Bitzlato Exchange Busted as US Deals ‘Blow to Crypto Crime,’ Arrests Owner

January 19, 2023 Bitcoin.com

Criminal use of crypto an ‘emerging threat’ — Australian police

October 25, 2022 Coin Telegraph

afp

Law enforcement will need to “continually evolve” in order to keep pace with criminals, Australia’s federal police said.

Australia’s federal law enforcement agency has highlighted the criminal use of cryptocurrency as an “emerging threat” in the country but says it’s a continuous challenge to keep up the pace with criminals.

A spokesperson for the Australian Federal Police (AFP) told Cointelegraph that there has been an “increase in the number of offenders using cryptocurrencies to facilitate illicit business and attempting to conceal the ownership of assets,” noting:

“The criminal use of cryptocurrency is an emerging threat for law enforcement.”

However, they admitted the biggest challenge for law enforcement is to “continually evolve” their “tools, techniques and legal frameworks” to keep pace with criminals, particularly as mainstream adoption of cryptocurrency increases.

Last month, the AFP established a new cryptocurrency unit focused on monitoring crypto-related transactions.

However, the spokesperson said that despite the previous establishment of crypto-focused units, “criminals are continuing to find opportunities to avoid law enforcement and exploit the public.”

Misplaced focus?

One Australian private investigator believes the AFP is yet to focus on the “prolific and profitable” crypto crime yet — online investment fraud.

IFW Global executive chairman Ken Gamble told Cointelegraph that most of the AFP’s focus recently has been on crypto money laundering relating to drug trafficking, cyber intrusion, ransomware, email compromise and hacking, but not “large-scale online investment fraud.”

Scamwatch data between January and July this year found that Australians had lost 242.5 million Australian dollars ($152.6 million) to scammers in 2022 already, with the majority of funds lost to investment scams, including romance baiting scams, classic Ponzi schemes and cryptocurrency scams.

The figure is already 36% higher than the that of the whole of 2021.

The investigator also believes that some law enforcement departments are still not fully equipped to handle crypto crime cases adding that “law enforcement agencies need better training and education on how cryptocurrency works.”

A report from analytics firm Chainalysis in July found that 74% of public agencies felt under-equipped to investigate cryptocurrency-related crime, with respondents indicating that many agencies did not use specialized blockchain analytical tools.

“There is a shortage of professional and certified cryptocurrency tracers rapidly involving the criminal industry,” said Gamble.

This may be soon to change, with a number of international and national authorities announcing the establishment of crypto-crime-focused units this year.

Meanwhile, Interpol (International Criminal Police Organization) recently set up a special team in Singapore to help the government fight crimes involving virtual assets.

Interpol secretary Jürgen Stock stated at Interpol’s general assembly in India on the need for further training in crypto for law enforcement, saying cryptocurrency “poses a challenge,” as agencies are “not properly trained and properly equipped from the beginning.”

Put your hands up! Interpol storms into the Metaverse

October 21, 2022 Coin Telegraph

Coin Telegraph

Interpol’s metaverse is up and running and has been designed to streamline communication between various units, along with providing an avenue to conduct education and training.

The International Criminal Police Organization (Interpol) is putting on its virtual reality headsets as it prepares to crack down on an expanding list of “possible crimes” in the Metaverse.

According to an Oct. 20 announcement, Interpol has launched the “first ever Metaverse specifically designed for law enforcement worldwide” — introducing it at the 90th Interpol General Assembly in New Delhi — already fully operational.

Interpol outlined that a key driver behind its jump into the metaverse is due to bad actors already leveraging the tech to conduct crimes, while public adoption rates are likely to significantly increase over the next few years.

“Criminals are already starting to exploit the Metaverse. The World Economic Forum [...] has warned that social engineering scams, violent extremism and misinformation could be particular challenges,” the announcement reads, adding that:

“As the number of Metaverse users grows and the technology further develops, the list of possible crimes will only expand to potentially include crimes against children, data theft, money laundering, financial fraud, counterfeiting, ransomware, phishing, and sexual assault and harassment.”

Notably, people have already been put behind bars for their actions in the Metaverse. Last month, a South Korean man was sentenced to four years in prison for sexually harassing children in the Metaverse, and luring them to send lude photos and videos.

At the event in Delhi, Interpol also revealed plans to develop a division dedicated to cracking down on crypto crime. Interpol secretary general Jürgen Stock highlighted the need for the specified unit, as many law enforcement agencies are not currently equipped to deal with the complexities of the sector.

The special director of India’s Central Bureau of Investigations, Praveen Sinha also noted that it has become increasingly difficult to monitor cybercrime due to its global nature, and that coordination is a key factor that will make their efforts easier.

“The only answer is international cooperation, coordination, trust, and real-time sharing of information,” Sinha said.

The new Interpol metaverse will allow registered users to visit the platform and take a tour through a “virtual facsimile of the Interpol General Secretariat headquarters in Lyon, France” and partake in forensic investigation courses, among other things.

Interpol has outlined that its metaverse will hopefully provide a more streamlined and efficient way for its various outfits across the globe to communicate and work with each other. While education and training for students/new recruits was also highlighted.

Earlier this week, the Ajman Police announced it would provide its services to customers through metaverse technology, according to an Oct. 16 tweet from the authority.

ETH Merge Forks, Quantum Computing, Biden Draining Oil Reserves, DOJ Targets Criminal Crypto Use — Week in Review

September 25, 2022 Bitcoin.com

Tornado Cash left a void, time will tell what fills it — Chainalysis chief scientist

September 22, 2022 Coin Telegraph

afp

There’s a hole to be filled where Tornado Cash once was, and “junior mixers” are vying for position in the wake of the mixers sanction and ban by the U.S. Treasury.

The sanctions on cryptocurrency mixer Tornado Cash has left a vacuum for illicit fund mixing services, but more time is needed before we’ll know the full impact, according to Chainalysis’ chief scientist.

During a demo of Chainalysis’ recently launched blockchain analysis platform Storyline, Cointelegraph asked Chainalysis chief scientist Jacon Illum and country manager for Australia and New Zealand Todd Lenfield about the impact of the Tornado Cash ban.

Illum said whilst there is still some usage of the mixer, more time was needed to “see what's happening” and how the ”world responds to that designation,” adding that people are trying to figure out what to do now the crypto mixer is effectively gone:

“People are getting more cautious in the space and are not sure how to interact with Tornado Cash, we've seen deposits into services providing similar activity go down at least temporarily, because people are measuring like ‘what does this mean for me?’”

But, where others see obstacles, some are clearly seeing opportunity, Illum noted a crop of what he calls “junior mixers” have popped up looking to cash in on the void that Tornado Cash left.

An August report by blockchain security firm SlowMist stated 74.6% of stolen funds on the Ethereum (ETH) network were transferred to Tornado Cash in the first half of 2022, a sum of over 300,000 ETH, around $380 million.

Data from Chainalysis showed the 30-day moving average of the total daily value received by crypto mixers reached a new all-time high of $51.8 million in April.

“If the liquidity isn't there, you effectively dry up a lot of [a mixers] capability,” Lenfield added.

“The hunting for places where there is liquidity, when it's highly visible after things like the OFAC sanctioning of Tornado Cash, I think makes a very interesting space to keep an eye on.”

Tornado cash was sanctioned by the United States Treasury Department on Aug. 8 meaning criminal or civil penalties could be brought against U.S. citizens or entities who interact with the mixer. Over 40 cryptocurrency addresses purportedly connected to Tornado Cash were added to the Specially Designated Nationals list of the Office of Foreign Asset Control (OFAC).

Asked about the level of sophistication that law enforcement agencies had in dealing with crypto related crime, Illum mentioned one of the biggest gaps in law enforcement at the moment is blockchain-related training.

“As [blockchain] gains adoption, there's more people that are getting exposure to crypto, which also means that there are more agents or law enforcement personnel that need to have exposure to crypto as well.”

Lenfield noted that authorities are starting to build capabilities around cryptocurrencies, citing the Australian Federal Police’s (AFP) recent establishment of a cryptocurrency unit focused on monitoring crypto transactions.

“It is active in their minds, they are setting goals, and they're working through that…but as in any aspect, there's that learning curve to get them there, but there is 100% visibility and development in this space by those agencies.”

Earlier in September, Chainalysis Crypto Incident Response team helped law enforcement recover $30 million in crypto stolen in the Ronin Bridge hack by the North Korean linked Lazarus Group who used Tornado Cash to launder stolen assets.

Downfall of Canada’s Lambo driving ‘Crypto King’ reportedly sees $35M in losses

September 21, 2022 Coin Telegraph

<div>Downfall of Canada's Lambo driving ‘Crypto King’ reportedly sees M in losses</div>

bankruptcy proceedings

Founder of fraud recovery law firm says the only other avenue available for investors would be to make reports to the Ontario Securities Commission or the police.

A self-styled 23-year-old 'Crypto King' is facing a raft of demands among 140 of his investors as they try to claw back a collective total of $35 million from his company AP Private Equity Limited.

According to a Sept. 20 CBC report, creditors are hard at work trying to unravel where all the money they allegedly gave Canadian Aiden Pleterski to make crypto and foreign exchange investments on their behalf ended up.

A bankruptcy trustee's report, creditors meeting minutes, court filings, and complaints made to Investigation Counsel PC reveal Pleterski owned 11 vehicles, leased four other luxury cars, regularly flew on private jets, and was living in a lakefront mansion costing $45,000 a month to rent.

So far roughly $2 million worth of assets have been seized, among them two McLarens, two BMWs and a Lamborghini.

Norman Groot, the founder of Investigation Counsel PC, a fraud recovery law firm claimed the "large lifestyle burn rate" still doesn't "account for the amount of money that's missing."

An initial lawsuit brought against Pleterski resulted in his assets and bank accounts being frozen, but that has now been superseded by bankruptcy proceedings. At this stage, it is the only recovery process for investors because bankruptcy proceedings take precedence over civil claims.

Groot said that "the only other avenue available for investors would be to make reports to the Ontario Securities Commission and the police."

"Those processes are lengthy" he said adding, "The more time that goes by, the less likely there's a recovery of evidence and less likely there's a recovery of money."

Groot said the warning signs for investors of excessively high returns were there for all to see.

"Five per cent interest [a week] is not available on the open market. A 23-year-old kid is unlikely to be the next Bill Gates talk to somebody who is conservative and get a second opinion."

Creditor Diane Moore invested $60,000 and said her investment contract gave her the lion's share of a 70-30 split on any capital gains which were targeted at 10 to 20 per cent biweekly.

“The whole thing was based on trust," she said, claiming to be out of pocket $50,000.

Pleterski's lawyer Micheal Simaan has disputed the allegations and said his client has been cooperating fully with the bankruptcy process.

According to Simaan his client started investing in crypto as a teen. His success during the bull markets prompted others to offer cash freely for investments in the hopes of striking it rich.

"Shockingly, it seems that nobody bothered to consider what would happen if the cryptocurrency market plummeted or whether Aiden, as a very young man, was qualified to handle these types of investments."

Pleterski claimed his investment company ran into trouble thanks to "a series of margin calls and bad trades," possibly exacerbated by the market crash and ongoing crypto winter.

He said tha all the money fronted by investors in late 2021 and early 2022 is gone.

The trustee noted that they still needed to receive supporting evidence of the trades after requesting proof of transactions and bank statements.

FBI Arrests 2 Men Planning ‘Violent’ Robbery of Bitcoin Worth Millions of Dollars — They Face 20 Years in Prison

June 28, 2022 Bitcoin.com

Illicit crypto usage as a percent of total usage has fallen: Report

June 14, 2022 Coin Telegraph

AML

A rapidly growing crypto market means that hacks and scams are accounting for less overall activity, and their percentage of total usage continues to decline.

Illicit cryptocurrency activity in 2021 and the first quarter of 2022 has declined as a percentage of overall crypto activity, according to blockchain forensics firm CipherTrace.

The cryptocurrency industry has long held a reputation in some jurisdictions as a haven for illegal activity. However, CipherTrace estimates that illicit activity was between 0.62% and 0.65% of overall cryptocurrency activity in 2020. The firm reported that it has now fallen to between 0.10% and 0.15% of overall activity in 2021.

In its Cryptocurrency Crime and Anti-Money Laundering Report released June 13, CipherTrace outlined that the top ten decentralized finance (DeFi) hacks in 2021 and Q1 2022 netted attackers $2.4 billion.

Over half of that figure came from just two events, the largest being the late March 2022 Ronin Network exploit worth about $650 million and the $610 million August 2021 hack of the Poly Network, most of which was returned by the anonymous hacker.

Within a similar time period, anti-money laundering (AML) related fines in the banking sector increased dramatically with 80 institutions fined in 2021, up from just 24 in 2020 according to Kyckr.

While the total dollar amount of the fines fell from 2020, last year saw the banks pay $2.7 billion worth of fines for AML or Know Your Customer (KYC) related violations, the largest single fine totaling around $700 million.

While significant sums have been exploited in crypto, CipherTrace detailed the rapidly expanding crypto ecosystem, noting the total crypto market activity for 2020 was around $4.3 trillion, which grew to approximately $16 trillion of activity just in the first half of 2021.

CipherTrace says that the growth of the crypto market also brings with it increased scrutiny from the world's regulators, who are “starting to take decisive action to ensure that the space isn’t just a modern-day wild west.”

Some of the most significant regulatory events cited in the report include the United States President Biden’s crypto executive order in March to study blockchain technology, Dubai establishing a virtual assets regulator, and the European Union’s proposed anti-money laundering laws.

CipherTrace added organizations are going to have a “very real incentive to shape up” or face “heavy losses at the hands of the government,” adding it expects the threats existing in crypto will be the focus of future regulatory efforts.

US, UK, Canada, Australia, Netherlands Share Crypto Criminal Leads, Including a Potential $1B Ponzi Scheme

May 14, 2022 Bitcoin.com

How to protect yourself from the recent spate of ‘crypto muggings’

May 13, 2022 Coin Telegraph

Blockchain security

Cointelegraph spoke with security experts who shared tips on how to keep crypto safe after a slew of robberies in the UK successfully stole thousands worth of crypto from everyday holders.

There has been a spate of “crypto muggings” in London recently, with thieves threatening crypto holders with violence unless they transfer over their digital currencies held in mobile phone wallets or on crypto exchanges.

As detailed by The Guardian UK, crime reports from the City of London police detail how thousands of dollars worth of crypto has been stolen by thugs in person. One victim said their phone had been pick-pocketed while out drinking and they later realized over $12,000 worth of Ethereum (ETH) had been siphoned from their Crypto.com account. The victims believes the thieves witnessed them type in their account pin.

Another victim was approached by a group offering to sell him cocaine and after moving to another location to buy the drugs, the person was held against a wall whilst the gang accessed his phone and crypto account using facial verification, transferring over $7,000 worth of Ripple (XRP) to their own wallets.

This is an increasingly common variation on what is termed a “$5 wrench attack”.

As blockchain transactions are irreversible and most methods of cryptocurrency storage place responsibility for security of the assets with the individual who owns them, Cointelegraph spoke with blockchain security firm BlockSec who shared the following tips on how to protect crypto from a mugging:

“Do not deposit a large amount of crypto in a wallet or exchange app. Only leave a small portion in there. You can have a multi-sig wallet and with a policy saying only two signers can move the money in the wallet. By doing so, only a small amount of crypto will be lost during the mugging.”

BlockSec also suggested a way to trick thieves if a crypto user is mugged, saying some smart phones can have different logins which can hide certain applications such as Huawei’s “PrivateSpace” feature:

“The apps in the 'PrivateSpace' are different from the main ones actually used. So if the users are mugged they can enter into the 'PrivateSpace' showing that they don’t have any crypto apps installed on their phone, or vice versa, can hide crypto apps in this space.”

Samsung phones have a similar feature called a “secure folder” which can be used to hide all your crypto applications behind a PIN or password and the folder itself can also be hidden from the home screen.

On Apple iPhones apps can be moved to one page on the home screen and hidden all at once, and there are further options such as removing an individual app from showing on the home screen only to be accessed via search.

Cointelegraph also spoke with a pseudonymous Twitter user and independent security researcher known as “CIA Officer” popular for creating and sharing guides and tips on how crypto users can harden security of their assets.

You've been asking me for a long time and finally I decided to write an ultimative thread on an advanced (and authorial, please note) cryptocurrency storage technology

Read carefully, there will be only Spy-level trips
— CIA Officer (@officer_cia) April 25, 2022

CIA Officer shared an article they wrote in April featuring 13 tips on the principles of storing cryptocurrencies, saying:

“I wrote the article because my sense of justice just pushes me forward because maybe the biggest threat to crypto is crypto scams as people just get disappointed and leave forever.”

In the article, CIA Officer gives a reminder that mobile wallets like MetaMask are only interfaces and recommends storing all crypto on a cold wallet such as Ledger or Trezor as opposed to keeping it on an exchange or in a mobile wallet.

A physical storage device will keep all crypto offline and assets can only be moved if someone has access to the wallet along with knowing the PIN and in some cases a password. One can even be created using an old smartphone rather than using a dedicated device.

The crypto stored on the cold wallet can be further security hardened and CIA Officer echoes the advice from BlockSec to set up a multi-signature wallet th uses two or even three separate devices to approve a transaction.

CIA Officer also shared their rules for crypto OpSec, which is shorthand for “operational security” a process of risk management with the goal of preventing leaks of sensitive information.

“You should build your own stone wall of OpSec, so you'll know perfectly what to do if something happens.”

In light of the muggings, such OpSec measures include keeping any crypto investments a total secret. Potential thieves in public settings could overhear a discussion or even witness a person’s crypto holdings, as in the above case where the victim was pickpocketed.

“Being suspicious is always a good thing,” CIA Officer writes, “you may try to be hacked through acquaintances, either those pretending to be acquaintances or acquaintances themselves.”

crypto crime

Misplaced focus?

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