Category: Illegal

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Bitcoin Bitfinex Crypto Exchange Crypto News Cryptocurrencies Hackers Illegal Tokens

Bitfinex Token LEO Soars 60% Amid BTC Seizure from 2016 Hack

Bitfinex’s UNUS SED LEO token (LEO), an altcoin most had forgotten since it launched in 2019, has just surged 60 percent in value following the seizure of almost US$4 billion in Bitcoin lost in an infamous 2016 hack.

LEO Price Hits All-Time High

LEO went from trading at US$4.97 to US$8.04, according to data from CoinMarketCap, reaching an all-time high. The price has settled since to US$6.84, but the surge seems to be related to the seizure of stolen crypto assets that formerly belonged to Bitfinex users.

On February 8, the US Department of Justice announced it had recovered 94,000 BTC stolen in the infamous hack of the crypto exchange Bitfinex. The 2016 hack saw 119,754 BTC stolen, worth about US$72 million at the time. The value of the stolen crypto is now almost worth US$4 billion. On February 1, an estimated US$3.5 billion in BTC was moved from wallets associated with the hack into a single wallet, alerting authorities to the stolen Bitfinex BTC.

Bitfinex CTO Paolo Ardoino took to Twitter to express his gratitude:

Deputy Attorney General Lisa Monaco said in a statement: “Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals.” The statement also named Ilya Lichtenstein and Heather Morgan as the two culprits charged with attempting to launder the stolen property.

According to the FBI, Morgan and her husband Lichtenstein spent part of the proceeds on gold, NFTs and other items. Each faces up to 25 years in federal prison should they be convicted.

LEO Buys Back

In 2019, Bitfinex sold its Leo token and raised US$1 billion in 10 days. The token is a basic exchange utility token, so using it on Bitfinex lowers trading fees. However, LEO has an additional unique property. According to its whitepaper, the firm pledged to use most of any recovered BTC from the hack to purchase LEO on the open market and burn it after.

The whitepaper indicates: “Bitfinex and its subsidiaries will use an amount equal to at least 80 percent of the recovered net funds from the Bitfinex hack …. to repurchase and burn outstanding LEO tokens.”

The whitepaper also gives the firm 18 months to dispose of the BTC, thereby allowing it to do so at a time-weighted average price rather than shock the market with one giant sale.

In a statement following the news of the seizure, Bitfinex said: “We want to express our appreciation for the dedication and hard work by the DoJ team that led to this great success. We will continue to support their efforts.”

LEO comes from the Latin phrase, “unus sed leo”, a line in the Aesop’s fable The Lioness, and the moral of the story is quality over quantity. If all goes according to plan, there will soon be considerably fewer LEO tokens in circulation.

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Blockchain Crime Crypto News DeFi Illegal Scams

Report: Crypto Crime Reached New Highs in 2021

In its annual Crypto Crime report, New York-based blockchain analytics firm Chainalysis has reported that although the percentage of illicit crypto transactions fell drastically in 2021, their dollar value surged significantly.

As per the Chainalysis report, the value of crimes involving cryptos surged to a new high of US$14 billion in 2021. This represents an increase of 79 percent from US$7.8 billion reported in 2020, which is mainly due to the upward spiral in crypto prices experienced in 2021.

The cryptocurrency market has expanded to such an extent that Chainalysis has even opened a new office in the Australian capital due to increased mainstream adoption in the Pacific region.

Year-to-year comparison of illicit share of all cryptocurrency transaction volume. Source: Chainalysis

Although the dollar value appears to be astronomical, the activity represents a mere 0.15 percent of the total of US$15.8 trillion in crypto transaction volumes over the year – the lowest percentage ever recorded. To put this in perspective, the illicit share of crypto transaction volume in 2019 was 3.37 percent, and 0.62 percent in 2020.

DeFi Scams and Rug Pulls Main Drivers of Crypto Crime

The Chainalysis report attributes the growth in the volume of scams and legitimate crypto transactions to the boom in decentralised finance (DeFi). While scams accounted for the largest share in 2021, rising 82 percent to US$7.8 billion, nearly US$3 million of the total crime value came from rug pulls.

Last year, Crypto News Australia reported that crypto scams, particularly rug pulls, have become the main trust issue in the crypto space, especially for newcomers.

DeFi protocols have become the primary target for cryptocurrency crimes. Source: Chainalysis

Aside from rug pulls, DeFi platforms were also widely used for money laundering and were targeted by hackers for large-scale theft.

As Chainalysis head of research Kim Grauer noted: “DeFi services were hacked at rates that we’ve never seen before. Not only are people using DeFi to carry out crime, they’re also targeting DeFi for crime.”

Grauer added that DeFi platform protocols were often hacked because it’s a new industry and a lot of the code is open-source, exposing vulnerabilities.

In 2021, US$2.2 billion worth of cryptos was stolen from DeFi protocols, which accounts for two-thirds of all cryptos stolen in 2021 – this figure represents a 516 percent increase on the numbers reported in 2020.

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Bitcoin Crypto News Hackers Illegal Monero Scams

New Spider-Man Movie Torrent Contains Malicious XMR Mining Program

Cybercriminals have to keep up with the latest trends in order to continue running their scams, so it comes as no surprise they’re exploiting the popularity of blockbuster movie Spider-Man: No Way Home as a way to launch crypto-malware attacks.

Fans are urged to be careful when downloading pirated copies of the newest edition of the film as cybercriminals have uploaded a Monero miner code on a torrent download file.

Scammers Hiding Crypto Miner Malware in Torrent Files

Experts from ReasonLabs have reported details of a new malware attack in which scammers embed a Monero (XRM) miner code on a torrent download file for the Spider-Man film. The warning was first issued on December 23, along with details that the torrent file for the movie is named “spiderman_net_putidomoi.torrent.exe” in Russian.

The name translates to “spiderman_no_wayhome.torrent.exe” and the filename has led experts to believe that the malware did in fact originate from a Russian torrenting website.

Once the file is downloaded, the crypto-malware exploits the computer’s power to mine Monero, a privacy coin that operates with untraceable transactions. This type of attack is not as severe as others and does not affect computer performance, but will drive a victim’s power bill sky-high due to its massive energy consumption. Police agents have conceded that hackers are using legitimate names, so the program tends to go unnoticed by antivirus software.

Researchers at ReasonLabs have provided an example of the malware’s details:

What the malware file meta looks like. Source: ReasonLabs

In order to keep from downloading the malware, users are urged to look carefully at aspects such as the file type. A real film should end with the suffix “.mp4” while a crypto-malware file ends with “.exe”. Fans should be especially cautious when downloading content from the internet and are discouraged from downloading a file in Torrent and from other non-official sources.

News of the scam came soon after Bitcoin penny stock BitTorrent soared 80 percent ahead of its Mainnet Launch, which took place earlier this month.

Crypto Scams Continue on the Rise

As more crypto projects launch, more opportunities are created for scammers to take advantage of unwitting users. Late last month, Crypto News Australia published an article detailing a Threat Horizons report released which indicated that 86 percent of hacked accounts were being used to mine cryptocurrencies. Poor security measures were cited as the main reasons for malicious actors being able to infiltrate accounts.

Although the scam found in the Spider-Man torrent is not particularly dangerous, last month an insidious and highly sophisticated crypter was found in the crypto community. Named the “Babadeda” crypter, the malware is still targeting crypto enthusiasts on the popular community chat app Discord.

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Australia Crypto News Illegal Scams

Aussie Wunderkind Sentenced to 7 Years for Crypto Ponzi Scheme

Stefan He Qin, the Australian man who pleaded guilty to securities fraud totalling more than US$50 million, has been sentenced in a New York District Court to seven and a half years in prison.

On September 15, the 24-year-old from Canberra who cheated investors in his cryptocurrency fund told the sentencing judge he was “absolutely heartbroken” about the pain and suffering he had caused his victims.

I feel ashamed to even look them in the eye and tell them I am sorry, but I must … I know now that the world is not a video game. I deserve the punishment that [I have received] today. I will spend the rest of my life trying to make up for the pain I’ve caused. I am so, so, so sorry.

Stefan He Qin

No Sympathy From Sentencing Judge

From 2017 to 2020, Qin operated a brazen and wide-ranging Ponzi scheme that took US$54 million out of the pockets of investors. Qin, a University of NSW dropout, admitted he carried out his scheme while he owned and controlled two Manhattan-based cryptocurrency investment funds.

As the owner of Virgil Capital LLC, Qin attempted to funnel money from his second company, VQR Multistrategy, to pay investors of the Virgil Sigma Fund. After years of reckless spending – including the purchase of a Manhattan penthouse apartment – and risky investment, much of the money was gone.

Sentencing judge Valerie Caproni had no sympathy for Qin.

If he’s charming me the way he charmed his victims, he’s a real danger because he thinks his needs are more important than everyone else’s.

Judge Valerie Caproni

Quin pleaded guilty in February and was ordered to forfeit US$54.7 million.

Crypto Scams on the Rise During Pandemic

Fraudsters all over the world are taking advantage of the ongoing uncertainty that the pandemic has brought and financial scams are on the rise.

One cannot help but see the similarity of this case to the Mirror Trading International (MTI) scam perpetrated by South African Johann Steynberg.

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Crime Crypto News Illegal Scams

Stolen COVID-19 Vaccines and Fraudulent Certificates Sold on Darknet Markets for Crypto

An investigation undertaken by the Coinfirm blockchain analytics team has uncovered illicit trade in Covid-19 vaccines, certificates, and tests on darknet marketplaces.

According to a July 1 report, Coinfirm has identified addresses linked to various vendors selling illicit Covid-19 essentials for crypto assets including Bitcoin (BTC), Ethereum (ETH), Dash (DASH), Litecoin (LTC), Tron (TRX), Monero (XMR), and Zcash (ZEC).

Privacy coins are commonly used as assets on Darknet Markets (DNM) to pay for illicit goods. This is due to properties that allow users to transact anonymously, as well as darknet platforms that cater for people who wish to stay anonymous.

The ‘Vaccine Shop’ wallet was found to be linked to 145 other payment-accepting addresses that have been flagged for stolen/cloned credit card vendors, drug traders, and perpetrators of scams – specifically Bitcoin “doublers” (fully automated investment platforms operating with no human intervention).

Vaccines Including AstraZeneca For Open Sale

One darknet vendor known as ‘COVID-19 Vaccine Shop’ was openly selling an assortment of vaccines in bulk ranging from AstraZeneca to SputnikV.

Screenshot of the ‘COVID-19 vaccine’ shop. Source: Coinfirm

Another vendor, the similarly named ‘Vaccine Shop’, openly states it is selling stolen vaccines.

Screenshot of ‘Vaccine Shop’. Source: Coinfirm

A vendor on one of the largest darknet marketplaces, Hydra, claims to deliver “certification of the completion of a full course of vaccinations from Covid-19, the dates of the vaccine and the series, the doctor’s signature and the seal of the medical organisation”.

Notwithstanding “the obvious dangers of having rogue agents within the medical profession”, one of the most worrying aspects is that some of these services are linked to people who can input and alter information within national health systems.

A US-based vendor, catering to US residents, claims to be able to input client details into the system.

Coinfirm report

Rigorous KYC Measures Remain Vital

The importance of stringent Know Your Customer (KYC) standards have long been a topic of debate. Exchanges and other entities that handle and swap crypto and don’t have KYC built into them can play host to criminals and malicious interest groups seeking an easy way to cash out their funds.

It is for these reasons that every obliged entity should institute rigorous KYC policies.

Coinfirm report
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Crypto Wallets Cryptocurrencies Hackers Illegal

Ledger And Shopify Hit With Class-Action Lawsuit Over 2020 Data Breach

One of the most popular hardware wallet companies, Ledger suffered a massive blow to their reputation last year when a massive data breach occurred, causing somewhere between 250,000 and 1,000,000 customer email addresses to be leaked – and among the affected customers, 9500 also had more personal information leaked, such as their names and addresses.

ID Tag Team Theft

It turns out that the incident was actually part of a coordinated effort by two rogue Shopify employees to harvest data from Shopify users, with slightly less than 200 distinct merchants affected.

As Ledger used Shopify’s platform to create their online store, both companies are now being sued in a class-action effort.

The lawsuit will be coordinated by Roche Freedman, a company known for taking on crypto-related cases.

Although Pascal Gauthier – the CEO of Ledger – took to Twitter at the time to reassure customers that the cryptocurrencies stored in the hardware wallets – also known as cold wallets – were not affected in the least, his statement was not well-received by several users who received threatening e-mails rife with promises of midnight visits and the like.

Ledger’s general counsel Antoine Thibault commented on the case, stating that although they will not comment on ongoing legal cases, the company would like to remind Ledger customers that their cryptocurrency stashes were safe.

“Ledger does not comment on ongoing legal issues. Ledger would however like to take this moment to remind our customers, yet again, never to divulge their 24 words and validate the identity of the recipient of your transactions. You are in sole and total control of access to your funds.”

In turn, Kyle Roche of Roche Freedman stated that the class-action lawsuit had been in preparation for a while – and that he and his firm had been consulting with blockchain experts ever since the incident had taken place.

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Australia Bitcoin Crypto News Cryptocurrency Law Illegal Scams

Australian Man Pleads Guilty to $90 Million Crypto Hedge Fund Scam

An Australian crypto fund manager has pleaded guilty in a US court for the theft of almost $90 million of investor’s money. 

Stefan He Qin was charged with defrauding clients over a three year period between 2017 and 2021 through two cryptocurrency hedge funds that he founded. The US Securities and Exchange Commission (SEC) began investigating one of the 24-year old entrepreneur’s businesses, Virgil Capital LLC, in December last year.

It was discovered that Qin had attempted to funnel money from his second fund, VQR Multistrategy, to pay investors of the Virgil Sigma Fund. However, after years of risky investments and frivolous spending, much of the funds were gone, leaving investors empty-handed.

Judge Valerie Caproni found Qin guilty of the charges on 4 February 2021 brought forward by the United States Attorney’s Office for the Southern District of New York. US Attorney Audrey Strauss said Qin is now awaiting sentencing after being found guilty of draining “almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors’ money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund.”

Special Agent Peter C. Fitzhugh who had been investigating the case reiterated the charges, stating that Qin had been using investor’s funds to “live his extravagant lifestyle.”

“Qin orchestrated this reprehensible criminal scheme for many years, making misrepresentations and false promises that coaxed investors into pouring millions of dollars into fraudulent cryptocurrency firms, all the while stealing the hard-earned money of his investors,” he said.

Crypto Scams on the Rise

The case is reminiscent of the recent Mirror Trading International (MTI) scam perpetrated by South African Johann Steynberg. In December last year, Steynberg reportedly fled South Africa after the country’s financial regulator began investigating his company. The Financial Sector Conduct Authority (FSCA) found evidence suggesting that MTI’s broker, Trade 300, was owned and operated by Steynberg.

Despite several warnings issued during 2020, clients continued to invest money into the firm, which promised unrealistic returns of up to 10 percent monthly. The unlicensed firm has now gone into liquidation, with assets worth approximately $863 million unaccounted for.

“There were no proper accounting records and Bitcoin was transferred in and out,” FSCA executive Brandon Topham told Bloomberg. “Thus no definitive answer currently exists as to how much Bitcoin was actually invested but is in the region of 23,000 plus.”

Due to fraudsters taking advantage of the panic and uncertainty brought about by the ongoing pandemic, law enforcement agencies around the world reported a rise in financial scams in 2020. Scams such as these are likely to continue throughout 2021.

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Australia Crime Crypto News Illegal

“E-bay For Criminals”: Australian Man Arrested For Running Illegal Marketplace With Cryptos

German authorities recently arrested an Australian man who ran an illegal marketplace, called “The E-bay for criminals”. Apparently, the man received payments via cryptocurrencies with transactions worth 4650 Bitcoins and 12,000 Monero — the current equivalent value of $212,832,280 Australian Dollars.

The 34-year-old, identified only as Julien K, was trying to cross the Danish-German border when the Police arrived and arrested him. The Dark Market was so large and popular in the darknet that The Australian Federal Police —together with the Scotland Yard, the Europol, German authorities, and the FBI— had to join forces to reach Julian’s whereabouts.

Dark Market Landpage

The Dark Market Ran Silk Road-style

Julian ran Dark Market similarly to Silk Road, the most famous digital black market that hosted illegal products and activities founded by Ross William Ulrich. But Silk Road still has its underground users: two months ago, the U.S. Justice Department seized $1 billion in moved Silk Road crypto.

Like Silk Road, Dark Market used Bitcoin and other cryptos as a payment method.

The Dark Market also used the Tor network for its illegal activities with cryptocurrencies.

There was a similar case in Australia, where New South Wales authorities arrested a woman behind a “Bitcoin scheme”. Police arrested the 59-year old in a shopping centre in Burwood, accused of belonging to a syndicate that profited off by illegally exchanging BTC for money. The case was called “The first kind in Australia”.

Dark Market was operating since 2014, but according to the German police, the joint investigation sparked in 2019 when they found a data processing platform that hosted illegal markets. Organized criminals ran the data center in an abandoned 5,000 square meters NATO bunker.

Likewise, authorities in the German city Koblenz seized around 20 servers in Moldova and Ukraine, shutting them down on Monday.

According to dark.fail, The platform was run on “Eckmar” a PHP script that kept shipping addresses encrypted:

Julian refused to speak to any investigator for now. Prosecutors are now analyzing the platform to discover all its users and proceed to a greater investigation.