Category: Crime

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Crime Crypto News Hackers

Chainalysis Launches 24/7 Hotline for Crypto Crime Victims

Blockchain research firm Chainalysis has announced the launch of a 24/7 hotline accessible to victims of crypto crime. The Crypto Incident Response hotline will work to support organisations under attack from ransomware demands or targeted by crypto cyber-attacks:

Hotline Independent of Chainalysis

With crypto hackers responsible for US$3 billion of lost crypto value via theft and ransom demands from just 251 attacks in 2021, Chainalysis’ announcement is a welcome one:

https://www.remotejobs.lk/employer/chainalysis-inc/

We’re investing in this service not just to assist organisations in their times of need, but also to help bring bad actors to justice and demonstrate that crypto is not the asset class of anonymity and crime.

Chainalysis blog post

The hotline will be independent of the analytics service and will not require victims to be existing Chainalysis customers. This rapid-response strategy aspires to turn up the heat on hackers, making it more difficult for them to cash out. The Chainalysis team has also indicated its willingness to liaise with law enforcement on victims’ behalf.

Despite many organisations having called for the implementation of the hotline, just as many voices on Twitter seem to be on edge about what this could mean for their money and their privacy:

Regardless, with time of the essence in these cases, Chainalysis is hoping that its strategy will decrease the quantity and severity of crypto crime in the industry.

Chainalysis Monitors Crypto Crime

Earlier this month, Chainalysis published a report stating that DeFi projects were most often the target of crypto attacks. As many as 97 percent of all crypto attacks have been directed at DeFi projects since the beginning of 2020, with the biggest DeFi hack on record – in which Axie Infinity lost over US$600 million – happening on March 30 this year.

Chainalysis also announced in February that ‘criminal whales’ were holding US$25 billion in digital assets. Defined as private wallets holding over US$1 million of crypto, where a minimum of 10 percent of these funds are obtained from illicit addresses, criminal whales are commonly associated with fraud, malware, and scams.

Categories
Crime Crypto News DeFi Hackers

97% of Crypto Hacks Were Against DeFi Projects, Chainalysis

Blockchain analytics firm Chainalysis has published a new report about criminal activities in the cryptocurrency space, stating that 97 percent of crypto hacks have targeted DeFi projects since the beginning of 2020.

North Korean Hacking Groups Largely Responsible

According to the report, DeFi protocols accounted for 97 percent of the US$1.68 billion worth of cryptocurrency stolen. Most of the stolen funds, approximately US$840 million, have gone to hacking groups associated with the North Korean government, the report says.

On March 30, Axie Infinity lost over US$600 million in the biggest DeFi hack on record. The US government linked the heist to a notorious North Korean-based hacking group called Lazarus.

Source: Chainalysis

Another recent incident occurred on May 3 when a hacker stole US$80 million from DeFi platform Rari Capital.

DeFi-Based Money Laundering on the Rise

DeFi protocols have also seen an uptick of illicit funds coming into their networks. According to the report, 69 percent of all funds in DeFi were sent from addresses linked to criminal activity.

DeFi protocols allow users to trade one type of cryptocurrency for another, which can make it more complicated to track the movement of funds – but unlike centralised services, many DeFi protocols provide this ability without taking KYC information from users, making them more attractive to criminals.

Chainalysis report

Another key finding of the report was the incidence of NFT wash trading. This practice consist of artificially inflating the price of an asset by buying and selling the same instrument at the same time.

Chainalysis put up as an example two wallets that generated over 650,000 WETH in transaction volume by selling the same three NFTs back and forth to one another. The wash trade was done in the same marketplace, as it rewards transactions on its marketplace.

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Binance Crime Crypto Exchange Crypto News

Binance Denies $2.4 Billion Money Laundering Allegations

According to a new report by Reuters, US$2.4 billion in stolen funds have been laundered through the cryptocurrency exchange Binance between 2017 and 2021. Binance, however, has vehemently denied the allegations, calling the report a “woefully misinformed op-ed”.

‘Analysis False’, Says Binance CCO

The report was conducted using court records, speaking with law enforcement, and working with monitoring firms Chainalysis and Crystal Blockchain to trace illicit funds moved across the exchange. It quotes Patrick Hillman, Binance chief communications officer, who told Reuters that he believed the analysis was false.

According to Hillman, Binance is in the process of assembling “the most sophisticated cyber forensics team on the planet” that would “further improve our ability to detect illegal crypto activity on our platform”.

In a post, Binance defended itself but Reuters maintains its claims. The charge of a “hub” for illegal activity was due to the possibility of users opening accounts and moving funds on Binance with an email address alone, and Reuters claims that the platform allowed them to operate with little to no “Know Your Customer” requirements until August 2021. During this time, the report alleges there were amounts of money flowing through the exchange from malicious actors.

Binance has previously been under investigation by the US Internal Revenue Service and the Department of Justice in an effort to uncover unreported crypto income from US citizens and other illegal activities on the platform.

Categories
Banking Crime Crypto News Ethereum

ETH Developer Virgil Griffith Sentenced to 5 Years for North Korea Crypto Trip

A New York US Federal Court judge has sentenced former Ethereum developer Virgil Griffith to 63 months in prison and fined him $US100,000 for speaking at a 2019 crypto conference in North Korea and teaching North Koreans how to use crypto to evade US sanctions.

After initially protesting his innocence, Griffith eventually pleaded guilty to the charge of violating presidential executive orders designed to exclude the North Korean regime from the international banking system as punishment for repeatedly threatening to launch nuclear weapons against the US.

Following Early Support, Seriousness Becomes Clear

Many in the crypto community initially considered the charges against Griffith an overreaction. Ethereum founder Vitalik Buterin, for one, signed an online petition to free Griffith in 2019 and tweeted his support:

However, following a long investigation by the FBI it became clear that Griffith did more than illegally travel to North Korea and speak at a crypto conference – much of the evidence against him showed that he specifically sought to help the North Korean regime escape sanctions using crypto.

Images were uncovered showing Griffith wearing a North Korean military uniform standing next to a whiteboard where he’d drawn a happy face and written the words “No sanctions” and “yay”.  

The investigators also found Griffith had shared text messages with North Korean citizens assuring them he’d be able to help them get around US sanctions using crypto, in one message telling them that setting up an Ethereum node in North Korea will “make it possible to avoid sanctions on money transfers”.

North Korea Uses Crypto to Fund Illegal Activities

The actions of Griffith were treated so seriously by US authorities partly because the North Korean regime has been enthusiastic to use stolen crypto to skirt sanctions and fund its illegal weapons programs.

Through government-backed hacker groups such as the Lazarus Group, the North Korean regime steals huge amounts of crypto. According to Chainalysis, in 2021 alone it stole almost US$400 million worth of crypto, which is 2.4 percent of the nation’s total annual GDP.

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Crime Crypto Wallets Hackers Scams

Cybersecurity Uncovers 13 Malicious Wallets that Could Steal Your Crypto

A criminal plot to steal users’ digital assets via apps impersonating popular cryptocurrency wallets has been uncovered in new research by global cybersecurity firm ESET.

ESET believes it’s likely that a single criminal group is behind the coordinated scheme to steal users’ crypto funds – via more than 40 copycat websites of popular crypto wallets used to promote downloads of malicious apps.

While the malicious apps were not available on Apple’s App Store (instead requiring download and installation using a configuration profile), 13 apps impersonating the Jaxx Liberty wallet were found on the Google Play store and have subsequently been removed by Google.

Counterfeit Wallets Target Chinese Users

Primarily targeting Chinese users, across both Android and iOS devices, the malicious apps closely mimicked the appearance and functionality of legitimate wallets including MetaMask, Coinbase and Trust Wallet.  

ESET researcher Lukáš Štefanko said the malicious code used in the Trojan wallets enables users’ funds to be stolen and opened users to other risks:

These malicious apps also represent another threat to victims, as some of them send secret victim seed phrases to the attackers’ server using an unsecured HTTP connection. This means that victims’ funds could be stolen not only by the operator of this scheme, but also by a different attacker eavesdropping on the same network.

Lukáš Štefanko, ESET researcher

Beware Before You Download

ESET found the Trojan apps and fake websites were sophisticated, and also promoted using ads on legitimate sites and via groups on Telegram and Facebook.

The firm said the source code of the threat it uncovered has now been leaked online, which could encourage and enable other criminals to spread the threat even further. 

In light of the findings, Keystone Wallet tweeted a warning to its users to be wary of what they download:

Fake wallet scams are a key risk for crypto investors. Last year it was revealed that over US$500,000 had been lost due to Google Ads directing users to fake wallets, while Apple was served a US$5 million lawsuit over a phishing app disguised as a wallet that was available in the tech giant’s App Store.

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Australia Crime Cryptocurrency Law Facebook Scams Social media

Australian Consumer Watchdog Sues Meta Over Crypto Scam Ads

The Australian Competition and Consumer Commission (ACCC) has announced it will be suing Meta over the company’s failure to block crypto scam advertisements involving Australian public figures that are in breach of Australian consumer law.

person holding silver iphone 6 https://unsplash.com/photos/iurEAyYyU_c
ACCC takes action against Meta, the owner of Facebook and Instagram. Source: ABC

False Endorsements of Crypto Investments

Dick Smith, David Koch and Andrew Forrest are some of the prominent Australian personalities unwittingly involved in a series of crypto scam ads circulating on Facebook. The ads claim that the featured celebrities have hugely benefited from cryptocurrency investments, then direct users to scam websites on the strength of these false endorsements.

The consumer watchdog believes that Meta is not doing enough to prevent the circulation of these ads on both Facebook and Instagram. The personalities in the ads have not given any permission for their names and faces to be used in the money-making schemes, and users who have engaged with this material have reportedly been the victims of intense pressure tactics, including phone calls asking for funds.

Rod Sims, the ACCC’s chair, outlined his disappointment with Meta’s lack of action and solutions in a March 18 media release:

https://www.accc.gov.au/media/image-library

Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers.

ACCC chair Rod Sims

Sims stated that in one circumstance an individual consumer lost A$650,000 to one of these scams. The ACCC will be seeking injunctions, penalties, declarations, costs, and other orders from Meta to ensure the practice does not continue.

Australia Cracks Down on Crypto Scams

News of the ACCC’s legal action against Meta follows an investigation into how Australians lost over A$70 million in 2021 through investment scams alone.

Scamwatch reported in July last year that investment scams involving cryptocurrency and other digital assets were on the rise. Other prominent fraud-related practices have included romance scams, personal identity theft and illegal crypto mining.

Categories
Crime Crypto News Hackers NFTs OpenSea

$790,000 Worth of Rare Bear NFTs Stolen in Brazen Phishing Attack

Members of the Rare Bears NFT community woke on March 16 to find it had lost assets to the tune of US$790,000 due to a phishing scam. According to the team, weakened security of its Discord group allowed a perpetrator to spread a phishing link.

Rare Bear is a collection of 2,400 NFTs of cartoon-themed bears built atop the Ethereum blockchain. It was launched via a public mint last week and created by a New-Zealand-based digital artist called Enox.

Attacker Poses as Moderator

The phishing attack took place when an unknown person gained unauthorised access to the project’s Discord server, posing as an official moderator. There, the attacker was able to share a phishing link designed to steal people’s funds. The project took to Twitter to inform its community:

The attacker shared a message saying there was a new NFT mint, and then provided a link to a phishing site. Another user known as “steldes” on Twitter posted a screenshot of the phony announcement on the Discord server, with the scammer named Zhodan.

Malicious Smart Contract Allows Control Over Wallets

The fake announcement informed members of an additional 1,000 rare NFTs being added to the collection at a mint price of 0.1 ETH, or US$280. The website hosted a malicious smart contract that, when interacted with, allowed control over the victims’ wallets. As a result the hacker stole 179 NFTs and other assets belonging to everyone who participated in the mint:

The hacker then moved the assets to their Ethereum address. Soon after, most NFTs were sold one by one to the tune of 286 ETH, amounting to US$790,000. Exactly 213 ETH of the total was routed through mixing service Tornado Cash and 72.3 ETH was sent across three wallets:

Phishing Scams Rife in NFT Space

Due to the unregulated nature of the digital asset space, scams are an all too often occurrence, targeting NFTs heavily. A popular method of stealing NFTs is via phishing attacks. In January, a Bored Ape collector lost NFTs worth a whopping US$2.2 million. OpenSea also experienced a phishing scam in February in which at least US$3 million worth of NFTs were stolen.

Categories
Bitcoin Crime Crypto Wallets

BTC Mixer ‘CoinJoin’ Starts Blacklisting BTC Linked to Illegal Activity

The CoinJoin coordinator that facilitates the coin mixing functionality built into the privacy-focused Wasabi Wallet has started blacklisting accounts linked to criminal activity, in a move seen by many in the crypto industry as a blow to user privacy:

Essentially this means that Bitcoin addresses that have been linked to criminal activity in the past will be prevented from using the CoinJoin functionality offered by Wasabi Wallet.

Blacklists to Prevent Legal Trouble

According to blockchain analytics firm Elliptic, Wasabi Wallet’s CoinJoin functionality has likely been used numerous times in high profile thefts and scams to evade authorities. 

Apparently this illicit usage has concerned Wasabi Wallet’s parent company zkSNACKS. According to a series of tweets from one of its developers, the decision to implement blacklists on their CoinJoin coordinator is a bid to avoid legal and regulatory trouble:

In response to the move, Bitcoin users have aired concerns that it may impact their privacy and result in a slippery slope where legitimate use ends up being targeted by authorities:

Across the broader crypto market, privacy protocols have seen a growth in popularity recently, with the Ethereum-based mixer Tornado Cash surging 94 percent following recent updates.

What is CoinJoin?

CoinJoin is an open-source mixing protocol for the Bitcoin blockchain which allows users to perform anonymous transactions known as CoinJoins. 

CoinJoins create anonymity by obscuring the source and destination addresses used in the transaction – this process is also known more generically as coin mixing. CoinJoin coordinators play a vital role in finding users to participate in transaction pools and ensure anonymity.

CoinJoin Available on Alternative Services

Users do not need to use Wasabi Wallet to perform a CoinJoin transaction. While it is one of the most popular providers of the functionality, numerous other wallets and dedicated mixing services also offer automated CoinJoin functionality. 

Users can manually perform a CoinJoin, though this is difficult and requires advanced technical knowledge.

Categories
Bitcoin Crime Crypto News Illegal

Darknet Ecstasy Kingpin Forfeits $2.3 Million in Bitcoin

A 25-year-old man from Massachusetts in the US has been sentenced to eight years’ imprisonment for selling illicit drugs for cryptocurrencies on the dark web. In addition, he also had to forfeit US$2.3 million worth of bitcoin after starting “EastSideHigh” on the darknet.

At the age of 22, Binh Thanh Le set up “EastSideHigh”, a storefront on the Wall Street Market illegal marketplace on the darknet, selling illicit drugs such as Xanax, ecstasy (MDMA), and ketamine. Le’s illegal business netted him a profit of 59 bitcoin, which was originally seized in March 2019. At the time the funds were worth US$200,000, but now amount to a whopping US$2.3 million.

Le and Two Associates Arrested with 20+ kg of Ecstasy

Along with his bitcoin, Le also held over US$114,000 in cash and another US$42,000 generated from a sale of a car. He was indicted in June 2019 with two other people for conspiracy to manufacture and distribute drugs. At the time of his arrest and seizure, law enforcement officials found over 20 kilograms of ecstasy, approximately 6.8 kilograms of ketamine, and more than 10,000 Xanax pills in Le’s possession.

After serving his prison sentence, Le will be supervised on release for a further three years. US District Attorney for Massachusetts Rachel Rollins said: “This sentence sends a clear message to dark web criminals – the federal government is entering this space. We will find you and we will hold you accountable.” She added:

Thanks to the incredible work of our law enforcement colleagues, there is one less cybercriminal hiding in the shadows.

Rachel Rollins, US District Attorney for Massachusetts

Crypto Seizures Add Up to Massive Numbers

Recently, the US Justice Department impounded US$3.6 billion in bitcoin and arrested a wannabe rapper and her husband for conspiring to launder the funds. A January report also revealed that US$33 billion had been laundered via crypto by cybercriminals over the past five years.

Categories
Crime Cryptocurrencies Scams

Chainalysis Reveals ‘Criminal Whales’ Hold $25 Billion in Digital Assets

A new Chainalysis report has revealed that a total of 4,068 “criminal whales” across the globe are holding US$25 billion in digital assets.

‘Criminal Whales’ and Crypto Crime

Criminal whales are defined as private wallets holding over US$1 million worth of crypto, where 10 percent or more of these funds are obtained from illicit addresses associated with malware, scams and fraud. Chainalysis’ February 16 report contains data collected from 2017 to 2021 that shows just how drastically the figure has risen over that period.

https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-criminal-balances-criminal-whales/
Sources of illicit transactions. Source: Chainalysis

https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-criminal-balances-criminal-whales/
Shares of all illicit funds. Source: Chainalysis

Crypto’s double-edged sword of minimal regulation is causing the creation of various groups to counter illegal activity. One such example is the US Justice Department’s National Cryptocurrency Enforcement Team (NCET), the formation of which was announced last week.

Chainalysis Findings and Partnerships

Released in late 2021, another Chainalysis report found that scam revenue had risen by 81 percent in that year alone. A large portion of these scams were rugpulls, where a project’s team cuts and runs with investor funds.

In November last year, Chainalysis opened an office in Canberra after agreeing to a partnership with the Commonwealth Bank of Australia (CBA). This came in response to increased mainstream adoption of cryptocurrencies and demand for CBA’s crypto exchange and custody service.

By Lauren Claxton, Crypto News Guest Author