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Several Crypto Mining Operations Busted in Russia

Several Crypto Mining Operations Busted in RussiaAuthorities and power utilities in various Russian regions have shut down illegal crypto mining farms, seizing hardware and taking operators to court. The action against the coin minting facilities comes amid discussions on a proposal to introduce criminal liability for miners breaking the upcoming legislation for the industry. ‘Underground’ Crypto Mining Farms Shut Down Across […]

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Hong Kong’s losses to crypto scams doubled to $217M last year: Report

Crypto-related scams in Hong Kong reportedly accounted for over 50% of the total $407 million stolen from city residents in tech crimes in 2022.

Some countries worldwide suffered bigger financial losses to cryptocurrency scams despite a massive bear market in 2022.

Losses from crypto scams in Hong Kong amounted to 1.7 billion Hong Kong dollars ($216.6 million) last year — surging 106% from a year before — according to local police.

The number of crypto-related scams reported in Hong Kong in 2022 equaled 2,336 cases, surging 67% from 1,397 cases recorded by police in 2021, the South China Morning Post (SCMP) reported.

Hong Kong scams involving crypto accounted for more than 50% of the 3.2 billion HK$ ($407 million) stolen from city residents in technology crimes, according to the official data from the Hong Kong police CyberDefender website. In the previous four years, online scammers bagged a similar amount of money or about 3 billion HK$ annually.

The were almost 23,000 reported cases of technology-related crimes in 2022.

Technology crime figures in Hong Kong. Source: Hong Kong police CyberDefender website

According to SCMP sources, police witnessed an increase in the use of cryptocurrency as a medium for online scams, with fraudsters being able to hide their identities, transaction flow and final destination. One insider reportedly said that crypto use in online crimes has made tracking criminal funds more complicated for enforcement.

The Hong Kong police force’s cybersecurity and technology crime bureau also shared some observations about a typical crypto-related scammer, describing such perpetrators as pretending to be highly experienced in investing in crypto assets, precious metals or foreign exchange products. Such persons often lure victims into installing fraudulent investment applications showing fake transactions and returns, police stated.

Related: Binance launches anti-scam campaign after Hong Kong pilot run

The report comes amid the government of Hong Kong becoming increasingly engaged with the development of cryptocurrency infrastructure, distinguishing its crypto regulation approach from China’s blanket crypto ban enforced in 2021. In February, Hong Kong’s Securities and Futures Commission called for public feedback on the newly proposed licensing regime for crypto exchanges set to take effect from June 2023.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Terraform Labs co-founder Do Kwon gets probed by Singaporean authorities

Local police in Singapore sent an email on Monday saying that they have begun a probe connected to Do Kwon’s Terraform Labs.

Local authorities in Singapore announced they had begun a probe that is connected to Do Kwon’s Terraform Labs.

According to a Bloomberg report, Singaporean police sent an email on March 6, which said, “investigations have commenced in relation to Terraform Labs.” The email also added that the inquiries are “ongoing,” and Do Kwon is not currently in the city-state.

Last month, on Feb. 16, the United States Securities and Exchange Commission (SEC) accused Do Kwon and Terraform Labs of fraud in a new lawsuit.

Some voices in the crypto space have criticized this lawsuit as a way for the SEC to go after stablecoins with future lawsuits. Lawyers in the industry have even called the SEC’s comparisons of assets “wild."

Meanwhile, the SEC probe uncovered that Kwon removed around 10,000 Bitcoin (BTC) from the Terra platform and the Luna Foundation Guard, which he eventually changed into fiat. In total SEC allegations claim Kwon has laundered over $100 million worth of Bitcoin since the initial collapse of the platform.

At the time of writing, Do Kwon has made no comment. The Terraform Labs co-founder has been active on social media throughout the entire scandal. However, he has not tweeted since the beginning of February.

Related: Gary Gensler’s SEC is playing a game, but not the one you think

This entire saga has its roots back in May 2022 when the stablecoin UST dropped from its peg to the U.S. dollar. This caused the price to collapse to zero, which subsequently caused a major implosion in the digital asset market with a loss of nearly $40 billion.

Terraform Labs has also been under investigation by authorities in South Korea, where a warrant was out for Kwon’s arrest. South Korean police traveled to Serbia in their efforts to locate Kwon. 

On Feb. 15, South Korean prosecutors requested a warrant for the arrest of a local e-commerce executive who they accused of accepting LUNA for promoting Terra Labs.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

French police arrest 2 people in connection to Platypus attack

The French police have arrested two suspects and seized 210,000 euros worth of crypto in connection with the Platypus exploit.

Two suspects have been arrested by the French police in connection with Platypus' $9.1 million exploit, and 210,000 euros worth of cryptocurrency has been seized, according to the local authorities. 

Investigations leading to the arrests were supported by on-chain sleuth ZachXBT and crypto exchange Binance, said Platypus. The decentralized protocol was compromised in three separate flash loan attacks carried out by the same exploiter on Feb. 16.

The attacks resulted in the theft of several stablecoins and other digital assets. The first attack resulted in the theft of approximately $8.5 million in assets. Approximately 380,000 assets were mistakenly sent to the Aave v3 contract in the second incident. As a result of the third attack, roughly $287,000 was stolen. The attack resulted in the depegged of the Platypus USD (USP) stablecoin from the United States dollar. 

Perpetrators used a flash loan method to explore a logic error in the USP solvency check mechanism within the collateral-holding, Platypus recently confirmed. The stable swap operations have not been affected.

A flash attack is the same method used by Mango Market's exploiter Avi Eisenberg, who claimed responsibility for manipulating the price of the MNGO coin in October 2022. After the exploit, Eisenberg said that “all of our actions were legal open market actions, using the protocol as designed.” Eisenberg was arrested in Puerto Rico on fraud charges on Dec. 28.

Platypus announced a plan to return funds to affected users on Feb. 23. According to the protocol, 63% of the main pool funds will be returned within six months. As per the plan, reminting frozen stablecoins could result in 78% of the funds being recovered. “If our proposal submitted to Aave is approved and Tether confirms reminting the frozen USDT, we will be able to recover approximately 78% of user’s funds,” noted the protocol.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Interpol Is Figuring Out How the Metaverse Will Be Policed

Interpol Is Figuring Out How the Metaverse Will Be PolicedThe International Criminal Police Organization, Interpol, is working on how to police the metaverse, a digital world that is projected as an alternative to the real world. Interpol secretary general Jurgen Stock believes the organization must be ready for this task in order to not be left behind by the metaverse and its related technology. […]

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Interpol wants to police metaverse crimes, reveals secretary general

According to Stock, criminals have started targeting users on platforms similar to the metaverse, adding that “We need to sufficiently respond to that.”

The International Criminal Police Organization (ICPO), a.k.a, Interpol, is investigating how it could police crimes in the metaverse. However, a top Interpol executive believes there are issues with defining a metaverse crime.

Interpol’s intent to oversee criminal activities on the metaverse was revealed by secretary general Jurgen Stock, according to BBC. Stock highlighted the ability of “sophisticated and professional” criminals to adapt to new technological tools for committing crimes.

The move for policing metaverse comes nearly four months after the international organization launched its own metaverse in October 2022, at the 90th Interpol General Assembly in New Delhi, India.

The official Interpol office in the metaverse. Source: Interpol

During this launch, the announcement read:

“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.”

According to Stock, criminals have started targeting users on platforms similar to the metaverse, adding that “We need to sufficiently respond to that.” However, the organization faces issues with defining a metaverse crime. Madan Oberoi, Interpol's executive director of technology and innovation, stated:

“There are crimes where I don't know whether it can still be called a crime or not. If you look at the definitions of these crimes in physical space, and you try to apply it in the metaverse, there is a difficulty.”

Moreover, he revealed that Interpol is also challenged with raising awareness about possible metaverse crimes.

Related: The world must take a ‘collective action’ approach to regulations — India’s finance minister

In parallel to launching into the metaverse in October 2022, the organization created a dedicated unit to fight crypto crimes.

The initiatives followed Interpol’s “red notice” to global law enforcement in September for the arrest of Terraform Labs co-founder Do Kwon.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Bitzlato Executives Arrested in Europe, Exchange Laundered €1 Billion, Europol Says

Bitzlato Executives Arrested in Europe, Exchange Laundered €1 Billion, Europol SaysEuropean law enforcement authorities have detained four more members of the executive team of crypto exchange Bitzlato, Europol announced. According to the police agency, nearly half of the funds processed through the platform were associated with various criminal activities. Bitzlato Senior Management Targeted in Europe, Exchange Infrastructure Dismantled High-ranking executives of the recently busted Bitzlato […]

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Nexo offices reportedly raided by police in Bulgaria

The investigators have alleged that Nexo is involved in money laundering and violating global financial sanctions against Russia.

Troubled cryptocurrency lender Nexo is facing more pressure from regulators as its offices have been reportedly raided as part of an international investigation.

A group of prosecutors, investigators and foreign agents started searches of Nexo’s offices in the Bulgarian capital, the local news agency Standart reported on Jan. 12.

The operation was reportedly initiated a few months ago, targeting a large-scale financial criminal scheme allegedly involving money laundering and violations of international sanctions against Russia. Citing sources of the Bulgarian National Television, the report alleges Nexo’s involvement in the scheme.

The television also highlighted Nexo’s alleged ties with the government of Bulgaria, specifying that Nexo was co-founded by former parliament member Antoni Trenchev and Georgi Shulev, the son of former deputy prime minister Lydia Shuleva.

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Nexo was quick to react to the latest news, taking to Twitter to assure the public that the company has been compliant with global crypto regulations and has enforced strict Anti-Money Laundering and Know Your Customer policies.

Related: Sanctions couldn’t ‘pull the plug’ on Tornado Cash: Chainalysis

“Unfortunately, with the recent regulatory crackdown on crypto, some regulators have recently adopted the kick first, ask questions later approach. In corrupt countries, it is bordering with racketeering, but that too shall pass,” Nexo wrote.

Founded in 2018, Nexo operates a cryptocurrency investment platform, also allowing users to stake and borrow against crypto. The firm first encountered issues in the United States last year, with the California Department of Financial Protection & Innovation filing a desist and refrain order against Nexo regarding its interest service in September. Nexo eventually decided to gradually cease operations in the U.S. after failing to find a dialogue with local regulators.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Breaking: FTX founder Sam Bankman-Fried arrested and in custody

A statement from the Attorney General of The Bahamas was made on Dec. 12.

Sam Bankman-Fried, the former CEO of the FTX cryptocurrency exchange and founder of Alameda Research has been arrested and taken into custody by authorities in The Bahamas.

According to a letter from the Office of the Attorney General on Dec. 12, Bankman-Fried was arrested by The Royal Bahamas Police Force following formal notification from the United States that it has filed criminal charges against SBF.

Prime Minister Philip Davis said in a statement both countries have "a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law."

Bloomberg reported on December 10 that prosecutors from New York, FBI agents and other regulators met with FTX’s lawyers to discuss the documentation investigators want to obtain. The Justice Department was "closely" examining whether FTX improperly transferred hundreds of millions around the same time as the company declared bankruptcy.

The letter announcing the arrest from the Bahamas Attorney General.

This is a developing story and more information will be added as it becomes available.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Coinbase report shows dramatic increase in law enforcement enquiries worldwide

The crypto exchange says the overall number of enquiries is up 66%, with the United States producing the most by far; the U.S., and three European countries made 80% of all requests.

Coinbase has seen information requests from law enforcement surge over the past year, the cryptocurrency exchange reported in its latest transparency report. The vast majority of the enquiries came from the United States and were tied to criminal investigations. 

Coinbase’s new transparency report covers the last four quarters ending with September. In that time, the exchange received 12,320 information requests from law enforcement, an increase of about 66%. The United States accounted for 5,304, or 43%, of those requests. The United Kingdom, Germany and Spain produced between 1,000 and 2,000 requests apiece. Those four countries accounted for 80% of requests, while 57 other countries also made requests.

The 1,304 requests from Spain represent an increase o 940%. It was one of six countries that had more than doubled their enquiries in the last year. Twenty-one countries sent requests for the first time during the reporting period, including the Czech Republic, which sent 104 of them.

Related: Binance CEO, Coinbase exec feature in Masterclass crypto crash-course

According to the report, which was attributed to chief legal officer Paul Grewal, Coinbase may challenge or ask agencies to narrow their requests, as decided by their team of lawyers. The exchange does not provide law enforcement with direct access to information, but:

“Coinbase may produce certain customer information, such as name, recent login/logout IP address, and payment information; this type of information may be subject to requests by government and law enforcement agencies when a customer uses one of our applications or our website, as described in our privacy policy.”

“We also aim to provide anonymized or aggregated data that aids law enforcement and government agencies with their work, where it is possible to do so,” the report added.

Coinbase CEO Brian Armstrong said in an interview earlier in December that the exchange’s trading revenue fell by about half over the past year. Coinbase has 108 million customers worldwide.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say