TronWeekly

Crypto World News

You are here: Home / Archives for Crypto Scandals

Crypto Scandals

Canadian Duo Get Two Years In Prison Over Orgeon Woman’s Bitcoin theft

by

Bitcoin scams have been going on ever since the cryptocurrency was first invented with hacks and fraud becoming a small part of the industry. More than a decade after it was first made public, bitcoin scams have only grown in complexity and magnitude.

According to news reports, two Canadian nationals have been sentenced by a Portland Court to 2 years in prison for conspiring to commit wire fraud and money laundering in a scheme to steal bitcoin from an Oregon resident.

Karanjit Singh Khatkar and Jagroop Singh Khatkar were two brothers living in Surrey, British Columbia. In addition to their two years in prison, they will also serve three years’ supervised release. The case that brought them down was in connection to their nefarious activities between October 2017 and August 2018.

The defendants had used a fake Twitter handle ‘HitBTCAssist’ to fool people into thinking they were the support handle for Hong Kong-based cryptocurrency exchange HitBTC. The culprits hit jackpot when they were able to draw enough information from the victim to access her HitBTC and Kraken accounts. They also gained access to the victims email address so that they could confirm all the 2FA processes.

Kraken and HitBTC were unaware of these proceedings and both the cryptocurrency exchanges were functioning normally while the scam was going on. According to the Department of Justice, the perpetrators made away with 23.2 Bitcoin which was split evenly between Karanjit and Jagroop. The report from the Attorney’s office said:

“Two days after illegally accessing the victim’s account, Karanjit Khatkar bought a Mercedes-Benz with $56,598 in Canadian dollars. The Khatkars also traveled to casinos. Karanjit Khatkar gambled with tens of thousands of dollars while staying at high-end casinos in Las Vegas, Nevada.”

The party soon ended when they were both detained separately last year. Karanjit Khatkar was arrested on 18 July 2019 on arrival at McCarran International Airport in Las Vegas and later ordered to be detained for trial. Jagroop willingly handed himself over to the police on December 16, 2019. On the same day, the brother pleaded guilty to all charges brought against him.

Authorities have become effective in catching cryptocurrency criminals, and the story of the Khatkars has become one of many such cases. The 23-and 24-year-olds were asked to pay $142,349 as a prepayment refund and another $42,162 as a sentencing penalty. The $183,511 fine may not be the biggest figure in the world, but it was still enough to send a signal to Bitcoin fraudsters.

The decisions come in the wake of the Coronavirus and the total takedown of financial markets. It was still a hopeful sign that regulators were making efforts to combat fraud in the industry and to boost confidence among investors around the world.

 

BitClub Network founders in hot water as investors call out scam worth $722 million

by

The cryptocurrency market has been abounding with scams and frauds for a long time now, and millions of people have suffered from it. Despite the reduced occurring of these events now, one or two never fail to shock the crypto world. Just recently, the BitClub Network [BCN] and its five top members were found to be in hot water after cheating investors off $722 million.

The BCN had promised its investors that their money would be used to purchase mining equipment, and once they start producing Bitcoin, the investors would get a cut too. Federal prosecutors in the United States have taken multiple angles to analyse this case and concluded that it was a “high tech plot” in the “complex world of cryptocurrencies”.

The company even gave rewards to existing investors in exchange for recruiting others to join; a model made famous by the pyramid and Ponzi schemes. Revelations from reports showed that the founders [Matthew Brent Goettsche, Jobadiah Sinclair Weeks, and Silviu Catalin Balaci] had blatantly taken advantage of ill-informed investors and even called them “dumb” and “sheep.”

Some users in the space had first spotted discrepancies in the BCN ecosystem, with Japhet Mesa from Zambia being a major whistleblower. In a Medium post, Mesa had claimed:

“Unlike actual mining sites like Genesis Mining (please distinguish between miners and pool miners), the BCN website does not state who the owners or people behind the operations are. In fact, the website states vaguely that “BitClub is not owned by any single person or entity, we are a team of experts, entrepreneurs, professionals, network marketers, and programming geeks who have all come to together to launch a very simple business around a very complex industry”

The victims were still not identified, but the range of the company is far and wide. An advert was spotted on the Ben Franklin Technology Partners website where people were offered a “Founder” status for people who agree to purchase its mining pools.

Scams and frauds have been prevalent in the cryptocurrency space, especially since the 2017 Bitcoin boom. Since then, significant issues have rocked the crypto world, which was spread across the planet. A precursory analysis showed that countries such as the United States, Japan and some European countries where hotspots for scammers to capitalise on innocent citizens.

During the beginning of this year, investors in Hong Kong had claimed that they had lost almost HK$3 million in a crypto promoter stunt. The investors, aged between 20 and 50 suffered losses between HK$20,000 and HK$1 million each.

Disclaimer: The presented information is subjected to market conditions and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

Never miss our daily cryptocurrency news, price analysis, tips, and stories. Join us on Telegram | Twitter or subscribe to our weekly Newsletter.

Europol detains six people for plundering $27.2 million worth of cryptocurrency in the UK and Netherlands

by

Cyber attacks have built a new dimension since the evolution of cryptocurrency, the hacking methodologies employed to steal bitcoins, ethereum, and other cryptocurrencies have been very sneaky, along with the popular cryptojacking and typosquatting.

What is Typosquatting?

Typosquatting is a hacking methodology that targets internet users when they type in a wrong web address in their browser. These users may land on a different page similar to the original but looks legitimate as the original.

A group of six hackers used this typosquatting technique for plundering around $27 million in cryptocurrency. The hackers used typosquatting to login to client wallets and access funds. Based on the press release by Europol, it was reported that at least 4000 bitcoin users from 12 different countries had become the victim of this act.

The takedown of hackers

Europol has coordinated this operation with UK’s South West Regional Cyber Crime Unit (SWRCCU), National Crime Agency (NCA), Eurojust and Dutch Police (Politie) to investigate these six suspect over 14 months.

European Cybercrime Center’s (EC3) assistance to Joint Cybercrime Action Taskforce (J-CAT) allowed the international cooperation between a different member of the European Union and made a move on the suspects by locating their whereabouts with the help from British authorities.

With the integrity and confidentiality of cryptocurrency if people are assuming this could be an exciting means of the transaction then they need to be aware of the cybersquatting techniques that hackers can employ to sneak into your login details, access the secret vaults and use your cryptocurrencies. Bitcoin has been a favorite victim of these sneaky techniques, and this case here is an excellent example to refine your security policies now.

Other typosquatting alike techniques

Malware watchdogs already found something fishy with the Cryptohopper website and identified it to be a cloning technique to steal login credentials of the users, making them download a false exe. When installed, the exe will also deploy trojans and cryptominers that can later perform cryptojacking or plunder the cryptocurrencies away.

Poor browser security and practices can worsen the situation allowing the hackers to track your browser history, cookies, credentials, payment information, wallets and more, while clipboard hijacking is also being used to exploit the same in detail. Popularly known as Qulab trojan later starts infiltrating user information, tapping into personal data and exploiting the wallets.

Reinforcing security and brushing up your best practices

Cryptocurrency will continue to evolve over the years, but making sure your currency is well secured by enriching your cyber awareness, can reduce your chances of becoming victim to these sneaky takedowns. Though cybersecurity tools can come in handy, only knowledge and cautiousness can keep users secured from cybersquatting.

Recheck your browser plugins and add-ons, make sure they are from trusted sources to continue using them in the future. Europol has arrested these six people, but they aren’t the only ones out there trying to get away with cryptocurrency theft. Build your defenses and enhance your knowledge to stay secure against cybersquatting.

Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

Never miss our daily cryptocurrency news, price analysis, tips, and stories. Join us on Telegram | Twitter or subscribe to our weekly Newsletter.

Beware of free crypto offers, there is no such thing as free cryptocurrency

by

You’re probably familiar with an old saying that goes, “there’s no such thing as a free lunch.” Well, you should update it as “there’s no such thing as free cryptocurrency” and act accordingly because we’re seeing several websites offering software downloads that supposedly deliver free digital assets to their users. What they really get instead is malware.

Two levels

The scam works on two levels.

In the first level, a website will offer free Ethereum tokens (ETH) to users as rewards for referrals of other new navigators that come to the websites in question and adopt the scam as well. You’re supposed to get three ETH for every 1.000 visitors. That’s almost USD 800,00 in the current market, which is an exceedingly high reward as this kind of things go. It’s just a lure, of course, that’s how unsuspecting users are persuaded to bring more people about.

But the real deal (which in this case means the real problem) comes at the second level.

Once a potential victim arrives into one of the dodgy websites, they are offered to be awarded from USD 15 to SUD 45 in free Bitcoins daily. All they have to do to get those coins is to download a piece of software called “Bitcoin Collector,” which is supposed to “generate” BTC for free. That’s not what this program does, of course.

Beware of g[r]eeks bearing gifts

So the “Bitcoin Collector” gets downloaded, the user extracts and, in so doing, a bunch of files are created. Chief among them is “BotCollector.exe” which will run “Freebitco.in – Bot”.

The recently installed software won’t get users any BTC. It will download and install malware software into the victim’s computer instead.

A Twitter user known as Frost is a malware researcher who’s warned people about the scam. According to him, the malware evolves in two different ways. “BotCollector.exe” initially launched a piece of ransomware called “Marozka Tear Ransomware.”

In a ransomware attack, a computer’s files are encrypted by the malware. Then the owner gets a digital ransom note, in a text file usually warning them that if they don’t get in contact with the hacker team to agree on a payment mechanism, all the data will be lost or will remain inaccessible.

The ransomware aspect is not as severe as it used to be because nowadays a user can get the HiddenTear Decrypter utility, which will decrypt the affected files without the need for any payment. So the hackers have adapted to the new reality, and now, it installs a Trojan Horse that steals information from the victimized computer.

Frost identifies the Trojan as Baldr, and it can steal files, get your browsing history, take screenshots, and even get your logins as passwords for all the accounts you use in your browser or the applications you run in the infected computer.

If you’ve been around those websites and tried out the “Bitcoin Collector” thing, you should run a good antivirus and malware scan as soon as you can, change all your passwords, and improve your security all around. Most importantly, keep in mind that nobody is likely to give you any cryptocurrency away for free or any more than fiat currency you give them. Act accordingly.

Disclaimer: Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

Scandals and crypto: 3 of the best-known cases

by

Bitcoin and many other digital assets hold great potential for the good and the bad. They could make you rich in a heartbeat. They could also make you lose your shirt just as quickly. Cryptocurrency investing is very risky, which is why it can be highly profitable, and very exciting.

One of the things that make cryptocurrencies so exciting and open to the possibilities is also one of the things that make them so dangerous. That’s the lack of regulations from governments and institutions in general.

Lots of new exchange platforms, as well as wallet services, are popping out in the crypto verse all the time. And they remain unregulated. That’s why the risk of fraud, hacking and other misbehaviors remains real. Take the Bitfinex fiasco, for instance, which saw the platform lose USD 66 million. So the risks are here, they’re real, and every cryptonaut should be aware of them. And the Bitfinex example is not even among the most important ones.

And the lack of legal codes is not the only problem. The very nature of the beast makes it prone to moral hazard. It’s a situation that allows for huge risks, which, in turn, mean that equally big profits could be in the cards, which is why recklessness is present around the crypto verse.

In this article, we recapitulate for you some of the greatest scandals we’ve seen so far in the cryptosphere.

QuadrigaCX

It could have been a Sherlock Holmes novel. A dead CEO, fraud accusations, millions of dollars lost. It shook the Bitcoin world, and while it looked like something out of thriller fiction, the nightmare was genuine for all those holders who lost their wealth.

It was 2018 and QuadrigaCX’s CEO, Gerald Cotten was enjoying his honeymoon in India. But he didn’t make it back. After Mr. Cotten’s death, the company found that it couldn’t manage the company’s cryptocurrency portfolio. So the bells rang, and the alarm was widespread.

QuadrigaCX’s wallets were cold. That means that the company’s cryptocurrencies are stored offline, which is a good thing when it comes to security because it makes hacks so much harder. But only Mr. Cotten was privy to the passwords, so the company suddenly was unable to give its customers their coins back.

The situation prompted an investigation on QuadrigaCX, and then new disturbing facts started to emerge. Once the investigators got hold of Mr. Cotten’s personal computer, the firm Ernst & Young found a way to locate all the wallets owned by the company. And the wallets were empty, which meant that from USD 140 to US 190 million were missing.

As the auditing company followed the money, they found that the wallets had been regularly emptied over a full year before Mr. Cotten’s honeymoon. So the investigators (and the customers) had the remains of a company and no assets to recover.

The highly irregular situation described above lead to all kinds of theories. For instance, some said that Mr. Cotten faked is own demise so he could get away with millions of dollars to enjoy with his new wife. His widow says that he actually died.

But what happened to the company’s deposits? Good questions. Nobody has been able to find out so far.

Mt Gox

This cryptocurrency exchange was started by Jed McCaleb who enjoys an excellent reputation in the crypto world. Mt Gox stands for “Magic the gathering online eXchange.” No, we don’t understand what that means either. But the weird name didn’t stand in the way of Mt Gox becoming the world’s largest Bitcoin trader very quickly.

The platform was responsible for about 70% of the world’s trading in Bitcoin at some point. But things were never quiet for the company. It suffered from persistent security problems, it was always under attack by hackers, the CEO wasn’t the brightest bulb in the box, and they even got a lawsuit from the US government. So Mt Gox was always in the news for all the wrong reasons.

But painful as life was for the company, it was manageable. Then a real catastrophe hit. In 2014 the company had to go bankrupt because it lost half a billion USD in Bitcoins. Hackers had been emptying the company’s wallets over a long, and the company security team was none the wiser. Then, as users tried to withdraw their funds, they found they didn’t have any left.

The users complained, of course. The company answered by going silent and disappeared from all social media. The story isn’t over yet. It’s been almost five years already, and creditors are still trying to get their money back from Mt Gox. Some of them have been able to sell the debt at discounted prices, and the legal fight remains ongoing.

NiceHash

This company started in Slovenia. It was a crypto mining platform shared by both miners and investors. In December 2017, when Bitcoin was most attractive than ever, the platform had to face a very advanced hack attack. The hackers succeeded and went away with BTC 4,736,042 in their digital pockets. That’s the most significant number we’ve seen when referring to Bitcoins.

The token’s price was around USD 20k by then, so the hackers got away with trillions of dollars. And, to make things even worse, not a single Satoshi was recovered. So the unavoidable happened, and every member of the managing team had to resign.

Incredibly, and unlike most stories of this kind, the company survived. It remained in business and was able to rescue what was left of its heavily damaged reputation. They’re still in business trading BTC and other digital assets.

Final thoughts

There is something to learn from these stories.

The cryptosphere can be lucrative in the extreme. But “gainful” always means risky as well. If you take on too many risks, you’re going to have to pay the price, sooner or later. So take advantage of your opportunities, but remind yourself of staying safe and use prudence. We wouldn’t like to know that you become part of a story such as the ones in this article.

Disclaimer: Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.