to zero.” Tehran has responded by saying it would continue oil exports, and threatened that it would blockade the Strait of Hormuz waterway carrying a fifth of the world’s oil supplies if threatened. The US and Iran have not enjoyed normal diplomatic relations since the Islamic Revolution of 1979.
Owen Shroyer delivers an epic rant about the U.S. soldiers who were disrespected at the southern border by members of the Mexican Army.
Source: InfoWars
House Democrats are finding out how difficult it is to provide Congressional oversight.
Axios reported the White House has figured out there’s not much Democrats can do if the administration continues to say no to everything. The administration has blocked several key administration officials from appearing before the House Oversight Committee.
The Washington Post reported the latest example is the administration’s refusal to allow senior adviser Stephen Miller to testify regarding immigration policy.
Meanwhile, Axios noted that any of those who have actually been subpoenaed by the committee could be held in contempt if they do not appear. But it said the subpoenas are difficult to enforce. And the website said recent contempt cases have “fizzled,
Axios also pointed out President Donald Trump and the Trump Organization have filed suit against Oversight Committee chairman Elijah Cummings, D-Md., to block a subpoena for the president’s financial records.
But it said that strategy could have a downside, the website said.
“It totally undercuts the argument that we’ve been transparent and because there was no criminal wrongdoing that’s why we encouraged everyone to cooperate,” said a former senior White House official. “Now we look like we’ve got something to hide and we’re not being open and transparent.”
Still, the Trump White House is unlikely to face any consequences in the short-term, Axios said.
But one Democratic aide said there are ways of getting past the White House efforts.
“One trend we’ve been seeing more and more, and a way we can get new information, is from whistleblowers,” the aide said.
Source: NewsMax Politics
Michael Savage believes that Islamist terrorists may have been behind the Notre Dame blaze, and he is being vocal about it. In response, Twitter has reportedly moved to shadow ban Savage to stop his opinion spreading.
Savage’s reasoning is that terrorists attempted to set the cathedral on fire as recently as 2016, in addition to the fact that hundreds of churches in France have been desecrated over the past year.
why do I say ‘TERRORISTS SET NOTRE DAME ABLAZE? in 2016 3 RADICAL ISLAMISTS WERE CAUGHT IN FRONT OF THE CATHEDRAL WITH GAS CANNISTERS IN THEIR CAR. ARRESTED TRIED AND SENTENCED JUST LAST WEEK https://t.co/B8Pxj9bkjP
— Michael Savage (@ASavageNation) April 15, 2019
how can the
investigation’ of possible arson or terror be ‘over’ when the ashes are still smoldering! LIES, COVER-UP. USE COMMON SENSE. THIS WAS TERRORISM— Michael Savage (@ASavageNation) April 16, 2019
Savage found that after he expressed that opinion, Twitter stopped a lot of other users from seeing his posts.
“It became apparent Sunday after being temporarily blocked last week following the burning of Notre Dame, that now he may join the rebels in the shadows,” wrote Amanda Metzger, who works for Savage on his website.
“Some followers who used to receive notifications of his tweets on their smartphones no longer received them,” she added.
Metzger also noted that Savage “suddenly found his Periscope live broadcast was limited in the number of viewers.” (Periscope is owned by Twitter).
Infowars’ Alex Jones is still permanently banned from Twitter. No explanation was ever given, other than the vague suggestion that Jones ‘violated’ T&C’s.
It appears Savage now finds himself in the Twitter sin bin along with Jones and many others.
“Who is in the shadows deciding who is heard and who is silenced? Someone in a dark room behind a bright screen in a foreign country with no First Amendment?” Metzger asked, adding “maybe it’s an American trying to create a safe space online.”
“I can’t think of anything less safe – anything more damaging – than limiting the exchange of ideas,” she continued. “We’re in a dangerous place when we’ve forgotten the phrase, ‘I disapprove of what you say, but I will defend to the death your right to say it.’”
“We are getting closer to the point where federal regulation of social media is inevitable. The airwaves are regulated. In this case, my plea is that there is some transparency in who is banned, blocked or deplatformed and why,” Metzger urged, adding “I would prefer no one find themselves silenced by another.”
“Maybe you don’t care who was deplatformed last year. You didn’t agree with them anyway and seeing their tweets and posts ruined your day,” Metzger concluded. “But if you don’t stand up for them now, they won’t have a voice to come to your defense when you are silenced.”
In related news, it appears that Twitter is planning to allow users to report tweets that they believe are an attempt to ‘mislead’ people at election time.
What could go wrong there?
In a blog post regarding the change, Twitter declared that “Any attempts to undermine the process of registering to vote or engaging in the electoral process is contrary to our company’s core values.”
The move appears to be an effort on behalf of Twitter to adhere to the EU ‘Code of Practice against disinformation’ which Facebook and Google have also signed up to.
Source: InfoWars
FILE PHOTO: A woman is seen in front of the logo of Zozo, which operates Japan’s popular fashion shopping site Zozotown and is officially called Start Today Co, at an event launching the debut of its formal apparel items, in Tokyo, Japan, July 3, 2018. REUTERS/Kim Kyung-Hoon
April 25, 2019
By Ritsuko Ando
TOKYO (Reuters) – Japanese online fashion retailer Zozo Inc said it expects its profit to recover in the current fiscal year, after booking its first-ever annual drop in earnings on a failed experiment with bespoke tailoring and clashes with fashion brands.
But Zozo’s results also show its liabilities mounting and cash position dwindling, underscoring worries about the finances of the company that runs the popular Zozotown online mall.
Zozo has captured nearly half of Japan’s online sales of mid- to high-end clothes by setting up a website catering to fashion-forward, higher-income customers.
It has sought to transform itself in recent years from an e-commerce site into a tech-retail hybrid by starting a private brand and launching a made-to-measure service using a bodysuit that allowed users to upload measurements online.
The bodysuit, along with billionaire CEO Yusaku Maezawa’s plans for a lunar flyby as the first private passenger on Elon Musk’s SpaceX mission, had helped spread Zozo’s name globally. The end of the Zozosuit has cast a shadow on its strategy.
Many people who ordered the bodysuit did not use it to buy clothes, leaving Zozo saddled with the huge cost of distributing the suits without seeing returns. It also struggled to cope with orders that did come in, forcing some customers to wait several months for delivery.
Zozo’s operating profit for the year ended March fell 21.5 percent to 25.7 billion yen ($229 million). That was worse than its most recent forecast of 26.5 billion, which had been marked down from an initial projection of 40 billion yen.
Adding to its woes, some fashion brands that helped Zozo build its reputation have left the site. Some of them launched their own e-commerce sites, while others grew unhappy with what they saw as excessive discounting at the Zozotown online mall.
Apparel company Onward Holdings Co, fashion retailer United Arrows and childrens’ brand Miki House have left the site.
Zozo has been trying to regain momentum by adding more mass-market retailers such as Shimamura, but some analysts say this has hurt its initial, fashion-focused image.
Shares of Zozo have nearly halved in the past year on fears that its popularity may be waning, and that its cash position looked weak. The company secured a 15 billion yen commitment line from banks in late March.
Thursday’s results show Zozo’s cash and cash equivalents fell to 21.6 billion yen by end-March, versus 24.6 billion a year earlier, while total liabilities jumped to 56.3 billion from 29.9 billion.
But the company said it expects business to pick up as Japanese consumers were just beginning to buy clothes online.
It forecast a 24.7 percent rise in operating profit to 32 billion yen for the current financial year.
($1 = 111.9300 yen)
(Reporting by Ritsuko Ando; Editing by Himani Sarkar)
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