Crypto Crime

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Signature Bank Faced Criminal Probe Ahead of Firm’s Collapse

US prosecutors were investigating Signature Bank’s work with crypto clients before regulators suddenly seized the lender this past weekend, according to people familiar with the matter.

Justice Department investigators in Washington and Manhattan were examining whether the New York bank took sufficient steps to detect potential money laundering by clients — such as scrutinizing people opening accounts and monitoring transactions for signs of criminality, the people said. The Securities and Exchange Commission also was taking a look, two people said, asking not to be named because the inquiries are confidential.

https://archive.ph/gDelT

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Crypto exchange Binance to halt sterling transfers

Binance is halting its sterling deposits and withdrawals, a company spokesperson said on Tuesday, a month after the world’s largest crypto exchange ceased dollar transfers.

Binance has been informed by its partner for sterling transfers, Paysafe, that it would halt its services from sterling transfers for new users were stopped on Monday, it said.

The cessation of sterling transfers, first reported by crypto news outlet The Block, is the latest obstacle for Binance in accessing traditional currencies. Binance last month suspended all dollar bank transfers amid a growing crackdown on crypto by U.S. authorities.

The Justice Department is also investigating Binance, run by billionaire CEO Changpeng Zhao, for suspected money laundering and sanctions violations, Reuters has previously reported.

https://www.cnbc.com/2023/03/14/crypto- ... sfers.html

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Justice Department Investigation Leads to Takedown of Darknet Cryptocurrency Mixer that Processed Over $3 Billion of Unlawful Transactions

The Justice Department announced today a coordinated international takedown of ChipMixer, a darknet cryptocurrency “mixing” service responsible for laundering more than $3 billion worth of cryptocurrency, between 2017 and the present, in furtherance of, among other activities, ransomware, darknet market, fraud, cryptocurrency heists and other hacking schemes. The operation involved U.S. federal law enforcement’s court-authorized seizure of two domains that directed users to the ChipMixer service and one Github account, as well as the German Federal Criminal Police’s (the Bundeskriminalamt) seizure of the ChipMixer back-end servers and more than $46 million in cryptocurrency.

“Today's announcement demonstrates the FBI's commitment to dismantling technical infrastructure that enables cyber criminals and nation-state actors to illegally launder cryptocurrency funds,” said FBI Deputy Director Paul Abbate. “We will not allow cyber criminals to hide behind keyboards nor evade the consequences of their illegal actions. Countering cybercrime requires the ultimate level of collaboration between and among all law enforcement partners. The FBI will continue to elevate those partnerships and leverage all available tools to identify, apprehend and hold accountable these bad actors and put an end to their illicit activity.”

https://www.justice.gov/opa/pr/justice- ... sed-over-3

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FTX influencers face $1B class-action lawsuit over alleged crypto fraud promotion

A class-action suit led by Edwin Garrison has been filed against “FTX influencers,” mostly on YouTube, seeking $1 billion because they “promoted FTX crypto fraud without disclosing compensation.” The suit was filed on March 15 in the Southern District of Florida, Miami Division.

Kevin Paffrath, Graham Stephan, Andrei Jikh, Jaspreet Singh, Brian Jung, Jeremy Lefebvre, Tom Nash, Ben Armstrong, Erika Kullberg and Creators Agency LLC are named as respondents. The defendants are eight YouTubers, the talent management company that handled the promotion of FTX and the agency’s founder.

https://cointelegraph.com/news/ftx-infl ... -promotion

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FTX Claims Sam Bankman-Fried Plundered $2.2 Billion in ‘Loans and Payments’ as CEO

Intelligencer reports that Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, received a staggering $2.2 billion in loans and payments while allegedly committing a massive fraud within the business, according to a late-night announcement made by liquidators on Wednesday. As federal investigators construct their case against Bankman-Fried, who is currently facing 12 charges, including money laundering and bank fraud, the revelation may have a significant impact on his case.

https://www.breitbart.com/tech/2023/03/ ... ts-as-ceo/

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Coinbase reportedly considers overseas expansion amid US crackdown

Crypto trading platform Coinbase has reportedly reached out to institutional clients about possible plans to set up a trading platform outside of the US, three people with direct knowledge told Bloomberg.

With crypto-friendly banks dwindling and regulatory scrutiny increasing, the potential move comes as no surprise. US regulators have been probing the platform’s nefarious dealings for years — the New York Department of Financial Services (NYDFS) slapped the firm with a $50 million penalty in January after an investigation found “long-standing failures” in its anti-money laundering compliance. According to NYDFS, these failures allowed serious criminals to move their crypto via the platform. Coinbase was also ordered to invest an extra $50 million in its compliance program.

https://protos.com/coinbase-reportedly- ... crackdown/

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Binance Answers Elizabeth Warren Without Addressing Financials

Crypto exchange Binance responded to harsh criticism and demands for answers about its business from US senators including Elizabeth Warren.

In a 14-page letter seen by Bloomberg, Chief Strategy Officer Patrick Hillmann described Binance’s work to build out its compliance program and team — but he also provided scant details on the company’s finances. The response failed to provide a lot of the information lawmakers asked for in their March 1 letter that called Binance a “hotbed” of illegal activity. Hillmann’s response said the company prioritizes regulatory compliance, citing “misconceptions” about the company.

A slew of agencies including the Justice Department, the Securities and Exchange Commission and Internal Revenue Service have been probing Binance for several years over various potential violations.

https://archive.ph/b7lAa

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$2.5 Billion Stolen From US Victims via Crypto Investment Scams in 2022: FBI Report

Despite the predominantly bearish year for the cryptocurrency industry, 2022 was fruitful for criminals. They stole nearly $2.6 billion from American consumers using investment schemes related to bitcoin and other digital assets. In contrast, such fraud resulted in “just” $907 million in 2021.

“Crypto investment scams saw unprecedented increases in the number of victims and the dollar losses to these investors. Many victims have assumed massive debt to cover losses from these fraudulent investments,” the FBI report reads.

The agency disclosed that the most targeted group is people aged 30 to 49. Previous studies have shown that such individuals are pretty active in the crypto field, while older investors have not yet embraced the asset class.

https://www.philiacryptonews.com/124190 ... fbi-report

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General Bytes crypto ATMs exploited for over $1.6 million

The largest manufacturer of Bitcoin ATMs, General Bytes, disclosed that attackers had stolen more than $1.6 million by exploiting a vulnerability in their software. The company released a statement on March 18 disclosing the breach, and urging operators of their ATMs to immediately upgrade their software to patch the devices.

https://web3isgoinggreat.com/?id=genera ... -6-million

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Did Justin Sun’s diplomatic immunity get revoked?

The cryptocurrency industry is abuzz with rumors that His Excellency Justin Sun, founder of the TRON blockchain and ambassador to the World Trade Organization (WTO) for Grenada, has lost his ambassadorship, and possibly his Grenadian citizenship, as well.

The billionaire faces an onslaught of regulatory and law enforcement scrutiny, with his stablecoins (TUSD, USDJ, and USDD) depegging, his exchange tokens collapsing, and several prominent Chinese investors, supposedly, accusing Sun of fraud.

No one is 100% sure where Sun currently resides, though he’s been seen in Singapore and has been making claims of returning to Hong Kong.

https://protos.com/did-justin-suns-dipl ... t-revoked/

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SEC Charges Crypto Entrepreneur Justin Sun and his Companies for Fraud and Other Securities Law Violations

The Securities and Exchange Commission today announced charges against crypto asset entrepreneur Justin Sun and three of his wholly-owned companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent), for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT). The SEC also charged Sun and his companies with fraudulently manipulating the secondary market for TRX through extensive wash trading, which involves the simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership, and for orchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.

The SEC simultaneously charged the following eight celebrities for illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation.

• Lindsay Lohan

• Jake Paul

• DeAndre Cortez Way (Soulja Boy)

• Austin Mahone

• Michele Mason (Kendra Lust)

• Miles Parks McCollum (Lil Yachty)

• Shaffer Smith (Ne-Yo)

• Aliaune Thiam (Akon)

“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” said SEC Chair Gary Gensler. “As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX. Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.”

https://www.sec.gov/news/press-release/2023-59

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Coinbase warned by SEC of potential securities charges

The SEC issued crypto exchange Coinbase a Wells notice, warning the exchange that it identified potential violations of U.S. securities law.

The notice is the second warning from the SEC to a crypto entity after a February notice to stablecoin issuer Paxos.

https://www.cnbc.com/2023/03/22/coinbas ... arges.html

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Do Kwon Arrested in Montenegro: Interior Minister

The founder of Terraform Labs, Do Kwon, appears to have been arrested in Montenegro, according to a tweet by the country's minister of interior, Filip Adzic.

"Montenegrin police have detained a person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon, co-founder and CEO of Singapore-based Terraform Labs," Adzic tweeted.

Kwon has been the target of several investigations and was even on Interpol's red notice after stablecoin terraUSD (UST) and its $40 billion ecosystem imploded last year, sending shockwaves across the crypto markets.

The suspect was detained at the Podgorica airport with falsified documents, Adzic added, saying he was still waiting for official confirmation of identity.

https://www.coindesk.com/business/2023/ ... -minister/

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Following Do Kwon's arrest in Montenegro, the US has charged him with conspiracy to defraud, commodities fraud, securities fraud, wire fraud and conspiracy to engage in market manipulation.

https://www.docdroid.net/62KjRHY/kwonzi ... dition-pdf

https://twitter.com/ahcastor/status/1639028390220148736

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Exercise Caution with Crypto Asset Securities: Investor Alert

Investors should be aware that this level of management discretion undermines any suggestion that a proof of reserves offers protections similar to a financial statement audit. In sum, investors should exercise extreme caution when relying on proof of reserves to conclude that a crypto asset entity has sufficient reserve assets to meet customer liabilities.

https://www.sec.gov/oiea/investor-alert ... stor-alert

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CEO of Titanium Blockchain Sentenced for $21M Cryptocurrency Fraud Scheme

The CEO and founder of Titanium Blockchain Infrastructure Services Inc. (TBIS) was sentenced today to four years and three months in prison for his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering (ICO) that raised approximately $21 million from investors in the United States and overseas.

According to court documents, Michael Alan Stollery, 54, of Reseda, California, touted TBIS – a purported cryptocurrency investment platform – as a cryptocurrency investment opportunity, luring investors to purchase “BARs,” the cryptocurrency token or coin offered by TBIS’s ICO, through a series of false and misleading statements. Although he was required to do so, Stollery did not register the ICO regarding TBIS’s cryptocurrency investment offering with the U.S. Securities and Exchange Commission (SEC), nor did he have a valid exemption from the SEC’s registration requirements.

https://www.justice.gov/opa/pr/ceo-tita ... aud-scheme

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OKX stopped serving Canadians this morning. It couldn't meet today's deadline for filing with securities regulators.

Next up: Coinbase, Kraken and Gemini.

Unless they file by today, all three will have to exit Canada, else they'll be operating here illegally.

https://twitter.com/jp_koning/status/16 ... 3110608899

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Chinese users bypassed Binance KYC thanks to help from Binance

A report by CNBC claims to have revealed how Binance employees and volunteers are helping Binance users to avoid KYC checks.

CNBC translated a Chinese language Binance Discord server and Telegram group and found that many messages were from Binance staff showing customers how to lie about their country of origin to get Binance Debit cards.

https://protos.com/chinese-users-bypass ... m-binance/