What do the Pandora Papers mean for crypto?

Coin Rivet investigates what the shadowy world of centralised off-shore banking means for the decentralised finance industry

As the Pandora Papers rock the world, we take a look at what the revelations surrounding centralised finance mean for the crypto industry.

Jaw-dropping concerns in the documents include a $100m real estate empire stretching from London to Malibu, owned by the King Abdullah II of Jordan. Unfortunately, the ruler has banned Jordan’s citizens from accessing the files released by the international consortium of investigative journalists (ICIJ).

There’s also the Czech prime minister – Andrej Babiš – and his brand new $22m chateau in the South of France, apparently acquired through secretive off-shore centralised financial institutions.

Financial havens have emerged in the likely places such as the City of London and Cyprus, but also the unusual, with South Dakota appearing as a premier destination for off-shore banking due to financial secrecy laws.

The papers are even sending shockwaves through political spheres, with Boris Johnson’s Conservative Party embroiled in an unfolding scandal surrounding Mohamed Amersi, Lubov Chernukhin, and Viktor Fedotov who’ve collectively donated millions to the party in recent years.

Anneliese Dodds, the chair of the British Labour party (opposition), was quick to highlight how the financial document leak has smashed public trust in centralised finance.

“There can’t be one rule for senior Conservatives and their chums and another rule for everyone else,” said the politician.

The depth of hidden wealth amongst the world’s elite is remarkable, and inquiries have been announced in India, Pakistan, Mexico, Spain, Brazil, Sri Lanka, Australia, Panama, and the Czech Republic.

Is trust in centralised finance broken?

Coin Rivet spoke to George Benton – co-founder of the UK’s first university blockchain society and operations lead at Encode Club – to gain an insight into what the implications of the Pandora Papers may mean for the crypto space and decentralised finance industry.

Encode Club is an online blockchain education accelerator program aiming to help spread the key programming skills needed to engage with blockchain technologies.

“I think that the Pandora Papers story has worsened further the public’s lack of trust in the traditional financial and political systems, which seems to be at an all time low right now,” said Benton.

Bitcoin was born out of the financial crisis of 2008, due to a distrust of investment bankers and central banks.

“It will be very interesting to see what is created over the next few years as a result of the current situation, especially now that DeFi provides us with the tools to make real change to the way that the financial system operates.”

New avenues for the industry

Benton was keen to highlight the potential avenues this global scandal has opened up for decentralised finance to put forward a genuine offering for a better system to the public.

“I think that the Panama Papers story will have an impact on the public’s perception of finance and the ultra rich,” he explained.

Crypto and DeFi are building a more equitable world of finance that is inherently more transparent, fair and accessible.

“Individuals don’t need to be ‘High Net Worth’ or ‘Accredited Investors’ in order to participate in early stage funding rounds of young companies where a lot of fortunes have been made!”

Indeed, the spotlighting of the shadow centralised finance world in the public conscience has left many questioning the integrity of a system which effectively offers a different system to the rich and powerful.

“Additionally, the transparency of blockchain means that you can see how everything operates,” he added.

“And if you don’t like the way something is being done, you can fork the project and build it how you think it should be built. This is the power of decentralised finance.”

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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