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DoJ Arrested Five People for Allegedly Running a $20 Million Crypto Mining Scam

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According to a statement by the United States Department of Justice (DoJ) on August 18, five individuals were detained in connection with a crypto mining scam that ended up defrauding investors to the tune of $20 million.

The suspects allegedly urged investors to invest in their cryptocurrency trading and mining firm, AirBit Club, which in reality does not exist. According to the report, the suspects include Gutemberg Dos Santos, Jackie Aguilar, Pablo Renato Rodriguez, Cecilia Millan and Scott Hughes. They allegedly lured unsuspecting victims to invest in their crypto mining scam, promising a massive return on capital.

Crypto mining scam lands five in hot soup

Notably, Renato Rodriguez and Gutemberg Dos Santos founded the AirBit Club back in 2015. Both of them recruited both Cecilia Millan and Jackie Aguilar as marketers. The suspects falsely claimed that the company’s income generation is derived from its cryptocurrency mining and trading activities.

As per the report, investors were required to purchase a membership plan for the various programs of the Ponzi scheme to start earning passive income. At the end of the day, however, the firm failed to keep its promise to investors. Suspects have used the proceeds of the crypto mining scam for personal gain, the acquisition of luxurious properties such as apartments, sports cars, and jewelry,

“As alleged, the defendants put a modern-day spin on an age-old investment scam, promising extraordinary rates of guaranteed return on phantom investments in cryptocurrencies. Thanks to HSI, the defendants are in custody and facing serious criminal charges,” stated Acting U.S. Attorney Audrey Strauss.

Suspects to face charges against conspiracy to commit fraud

Moving forward, the DoJ report notes that three of the suspects, Dos Santos, Rodriguez, and Millan are up against one charge against conspiracy to commit banking fraud, conspiring to commit money laundering, and conspiracy to commit wire fraud. On the other hand, Aguilar is being charged with a single conspiracy to commit wire fraud while Hughes is facing charges against one count of conspiracy to commit money laundering and one count of conspiracy to commit banking fraud.

Bitcoin: Jeff Bezos, Elon Musk, Joe Biden; No one survived the recent BTC hack!

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Bitcoin scams and hacks have been extremely common over the last few years, but the recent conundrum on Twitter may have been the most memorable one in recent years.

Surrounding a cryptocurrency scam, an unidentified hacker found his way into several high-profile Twitter accounts and asked for BTC donations on social media platforms.

From Apple to Uber, from Kanye West to Barack Obama, everyone’s profile was intertwined, and a common tweet shared across everyone’s handle echoed a BTC donations message.

“I am giving back to the community. All Bitcoin sent to the address below will be sent back doubled! If you send $1000, I will send back $2000. Only doing this for 30 minutes.”

BTC donation
Source: Instagram

Following the incredible mess, Twitter CEO Jack Dorsey made an online statement stating the organization’s regrets about the situation. The CEO said the company felt “terrible this happened.”

Dmitry Alperovitch, the co-founder of Crowd Strike, informed media outlets that the above-mentioned hack could possibly be the “worst witness” on a major social media platform in history.

Hacker possibly made $120,000 in Bitcoins; unconfirmed

Although unconfirmed, Business Insider suggested that data from available blockchain records suggested that a hacker might make up close to $120,000 over the short scam period.

The hack was identified within hours, but hundreds of people took the bait on the platform and one particular wallet address reported receiving more than 350 transactions.

Ironically, the functionality of Bitcoin may make it difficult to properly identify the exact amount that the hack was able to collect during the scam.

Tron’s Justin Sun announces $1 million bounty following hack

The attention received by the scam was widespread and crypto proponents were taking centre stage as well. Justin Sun, Founder of TRON, released a bounty of $1 million for the capture of the hacker as he revealed that his team was working closely with Twitter on the issue. He informed outlets,

“We are working closely with Twitter to resolve this issue immediately and return our accounts to normal. We are always vigilant in handling our accounts; operating safely and responsibly — taking the security of our accounts to the highest standards possible. This only further illuminates the urgent need for our society to adopt decentralized, trustless software, and services.”

Chinese Law Enforcement Seize $15M in BTC in Fraudulent Crypto Scheme

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Chinese law enforcement has confiscated $15 million in crypto and two supercars, a McLaren and a Ferrari worth around $2 million from a fraudulent cryptocurrency scheme connected to the sale of fake Huobi tokens.

Perpetrators have used Telegram to lure investors

According to a local July 9 report, the Chinese law enforcement authorities apprehended ten suspects linked to a fake cryptocurrency scheme. While revealing the case, the Chinese Ministry of Public Security, the country’s chief law enforcement, said that this case is the first in China where victims were reportedly scammed using smart contracts to create fake cryptocurrencies.
Through Telegram, the criminals approached victims and asked them for ETH, in return for the fake tokens at a bargain price. The cheap tokens led investors to fall into the fraudsters’ trap because they could make fast money by selling the tokens to the open market. More than 1,300 people were affected by the fraudulent crypto scheme the report says.

Moreover, the group apparently created several Telegram groups; the one called “Huobi Global Arbitrage HT Chinese Group,” in which they marketed a smart contract that could generate Huobi tokens; and offered an arbitrage plan to earn 8 percent returns.

A victim named Li, the first victim to report the scam explained to the police; “Simply put, you send one unit of ETH to a designated ETH address, you will receive 60 HT. And then you can sell it to gain the difference.”  To his surprise, when Li transferred 10 Eth to the designated address; the 600 Huobi tokens he received in exchange were false.

Li realized that he could not sell or deposit fake tokens anywhere, thus reporting the fraudulent crypto scheme to the Chinese law enforcement authorities. In conclusion, the assets of the seized crypto include Bitcoin, Ether, and Tether. Confiscated physical assets include two luxury cars and a villa owned by the perpetrators.

Unregistered Crypto Firms Flagged by Philippines Financial Watchdog

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The financial regulator of the Philippines, Philippines Securities and Exchange Commission (SEC), has warned investors to be on alert to three unregistered crypto firms. The authority warned that the three companies might be potential scams, as they are not yet registered with appropriate government agencies.

Forsage among unregistered crypto firms flagged

Three flagged cryptocurrency firms are Forsage, RCashOnline, and The Saint John of Jerusalem Knights of Malta Foundation of the Philippines, Inc. The securities regulator warned the public that none of the above-mentioned firms had secured the relevant operating licenses or submitted documents for registration, leaving investors susceptible to fraud.

In its statement, the Philippines SEC asked investors to remain cautious when investing in companies with cryptocurrency. Notably, the Securities Regulation Code states that any individual engaged in illegal investment projects will face up to 21 years behind bars, in addition to P5 million ($100,891) in fines.

Forsage cryptocurrency firm, which Lado Okhotnikov created, is not listed with any relevant authority. It does not, therefore, have the lawful right to implore investment or sell crypto products. Moreover, the watchdog said the other unregistered crypto firm, RCashOnline, is not recognized as a partnership or a corporation.

Crypto scams on the rise amid COVID-19 pandemic

On the other hand, Saint John’s license was revoked as far back as 2003 due to refusal to report obligations. The warning by the Philippines SEC is the latest of caution to investors on blacklisted companies. In particular, investors have been warned to remain more careful than before when handing out their money during this coronavirus pandemic.

Earlier this year, the Federal Bureau of Investigations (FBI) warned that crypto-related scams are surging due to the COVID-19 pandemic worldwide. Besides, the government of Singapore revealed that the nation had seen a substantial rise in ransomware attacks in 2019. 

SEC Obtains Assets Freeze Against Crypto Mining for Defrauding Millions from Investors

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The United States Securities and Exchange Commission (SEC) reported on Friday, June 5, 2020, that it has secured an asset freeze and other emergency relief against Daniel F. Putnam, Jean Paul Ramirez Rico, and Angel A. Rodriguez, who reportedly deceived investors in two cryptocurrency-related schemes over $12million. Millions were raised by running a multi-level marketing business known as the “Modern Money Team” operated from July 2017 to November of last year.

According to the complaint of the SEC, unsealed at the federal court in Salt Lake City, Putnam invested in crypto-mining equipment until at least July 2017 and subsequently turning to offer investors ‘crypto-currency trading packages.’ Nearly 200 investors joined Putnam’s mining scheme which was promised huge profits through cryptocurrencies mining on “Modern Money Team” operated mining hardware.

Putnam started the Modern Money Team (MMT) and started offering investments in the “crowd-funding of a powerful cryptocurrency mining operation.” MMT’s sought-after investors were able to buy mining machines, operate them in MMT ‘s facilities, and gain money each month from the successful mining of cryptocurrencies through the mining operation.

Investors who wanted to buy actual mining machines were advised that their machines would be placed and controlled remotely at Putnam’s selected locations and that Putnam or those he employed would monitor all mining activitiesPutnam earned around $3.25 million to nearly two hundred investors through the selling of mining machines and the involvement in the mining activity.

After the mining investment program was no longer economically viable, Putnam began offering investors the option to buy “cryptocurrency trading packages” through MMT. Ramirez managed the crypto investments, Rodriguez was the intermediary, and MMT was run by Putnam, a multi-level marketing professional. The   Investors were further informed that their funds would be kept in Bitfinex3 trading accounts controlled by Ramirez, who will be responsible for trading.

Back investor offices reported weekly earnings until November 2019, and investors were able to make regular withdrawals from their accounts. However, in November 2019, the MMT stopped making the proposed profit payments to investors, and the trading activity was halted.

The SEC also claimed that in November 2019, MMT stopped paying investors but managed to collect funds until 9 March 2020. Defendants also misappropriated investor funds for personal use and made similar payments to Ponzi Schemes to former investors. According to the complaint, the defendants carried out these fraudulent schemes through two Utah companies owned by Putnam, MMT Distributions, LLC, and R&D Global, LLC.