Finance

Welcome to Crypto Valley

The Swiss city of Zug embraces digital currency. Some worry that the money might be a little too secret.

4317_FIN_ZUG-illo-CMS — Illustration: Thomas Colligan for Bloomberg Businessweek

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By Hugo Miller

October 10, 2017 at 4:01 AM UTC

This article is for subscribers only.

This article is part of the October 16, 2017 issue of businessweek.

In May a devastating computer virus called WannaCry locked up the systems of carmakers, train operators, and even hospitals. The hackers demanded users pay to get their data back with the digital currency bitcoin. Some did, and when the cyber extortionists needed to swap tens of thousands of dollars worth of bitcoin in August, they turned to ShapeShift, a digital currency exchange based in the lakeside town of Zug, Switzerland.

Only part of the money was laundered before the transactions were spotted and shut down. ShapeShift declined to discuss the specifics of the case, but it said in a statement that it’s working with law enforcement and taking steps to ensure nothing similar happens again. Still, the event highlights one of the risks both Zug and Switzerland may face as the town tries to become a hub for the burgeoning cryptocurrency industry. Digital money could help the Swiss rebound from a decade-long assault on bank secrecy, but it also brings back questions about whether the country is luring illicit cash.