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Austria Warns of Crypto Scam: Authorities Seize €6 Million, Arrest Dozens in Raid

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In a coordinated action, the authorities from Austria, Cyprus, and the­ Czech Republic worked toge­ther to take down a crypto scam based in Austria. The scam had be­en running from Decembe­r 2017 to February 2018. Six people we­re arrested for alle­gedly stealing money from inve­stors, with an estimated loss of €6 million (around $6.5 million).

The scam involve­d a fake online trading company that was selling a ne­w cryptocurrency token through an initial coin offering (ICO). To attract victims, the­ criminals claimed they had deve­loped their own trading software and promise­d high profits, taking advantage of the booming Bitcoin market at the­ time.

Europol, the law enforce­ment agency of the Europe­an Union, pointed out the warning signs in this case. Typically, an ICO will be­ transparent and provide clear information about the­ team members re­sponsible for it. However, in this instance­, there was a lack of transparency re­garding both the team membe­rs involved and the underlying algorithm of the­ cryptocurrency.

The crypto scam fell apart when the pe­rpetrators suddenly shut down their online­ presence in Fe­bruary 2018, leaving investors with nothing. After raiding six prope­rties, the authorities se­ized over €500,000 in cryptocurrency, €250,000 in cash, luxury ve­hicles, and property, all belie­ved to be linked to the­ fraudulent activity.

Major Takedown in Crypto Scam

Across the English Channe­l, another crypto scam has come to an e­nd. The South West Regional Organize­d Crime Unit (SWROCU) successfully prosecute­d two British men, Jake Lee­ (38) and James Heppel (42), for ste­aling over £5.7 million (approximately $7.1 million) worth of cryptocurrency from victims around the­ world.

Lee and Heppe­l used a sophisticated technique­ called domain spoofing, where the­y replicated the we­bsite of the popular cryptocurrency e­xchange Blockchain.com. This allowed them to trick victims into re­vealing their login crede­ntials and steal Bitcoin from their digital wallets. The­ir criminal operation targeted a stagge­ring 55 victims across 26 countries, amassing a significant amount of stolen assets.

The­ investigation began in 2018 when Le­e was apprehende­d by the Avon and Somerset Police­ on suspicion of money laundering. After the­ discovery of digital devices and Bitcoin walle­t recovery see­ds, the SWROCU launched a probe into Le­e’s activities. A parallel inve­stigation into a separate crypto scam re­ported by a Wiltshire victim ultimately le­d them to Heppel.

Both Le­e and Heppel have­ has been sente­nced for their crimes. Le­e receive­d a four-year prison sentence­, while Heppel was se­ntenced to 15 months. Additionally, a confiscation order of ne­arly £1 million was issued against Lee to compe­nsate his victims.

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$60 Million: Lazarus Group’s Railgun Laundering Surge Revelation

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The Lazarus Group, a notorious cyberhacking collective with ties to North Korea, once again made headlines in June 2022 with a brazen attack on Harmony’s Horizon Bridge. The FBI recently confirmed what many suspected: the Lazarus Group was indeed behind the audacious hack that siphoned off a staggering $99.7 million.

This revelation validates earlier assertions by Elliptic, who was the first to point the finger at North Korea following the discovery of striking similarities between the Horizon Bridge hack and Lazarus Group’s past exploits, particularly in blockchain laundering techniques.

The Harmony blockchain’s Horizon Bridge, designed to facilitate cross-chain transactions, fell victim to the Group’s sophisticated tactics, exploiting vulnerabilities exacerbated by its over-centralized nature. This vulnerability to social engineering attacks provided the perfect opening for the hacker group’s calculated assault.

Following the heist, the Lazarus Group utilized Tornado Cash, an Ethereum-based mixer, to obfuscate the illicitly obtained funds. However, their reliance on this method proved short-lived as the US Treasury swiftly sanctioned Tornado Cash in response to its complicity in aiding the cybercriminal activities of the Lazarus Group.

Tracking the Culprits: Lazarus Group’s Crypto Journey

Elliptic’s meticulous research uncovered the intricate web of transactions orchestrated by the Lazarus Group, leading to the eventual tracing of stolen funds through Tornado Cash. Subsequent movement of funds through Railgun, a privacy-based DeFi protocol, underscored the group’s adaptability in the face of sanctions.

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Source

However, the efficacy of Railgun as a laundering tool was called into question as Elliptic’s analysis revealed that a significant portion of funds from the Harmony hack could be traced back, highlighting the limitations of mixing services when dealing with disproportionately large transfers.

In a bid to launder the tainted funds further, the Lazarus Group attempted to deposit them into various cryptoasset exchanges. Fortunately, vigilant exchanges like Binance and Huobi intercepted and seized a portion of these funds, underscoring the importance of robust blockchain analytics solutions in thwarting illicit activities.

The Harmony Bridge hack serves as a stark reminder of the ever-evolving landscape of cyber threats and the critical role of proactive measures in safeguarding against nefarious actors like the Lazarus Group. As authorities continue to crack down on illicit activities in the crypto sphere, vigilance remains paramount in preserving the integrity of blockchain ecosystems.

Crypto Scams Rampant In Russia, Central Bank Warns

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The Central Bank of Russia has warned about the rising number of financial frauds using cryptocurrencies to attract victims or receive payments. The central bank said that in 2023, almost all of the pyramid schemes and illegal brokers it detected involved crypto in some way.

The Central Bank of Russia report defines pyramid schemes as “fake investment projects” mostly online, spreading through Telegram and social media. In 2023, it identified 5,733 entities showing signs of illegal activities – 2,944 were pyramid schemes. This was an increase of 927 from the year before.

The report said, nearly 1,500 schemes accepted digital assets payments – the most common form of payment among those the bank uncovered and the number of illegal financial market players using crypto themes is growing.

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Source: CBR

Alongside pyramid schemes, illegal brokers and dealers also greatly favor digital assets. These entities offered investments in scam tokens or accepted virtual currency payments without licenses or registrations, ignoring legal requirements for financial middlemen.

The Central Bank worked with the Federal Antimonopoly Service and internet censor Roskomnadzor to block over 11,200 websites of illegal financial market participants and pyramid scheme operators.

Global Crypto Scams Fall, But Sanctions Breaches Rise

While crypto-related fraud increased in Russia, global trends moved the other way. US pyramid scheme research group Ponzi Tracker found the share of fraudulent investment programs significantly involving crypto fell from over 25% in 2022 to around 15% in 2023.

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Source: Chainalysis

Likewise, Chainalysis showed global revenue from crypto scams dropped 29.2% year-on-year, part of an overall decline in crypto crime. However, sanctions breaches were one of the few crime categories to increase in 2023 – with Russian entities driving much of this illegal activity.

While warning the public about crypto scam risks, the Russian government also took action to combat financial crimes overall. In 2023, the Central Bank initiated over 125 criminal cases and 620 administrative cases against alleged fraudsters.

The Central Bank urged the public to be vigilant and cautious about financial offers involving digital assets or promising high returns. It advised checking the legitimacy and reputation of any financial entity before making transactions.

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Crypto Heist: Hackers Swipe $500K in Phishing Onslaught

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MailerLite, an email service provider, recently fell victim to a targeted phishing attack that focused specifically on the crypto market. The breach, disclosed by the company to Decrypt, unfolded when a support team member inadvertently clicked on a deceptive link, entered their Google credentials, and completed a second-factor challenge. This unfortunate sequence of events granted unauthorized access to MailerLite’s internal system.

Once inside, the attackers executed a password reset for a specific user on the admin panel, thereby solidifying their control. MailerLite reported that the intruders, with this high level of access, were able to impersonate user accounts, concentrating their efforts exclusively on cryptocurrency-related profiles. A total of 117 accounts were compromised, leading to the unauthorized use of some accounts to launch phishing campaigns.

Affected accounts included prominent names in the crypto space such as CoinTelegraph, Wallet Connect, Token Terminal, and De.Fi, according to internet investigator ZachXBT. Decrypt, a leading crypto news platform, was also among the affected entities, though MailerLite assured that no emails were sent from its system, and the contacts list remained secure.

The attackers, exploiting the trust associated with MailerLite’s templates, successfully stole over $580,000, as revealed by ZachXBT. However, web3 security firm Blockaid estimated the total amount at over $600,000.

Crypto Training Boost: MailerLite Enhances Security Protocols

Upon discovering the breach, MailerLite promptly took action to identify and resolve the issue, putting an end to the access method used by the perpetrators. The company assured users that the breach has been fully stopped, and they are actively monitoring the situation. In response to the incident, MailerLite is committed to implementing necessary changes to internal processes, emphasizing employee adherence to security protocols, and enhancing security training across the organization.

This incident serves as a stark reminder of the vulnerabilities in the cryptocurrency space and the importance of robust cybersecurity measures to protect against targeted attacks. As the crypto market continues to grow, such incidents underscore the need for heightened awareness and security diligence from all stakeholders involved.

Crypto Scam Lands Ex-IcomTech CEO In Jail For Five Years

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A U.S. district judge sentenced Marco Ruiz Ochoa, the former CEO of IcomTech, to five years in prison on Friday for his role in a crypto scam that defrauded investors of millions of dollars. Ochoa pleaded guilty to wire fraud charges in September, admitting that he and his co-conspirators ran a Ponzi scheme disguised as a crypto mining and trading company.

According to federal prosecutors, IcomTech was a sham operation that offered investors high returns on their investments in crypto-related products. Ochoa and his associates claimed they had a successful crypto trading and mining business that generated daily client profits.

However, in reality, IcomTech did not have any legitimate crypto business. Instead, they used the investors’ money to fund their lavish lifestyles, buying luxury cars and clothes and hosting extravagant events. They also diverted some funds to other unrelated schemes and personal expenses.

The scam began to unravel in 2018 when investors started to request withdrawals from their accounts. Ochoa and his team gave them various excuses, delays, and fees to avoid paying them. They also continued to promote IcomTech, attracting more victims to their scheme.

By the end of 2019, IcomTech collapsed, leaving investors with nothing. The scam exposed Ochoa and his associates’ fraudulent activities and highlighted the risks of investing in unregulated and unverified crypto ventures.

Legal Repercussions For Crypto Scam Involvement

Ochoa is not the only one facing legal consequences for his involvement in the scam. The Commodity Futures Trading Commission (CFTC) has also filed charges against other IcomTech executives, namely David Carmona, Juan Arellano Parra, and Moses Valdez.

One of the notable aspects of the case is that Ochoa and his co-conspirators targeted Spanish-speaking communities, exploiting their trust and lack of awareness. Ochoa’s sentencing, therefore, serves as a deterrent and a warning to others in the crypto space who may be tempted to engage in or fall victim to fraudulent activities.

In addition to the five-year prison term, Ochoa received two years of supervised release and a forfeiture of $914,000 in criminal proceeds. This ruling by the U.S. district judge reflects the increasing attention and action the authorities are taking against crypto scams and frauds as the industry grows and evolves.

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Crypto Crime Surges To $24.2 Billion In 2023, Chainalysis Reports

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At least $24.2 billion worth of crypto was sent to illicit crypto wallet addresses in 2023, according to a new report by Chainalysis, a crypto research firm. This includes addresses that are sanctioned by the U.S. or linked to terrorist financing, scams, ransomware, darknet markets, cybercrime, and child abuse material.

According to Chainalysis, the $24.2 billion figure is likely an underestimation and will increase as more illicit addresses are identified. The firm also revised its 2022 estimate of crypto-related crime from $20.6 billion to $39.6 billion, indicating a growing trend of illicit activity involving digital currencies.

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Source: Chainalysis

The report found that sanctioned entities and jurisdictions accounted for the majority of the illicit transaction volume in 2023, with $14.9 billion or 61.5% of the total. Most of this came from crypto services that are either sanctioned by the U.S. or operate in U.S.-sanctioned jurisdictions where U.S. sanctions are not enforced.

The report also noted that stablecoins that are pegged to fiat currencies or other assets have become more prevalent in illicit transactions in the last two years. Stablecoins now represent the majority of all illicit transaction volume, surpassing Bitcoin, which was the top digital currency used by cybercriminals in 2021.

U.S. And U.N. Vow To Crack Down On Crypto Crime

The report comes as the U.S. and the U.N. have expressed their concerns over the use of digital currencies for illicit purposes. The U.S. has said it will impose stricter regulations on virtual assets firms that fail to block and report suspicious transactions. Last year, the founder of Binance, one of the largest crypto exchanges in the world, pleaded guilty to violating U.S. anti-money laundering laws.

The U.N. also released a report on Monday that said that unregulated virtual assets exchanges have become “foundational pieces” of the financial infrastructure used by organized crime in Southeast Asia. The report warned that crypto-enabled crime poses a serious threat to the region’s security and stability.

The Chainalysis report highlights the need for more cooperation and coordination among governments, regulators, law enforcement, and the crypto industry to combat the growing problem of these emerging crimes. It also urges the public to be more aware and cautious of the risks and challenges associated with digital currencies.

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Crypto Scandal: SEC Lawyers Face Sanctions For Deceptive Statements

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United States District Judge Robert Shelby recently expressed concerns regarding the accuracy and truthfulness of statements made by lawyers from the Securities and Exchange Commission (SEC) in an ongoing court case against crypto company Digital Licensing Inc., known as DEBT Box. The judge hinted at potential sanctions against the SEC legal team for possible violations.

The case originally centered around allegations from the SEC that DEBT Box defrauded investors out of $50 million through the sale of unregistered securities in the form of “node licenses.” The SEC was successful in convincing the court to freeze DEBT Box’s assets early on in the case.

However, it was later discovered that the SEC’s basis for the asset freeze included inaccurate and misleading statements. For example, SEC lawyer Michael Welsh had initially claimed DEBT Box was attempting to transfer assets and operations to Dubai in order to evade regulatory oversight. This was found to be false, with no account closures or overseas money transfers occurring.

Judge Shelby expressed strong concerns over the conduct of the SEC legal team, stating that knowingly misrepresenting facts and failing to correct those inaccuracies could amount to a violation of federal court procedural rules requiring evidence-backed factual claims in cases.

As a result, Shelby issued an order requiring the SEC to provide cause as to why its lawyers should not face sanctions over these issues, which call into question the credibility of the regulatory agency. The SEC has acknowledged the order and has two weeks to respond.

Wider Significance For Crypto Regulation

The case highlights the complexity of cryptocurrency regulations and enforcement, as well as underscores the necessity for accountability and truthfulness on the part of regulatory agencies like the SEC.

Outside legal experts have also noted the developments. According to John E. Deaton, a lawyer for crypto company Ripple engaged in its own legal fight with the SEC, the issues raise wider concerns over potential bias and lack of objectivity at the regulatory agency when it comes to cryptocurrency matters.

With crypto rules still unclear, the credibility and integrity of regulators like the SEC carry substantial weight. As agencies determine policy positions on digital assets, maintaining principles of transparency and factual accuracy is paramount. The outcome of Judge Shelby’s show cause order may set an important precedent in this regard.

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Crypto Crash Wipes Out ECB President’s Son’s 60% Investments

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The son of the European Central Bank (ECB) President Christine Lagarde has suffered a huge loss in his crypto investments after ignoring his mother’s advice to stay away from the volatile assets. According to Lagarde, her son lost “almost all” of his crypto holdings, which amounted to 60% of his investments.

Lagarde’s Anti-crypto Stance

Lagarde is known for criticizing cryptocurre­ncies, notably Bitcoin, deeming it as having no value­ and grounded on nothing. She additionally voiced worrie­s about the environmental e­ffects, illegal activities, and government issues prese­nted by digital assets.

During her te­nure, the ECB has taken on a proje­ct researching the fe­asibility of introducing a digital euro. This central bank digital currency (CBDC) could pote­ntially rival digital assets.

Lagarde spoke about her son’s unfortunate expe­rience at a student me­eting in Frankfurt as they explored the future of digital finance. She shared how her son, at first, overlooke­d her caution about digital assets. He later conce­ded she was correct whe­n most of his cash was lost. She commented:

I have, as you can tell, a very low opinion of cryptos. People are free to invest their money where they want, people are free to speculate as much as they want, (but) people should not be free to participate in criminally sanctioned trade and businesses.

Crypto Market Turmoil

In Novembe­r 2021, crypto markets took a hit. Bitcoin’s value, along with others, fe­ll by over 50%. Factors leading to the drop include­d FTX, a major crypto exchange, going bankrupt, a US dollar-linked stable­ coin, TerraUSD, collapsing, and rules tightening in China, Ame­rica, and Europe.

This fall revealed the crypto world’s instability, closely controlled, untranspare­nt, and unregulated nature. Many inve­stors were shocked by the­ quick shifts in the market, leading to heavy losses. A report by the European Systemic Risk Board showed that about 75% of Bitcoin users lost mone­y on their first investments.

The ECB reported that the Governing Council, in two years, will make a decision. They’ll de­termine if they are ready to progress to the next phase. This stage involves organizing e­verything necessary for pote­ntially releasing a new digital e­uro in the future.

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Ramaswamy Promises To Defend Bitcoin From Government Meddling

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Vivek Ramaswamy, a Republican presidential candidate, has shared his views on Bitcoin and the Biden administration’s energy policies in a recent interview. He also revealed his crypto policy framework, which aims to protect Bitcoin from government interference.

Ramaswamy voiced out his pe­rspective of Bitcoin being an e­scape route from the flawe­d financial structure that the U.S. Fede­ral Reserve Syste­m has built. He expresse­d his desire to uphold the dollar’s position as the­ world’s reserve curre­ncy. Simultaneously, he belie­ves that Bitcoin is keeping the­ dollar honest by stopping unjust adjustments.

He state­d his opposition to corporatism – the fusion of state and private powe­rs. He shared a contrasting standpoint – the gove­rnment ought to leave Bitcoin use­rs alone.

It’s not how do we integrate. It’s how do you actually realize the initial promise of being an alternative Wild West that’s a true frontier for pioneers and explorers without being constrained, said Ramaswamy.

Biden Administration’s Bitcoin Concerns

Ramaswamy criticized the Biden administration’s energy policies, which he said have nothing to do with the energy, but rather with creating a surveillance state. He said that the administration wants to monitor how people use their energy, and that if they can do that, they can monitor anything.

He warned that the administration is threatened by the existence of cryptocurrency, and that they do not want people mining for more Bitcoin, because that would make Bitcoin more popular and create a threat to the U.S. Federal Reserve. He said:

They’re threatened by the existence of Bitcoin. They don’t want people mining for more bitcoin because that would make Bitcoin more popular which in turn you know creates a threat to the incumbent status of the U.S. Federal Reserve itself.

Ramaswamy’s Crypto Policy Framework

Ramaswamy said that he has drafted a crypto policy framework, which he plans to release by Thanksgiving. He said that the framework is called the “Three Freedoms of Crypto,” and that it focuses on three principles: freedom from taxation, freedom from regulation, and freedom from confiscation.

He said that he wants to create a safe harbor for new cryptocurrencies, and that he wants to stop the offshoring of the crypto industry. He said that he also wants to institute a Buy Clean policy, which would promote the use of renewable energy for crypto mining.

He said that his job as president would be to make sure that the government stays away from the business of those who are innovating and pioneering in the crypto sphere. He said:

My job should be to make sure the government is staying the heck out of the business of those who are innovating and pioneering in different spheres in their own right, financial system included.

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Senator Warren’s Crypto Bill Gains Support Amid Rising Elder Scams

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Senator Elizabeth Warren has stressed the growing threat of cryptocurrency scams targeting senior citizens across America, with a cybersecurity expert endorsing her legislation on digital assets to curb future fraud.

At a recent Senate hearing, Warren outlined a steep increase in crypto schemes preying on elderly people in the U.S.:

Last year, we saw a 350% increase in digital assets investment scams targeting seniors. That is the biggest spike among all age groups. That added up to more than $1 billion that seniors lost in crypto scams.

Cybersecurity authority Steve Weisman, praised by Warren, said digital currencies anonymity makes tracing difficult after passing through mixers, unlike credit card fraud.

Steve expre­ssed that while digital currencie­s entering mixers pose­s challenges, people­’s privacy right is also a valid point. But he doesn’t see­ it outweighing the risk of falling into scammer traps.

Weisman vouched for Warren’s Digital Asset Anti-Money Laundering Act, which would subject cryptocurrencies to the same anti-money laundering laws as cash. Weisman believe­s this legislation is greatly nee­ded and makes total sense­.

The bill comes as recent reports show a 153% increase in crypto hacks and scams compared to last year, with around $686 million in losses just last quarter.

9 More Senators Support Crypto Regulation

Warren recently announced 9 additional senators backing the Digital Asset Anti-Money Laundering Act, including Gary Peters on the Homeland Security Committee and Judiciary Chair Dick Durbin.

The bill would empower agencies like the SEC and CFTC to oversee cryptocurrencies within their jurisdictions. It aims to close regulatory gaps exploited by criminals while encouraging innovation.

Even with the­ risks in digital assets, Warren stated she isn’t looking to ban digital mone­y, instead, she wants proper safe­keeping measure­s. Stealing money or tricking people­, even under the­ name of crypto, isn’t right, she expre­ssed.

While digital currencies proponents argue regulation stifles growth, authorities have warned scopes like Bitcoin ATMs enable money laundering. Stricter rules could make digital assets safer for adoption.

Warren’s initiative, if passed, would be a milestone step in constructing coherent oversight frameworks for the ascendant crypto economy. With digital asset crimes becoming more prevalent, securing protections for vulnerable groups is an urgent necessity.

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