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Former FTX Legal Head Reportedly Assists U.S. Prosecutors In Investigation: Report

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Daniel Friedberg, the former head of FTX’s legal department, has reportedly provided assistance to U.S. prosecutors in their investigation into the failure of the cryptocurrency firm, as reported by Reuters, citing a source familiar with the situation told.

According to a source, Daniel Friedberg met with U.S. prosecutors on November 22nd to provide information about the cryptocurrency firm. Officials from the Justice Department, the FBI, and the SEC attended the meeting, which was conducted at the Southern District of New York’s U.S. Attorney’s office.

Friedberg received a call from two FBI agents on November 14th, following FTX’s bankruptcy filing on November 11th. He told the agents he was willing to share information with them but needed FTX to waive his attorney-client privilege. 

He requested the waiver in a letter to FTX the following day, but FTX did not grant the request. However, the company did agree on the points that he could disclose to investigators, according to a source and emails viewed by Reuters.

He then informed the FBI agents of his willingness to cooperate in all respects. The U.S. Attorney’s Office arranged a meeting where Friedberg signed proffer letters, which typically outline a potential agreement between authorities and individuals involved in an investigation.

Friedberg discussed Sam Bankman-Fried’s alleged use of customer funds to finance his business empire and provided information on how Bankman-Fried’s hedge fund, Alameda Research, operated. 

His involvement in the matter has not been previously disclosed. When contacted for comment on his cooperation, Friedberg, the FBI, and FTX did not respond to Reuters.

FTX Ex-CEO Pleads Not Guilty

Last month, Manhattan U.S. Attorney Damian Williams, who is in charge of the criminal case against the now-bankrupt FTX, told SBF that if he had been involved in any misconduct at the exchange or Alameda, it would be in his best interest to confess before it is too late.

But, As TronWeekly reported on January 4th, In Manhattan federal court in New York, SBF denied the accusations, and “the judge in the case set a trial date of October 2nd.”

Whereas Gary Wang, the former chief technology officer of FTX, and Caroline Ellison, the former CEO of Alameda, two of his closest allies, both admitted to fraud and agreed to collaborate.

Nevertheless, Friedberg is expected to be called as a witness in Bankman-Fried’s October trial, during which SBF will face accusations of diverting billions of dollars in FTX of client funds to Alameda for personal use.

Related Reading |  A Stablecoin Version of the Hong Kong Dollar May Soon Be Available On DeFi Platforms

Crypto Fraudsters Have Now Crept Into LinkedIn; One User Lost $288K

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Scammers are now infiltrating leading job portals LinkedIn and targeting users through cryptocurrency investment schemes. In a recent interview FBI’s special agent Sean Ragan called it a “significant threat” to the platform and consumers.

Fraudsters usually get in touch with victims by posing as a professional, luring the user with attractive returns through a crypto investment. They then steer the latter to drop funds in a site controlled by them. And the funds are promptly drained from the account.

One Florida native Mei Mei Soe revealed how she lost her entire life savings to the tune of $288,000 to a scammer on LinkedIn. “It began with the person asking me if I’m on LinkedIn for professional networking or if I’m looking for a job,” Soe said.

The conversation eventually shifted to investment, Soe continued. “He showed me how he’s profiting from his investments and told me I should start investing with crypto.com which I know is a legitimate website. I started with $400.”

The fraudster directed her to move her holdings to a site he controlled. Over the course of several months, Soe made a total of nine transactions. Soon, she found out that the person isn’t the one he claims to be. And before she could do anything, Soe lost all of her funds.

Crypto Scammers Often Use Social Media As Their Launchpad

Acknowledging that there has been a rise in fraud cases on its platform, LinkedIn released a statement,

“We work every day to keep our members safe, and this includes investing in automated and manual defenses to detect and address fake accounts, false information, and suspected fraud. If a member encounters or is the victim of a scam we ask that they report it to us and to local law enforcement.”

Crypto.com said it immediately takes down accounts that it finds are linked to a scam.

According to research conducted by US Federal Trade Commission on June 3, scammers took away $1 billion in cryptocurrency last year, an increase of more than five times from 2020 and over a sixty-fold jump from 2018.

The majority of these attacks exploited social media platforms, TronWeekly reported.

FBI plans to form a new team dedicated to cryptocurrency

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According to the Department of Justice, the FBI is developing a new squad dedicated to cryptocurrencies (DOJ). The Department of Justice stated Thursday that the new squad would collaborate closely with the National Cryptocurrency Enforcement Team.

The National Cryptocurrency Enforcement Team’s first director will be prosecutor Eun Young Choi, who has a history in cyber-related offenses.

“The department has been at the forefront of investigating and prosecuting crimes involving digital currencies since their inception,” said Director Choi. “The NCET will play a pivotal role in ensuring that as the technology surrounding digital assets grows and evolves, the department in turn accelerates and expands its efforts to combat their illicit abuse by criminals of all kinds. I am excited to lead the NCET’s incredible and talented team of attorneys and to get to work on this critical priority for the department.

Choi will resume her full-time duties on Thursday.

FBI’s decision to control rising crypto crimes

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division stated that criminals had increased their illicit use with the rapid innovation of digital assets and distributed ledger technologies. They use them to fund cyberattacks, ransomware, and extortion operations, as well as to trade in drugs, hacking tools, and illicit items online, perpetrate thefts and frauds, and launder the proceeds of their crimes, according to him.

He mentioned that NCET would be the focal point for the department’s efforts to combat the rise in technology-related crime.

The enforcement team will concentrate on the problems that arise from the illicit usage of cryptocurrencies and digital assets. The group will also include prosecutors with expertise in cryptocurrencies, cybercrime, money laundering, and forfeiture from throughout the agency.

The squad will collaborate with others throughout the department, along with the FBI’s new cryptocurrency task force.

The FBI’s new unit will be comprised of crypto professionals who will aid the bureau with analysis, support, and training. According to the department, the team will also reinvent its cryptocurrency technologies to remain ahead of new threats.

With the growing popularity of crypto, crimes are also on the rise. A dedicated team to investigate cryptocurrency crimes ensure that the culprits will be caught on time and also it will help to reduce the crimes from happening.

FBI traced embezzled $150 million to Bitcoin

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FBI’s investigation of the theft of the $150 million from a subsidiary of Tokyo-based Sony Group Corporation has been traced to Bitcoin(BTC).

The Department of Justice(DoJ), US Attorney’s Office, Southern District of California issued a press release on 20 December 2021 stating that Rei Ishii, an emplyee of Sony LIfe Insurance Company Ltd., allegedly embezzled the $154 million when the company attempted to transfer funds between its financial accounts.

After acquiring certain insurance companies, Sony Life was to transfer funds from its Citibank account in Bermuda to its Japanese accounts.

Ishii managed to embezzle these funds by distorting the transaction instructions, which caused the funds to transfer into an account controlled by him at the Silvergate bank in La Jolla, California. the money from these funds was immediately used to buy 3,879 Bitcoins on Coinbase. He tried to cloak this theft by transferring the bought Bitcoins into a hardware wallet, in an attempt to ensure that the essence and ownership of the funds were unknown.

Like stealing wasn’t bad enough, Ishii tried to coerce Sony Life into an arrangement. He asserted that it would not be possible for the company to recover any part of the stolen money. Ishii even alleged that the company would go down with him if they filed criminal charges against him.

However, the FBI tracked down the funds and seized them on 1 December 2021. The stolen money in the form of Bitcoins was then transferred to the FBI San Diego’s Bitcoin wallet.

Stolen money accounts to $180 million in Bitcoin cryptocurrency: FBI

Acting U.S. Attorney Randy Grossman said, “It is our intent to return the stolen money to the victim of this audacious theft, and today’s action helps us do that.” He further went on to thank the prosecution team, the FBI, and Japanese authorities for their impeccable work on the case.

FBI Special Agent in Charge Suzanne Turner said,

“The FBI was able to recover these stolen funds for two very important reasons, first, Sony and Citibank immediately contacted and cooperated with law enforcement as soon as the theft was detected, and the FBI worked in partnership with both to locate the funds. Second, the FBI’s footprint internationally through our Legal Attaché offices and the pre-existing relationships we have established in foreign countries – in this instance with Japan – enabled law enforcement to coordinate and identify the subject. The FBI’s technical expertise was able to trace the money to the subject’s crypto wallet and seize those funds.”

All the Bitcoins that are worth $180 million, traceable to the theft, have been recovered and fully preserved, according to the press release.

Authorities Out to Trace all Links Connected to Bitcoin Wallet Involved in Latest Twitter Hack

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On Wednesday, Twitter users in the United States woke up to the shocking news that multiple bigwigs had their accounts hacked in one of the biggest social media security breaches in history. The Twitter accounts of personalities like Kanye West, Elon Musk and Bill Gates were hacked with the intention of scamming people of their holdings.

The hacked accounts asked users to deposit capital in Bitcoin to specific wallet addresses with the promise of doubling what they sent. By the time Twitter support realized what was happening, millions of dollars worth of transfers had occurred.

Two days after the attack, investigative authorities were trying to figure out who was behind the attacks and what it could mean for future security protocols. The attack was widespread, attacking not just pop celebrities but politicians such as Joe Biden and Benjamin Netanyahu as well. It can only be left to the imagination what would have happened if the hackers had done something more extreme.

To ensure that the hacker’s trail does not go cold, US blockchain forensics firm Chainalysis stated that a digital wallet used to consolidate the BTC had previous links to other merchant service providers. Maddie Kennedy, the spokesperson for Chainalysis had said:

“They have interacted with service providers that have know-your-customer processes, and law enforcement can work with those service providers to find out who can be behind those accounts.”

Twitter has been working with the Federal Bureau of Investigation [FBI] to uncover the trails of the heist. The main problem that law enforcement has faced is with regarding tracing the Bitcoin wallet. Since Bitcoin is completely decentralized it becomes difficult to track the exact location and owner of the Bitcoin wallet. The only information that is available right now is the Bitcoin wallet address to which some people transferred their capital to.

Tom Robinson, an official of blockchain analysis firm Elliptic admitted that the Bitcoin transfers left very few clues to trace it back to its source. One of the wallets involved even had some active transactions going back some time, making it a key lead.

Free Ross Billboard Spotted in New York’s Times Square

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A ‘Free Ross’ billboard, demanding for the release of Ross Ulbritch, the founder of Silk Road darknet market, was spotted on Times Square on May 21. It appears the ‘FREE ROSS’ movement has leased a billboard in New York’s Times Square as they advocate for the liberation of Ross.

As per a tweet by ‘Clemency for Ross’ the billboard will display the movement’s communication and image for a couple of months. The Twitter account noted that the Times Square billboard was sponsored by “a generous supporter” and not from the site’s donations.

Free Ross billboard sponsored by “a generous supporter” 

Ulbricht was given a double life sentence and is currently in his seventh year in prison. Only clemency can save him now. The 36-year-old was apprehended and incarcerated back in 2013 for initiating Silk Road darknet market that facilitated illicit trades through Bitcoin.

The illicit drugs and fake documents market operated for three years making sales amounting to $214 million before the FBI brought it down in 2013. Ulbricht was found guilty of multiple charges including money laundering, drug trafficking, criminal enterprise and others. 

Ulbricht still influential behind bars

Even while in prison without access to the internet, Ulbricht has been actively contributing to the digital currency community through friends who share his articles on the internet. On Wednesday this week, his Medium account shared an article suggesting a solution to encrypted child pornographic content.

Ulbricht suggested a partnership with the authorities to coach the ‘ZKANN’ system to pinpoint child pornography; by use of seized media, before introducing the system to the world.

After the Silk Road founder was arrested back in 2013, a clemency petition was initiated arguing that his imprisonment was ‘rife with abuse.’ The petition will then be submitted to the United States president asking for a reduction in Ulbricht’s sentence when it gets 300,000 signatures. At press time, the petition has already garnered 291,177 signatures.