Cryptocurrencies are no longer the wild west of the internet. Scammers are being arrested all over the world
Just a few years ago, the cryptocurrency world may have been considered the wild west of the internet.
Since then, however, many countries have taken up the fight against crypto crime, and all sorts of specialised units have sprung up to combat cryptocurrency fraud. In the Czech Republic, the National Headquarters against Organized Crime is in charge of these cases, but other countries already have groups of experts working only on cryptocurrencies. Asian units are relatively active, where cryptocurrency fraud is an even bigger problem than in Europe. However, fraudsters are also being arrested in the United States, and the Czech police have also had several successful operations. We recently wrote about several arrests, including those in the Czech Republic.
Former stock exchange boss arrested for accepting bribes
Probably the most watched trial of a stock exchange boss is the one involving Sam Bankman-Fried. His bankrupt FTX exchange left behind a lot of robbed people and the trial has been going on for almost a year. But SBF isn't the only exchange boss who has ended up in court over strange financial machinations. In South Korea, the former head of the Coinone exchange was arrested and jailed for accepting bribes in exchange for listing altcoins on the exchange. According to the court, this is token price manipulation and the 41-year-old exchange boss will go to prison for four years for this act. He must also pay a fine of $1.4 million. Meanwhile, Coinone is one of the four largest exchanges in South Korea and had a really huge user base. It is therefore sad that the boss of the exchange accepted bribes and offered tokens to the users of the exchange that were designed from the start to make only the creator of the tokens rich.
The second person arrested is a 31-year-old man with the surname Kim, who was in charge of the team responsible for deploying new tokens on the exchange. He was sentenced by the court to three years in prison and fined $600,000. The team of fraudsters was complemented by two other men posing as cryptocurrency brokers. One of them was sentenced to 2 years and 6 months in prison and the other to 1 year and 6 months. These are the creators of the tokens, which the convicted boss then listed on his exchange to increase liquidity and thus, of course, the price of the token. Although the head of the exchange and the internal team are defending themselves, the court has enough evidence on both of them that they tried to destroy documents proving token manipulation. In addition, the court adds that the head of the new token listing team is not allowed to let this type of cryptocurrency pass. This is an interesting case that shows that the authorities there already understand the workings of exchanges and cryptocurrencies. This makes them better able to intervene and arrest fraudsters who are trying to fleece cryptocurrency investors out of their money.
12 years in prison for a fraudulent mining project
Pablo Renato Rodrigues was sentenced to 12 years in prison for running a cryptocurrency mining Ponzi scheme. His AirBit Club project defrauded investors of more than $100 million. Rodriguez was convicted in New York of conspiracy to defraud. According to the judgment, Rodriguez "preyed" on unsophisticated investors, promising them high profits from cryptocurrency mining and crypto trading. But this was a classic scam, using investors' money to fund his luxury lifestyle. In the fraudulent scheme, Rodriguez used bitcoins, a team of attorneys, and companies around the world to launder money. The court also seized $65 million worth of luxury real estate, 3,800 bitcoins, $900,000 in cash and a private jet worth $1 million from the convicted fraudster. The other participants in the scam are still awaiting sentencing.
The AirBit Club project was founded by Rodriguez in 2015 and offered investors appreciation based on cryptocurrency mining and trading. AirBit Club offered, now easily recognizable, passive income, guaranteed daily returns and extra bonuses from premium membership. All these things are perhaps already considered red flags by all experienced investors and similar projects are avoided. In one year, Rodriguez raised tens of millions of crowns from investors and already in 2016 there was a problem with fundraising. Anyone who wanted to withdraw money had to pay a large fee, write emails for weeks and read a series of excuses. But the most interesting condition for withdrawal was bringing new clients who would invest their money in AirBit. But the judgment and settlement of the investors will only start now, after more than 7 years.
Sanctioned wallets of hackers and fraudsters
Authorities are not always lucky enough to catch the actual perpetrators of fraud. In such cases, they still have the option of sanctioning the wallet, making it quite difficult for the owner to transfer funds from the crypt to the fiat. One such wallet, for example, is an Ethereum address linked to the Sinaloa cartel in Mexico. Its owner is believed to be Jimenez Castro, who has ties to the Sinaloa cartel and apparently handles international cryptocurrency money transfers for them. The wallet was first active in January this year and has received $740,000 worth of ether to date. Most of them came just from the Binance exchange. The Sinaloa Cartel is based in Mexico and is one of the main importers of fentanyl into the United States. So selling ethers will be more difficult in some countries around the world, but crooks routinely launder their cryptocurrencies through Russian exchanges ignoring Western sanctions.
Binance has had problems with scammers before, when OFAC issued a report saying that more than $2 million in cryptocurrency went from the exchange to wallets linked to North Korean hackers. The wallets were registered with the exchange in the name of Sang Man Kim, a 58-year-old North Korean resident. The latter has been quite active in recent years in the field of hacking and planting spies in IT companies. In addition, hackers have been shown to be working with Kim Jong-un's dictatorial regime and helping to fund, for example, its nuclear programme and ballistic missile development. The Binance exchange has come under criticism for facilitating money laundering on several occasions and has introduced stricter AML rules. In recent months, however, hackers have tended to use Russian exchanges that ignore regulations and sanctions from all other countries and allow hackers to transfer stolen cryptocurrency.
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Original post: BTCTip.cz