Singapore's Group-IB highlights the lingering threat of Inferno Drainer in crypto through users of the scam-as-a-service dashboard.
Four alleged perpetrators of a massive crypto investment scam are facing potential jail time of up to 20 years following their indictment on Wednesday. According to the U.S. Department of Justice (DOJ), Lu Zhang of Alhambra, California, Justin Walker of Cypress, California, Joseph Wong of Rosemead, California and Hailong Zhu of Naperville, Illinois conspired to […]
The post DOJ Accuses Four US Residents of Laundering Money for $80,000,000 ‘Pig Butchering’ Crypto Investment Scam appeared first on The Daily Hodl.
The ringleader of a Miami-based crew that defrauded banks out of millions of dollars has been sentenced to over five years in prison. In a new press release, the U.S. Department of Justice (DOJ) says that Miami resident Esteban Cabrera Da Corte has been sentenced to 63 months in prison for masterminding a scheme that […]
The post Miami Fraudster Sentenced to 63 Months in Prison for Duping Banks out of $4,000,000 in Crypto Scheme appeared first on The Daily Hodl.
The November 2022 Alameda gap exposed vulnerabilities in the crypto market, shedding light on FTX and Alameda Research’s fraud.
In November 2022, the cryptocurrency world was rocked by the collapse of FTX, one of the largest cryptocurrency exchanges. The collapse was triggered by a liquidity crisis at FTX, which was caused by a combination of factors, including mismanagement of customer funds and risky trading practices by FTX’s sister company, Alameda Research.
The collapse of FTX had a ripple effect across the crypto market, causing a sharp decline in cryptocurrency prices, a drain of liquidity and a loss of confidence in the crypto industry. It also raised serious questions about the safety and security of customer funds on cryptocurrency exchanges. The crypto industry’s lack of risk management standards was exposed through the crisis.
FTX has filed for bankruptcy, revealing a debt of over $3 billion to its creditors. Additionally, the exchange is unable to locate approximately $8.9 billion worth of customer assets. The exact amount of money lost by customers is difficult to determine, as some customers may have been able to withdraw their funds before the exchange suspended withdrawals. However, it is estimated that customers lost billions of dollars in the FTX crash.
The collapse of FTX caused a sharp decline in cryptocurrency prices. The total market capitalization of the crypto market fell from over $1 trillion in November 2022 to under $800 billion in December 2022. This represents a market collapse of over $200 billion in dollar terms.
SBF saw an opportunity to create wealth at an unparalleled pace by combining the ICO method of token creation and subsequent leveraging.
SBF saw an opportunity to profit by creating a new cryptocurrency exchange that would exploit the shortcomings of existing exchanges. Bankman-Fried began by setting up a quantitative trading firm called Alameda Research.
Alameda Research used sophisticated algorithms to trade cryptocurrencies on a variety of exchanges. Alameda Research was very successful, and it quickly became one of the largest cryptocurrency traders in the world.
In 2019, Bankman-Fried launched FTX, a cryptocurrency exchange designed to be more user-friendly and efficient than existing exchanges. FTX also offered a number of features that were not available on other exchanges, such as margin trading and derivatives trading. However, none of the regulatory controls typically needed by mainstream financial services trading platforms were addressed.
FTX and Alameda Research were closely linked. Bankman-Fried and Caroline Ellison were the CEOs of FTX and Alameda Research respectively. However, Bankman-Fried controlled a majority of the shares in both companies. Alameda Research also used FTX as its primary exchange.
The close relationship between FTX and Alameda Research allowed Bankman-Fried to engage in a variety of fraudulent activities, including:
The scam began to unravel in November 2022 when it was revealed that Alameda Research held a large position in FTT, the native token of FTX.
The report sparked a sell-off of FTX Token (FTT), which caused the token’s price to plummet. It also raised concerns about the financial health of Alameda Research and FTX. This led to a liquidity crisis at FTX, as customers rushed to withdraw their funds from the exchange.
FTX was unable to meet the withdrawal demands, and it was forced to suspend withdrawals. FTX also filed for bankruptcy on Nov. 11, 2022. The collapse of FTX had a devastating impact on the crypto market.
In November, a significant decrease in liquidity within the crypto market was coined as the “Alameda gap” by blockchain data firm Kaiko. This term emerged due to the notable role played by Alameda Research, the largest market maker during that period.
The Alameda Gap represented a substantial decline in available liquidity, impacting trading volumes and market stability. This phenomenon underscored the influence of major market participants and highlighted the intricate dynamics that govern cryptocurrency markets.
While the FTX episode may have been the last domino to fall in a series of bankruptcies that were filed during 2022, it was easily the biggest event of the year, and it put the industry under a legal and regulatory microscope.
SBF was arrested in the Bahamas on Dec. 12, 2022, after United States prosecutors filed criminal charges against him. He was extradited to the U.S. in January 2023 and went on trial in October 2023.
The arrest and trial of SBF was a major development in the crypto industry. It was the first time that a major crypto founder had been arrested and tried on criminal charges. Bankman-Fried was charged with seven counts of fraud and conspiracy.
The key witnesses for the prosecution were:
Ellison, Singh and Wang all pleaded guilty to multiple charges and cooperated with the prosecution. They testified that Bankman-Fried knowingly misled investors and customers about the financial health of FTX and Alameda Research. They also testified that Bankman-Fried used FTX customer funds to cover losses at Alameda Research and to fund his own lavish lifestyle.
Bankman-Fried was found guilty of all seven charges on Nov. 2, 2023. He faces a maximum of 115 years in prison. Bankman-Fried denied all of the charges against him. He said that he made mistakes but that he did not commit any crimes.
There is often a silver lining with black swan events. A black swan event is one that is impossible to predict and has severe consequences. In the wake of the FTX and Alameda Research scam, several things have gained momentum, and the industry has focused on getting itself regulated. Across the world, regulators and crypto firms have worked collaboratively and consciously to protect investors.
The following are some notable developments in the crypto industry post the FTX crisis:
Investors also need to be vigilant and do their own research before participating in any cryptocurrency exchange-related activities. Investors should look for exchanges that are regulated, transparent and have a good reputation.
Phishing scammers have been spreading fake news of a $37 million dollar Uniswap exploit using a convincing fake Blockworks website.
Phishing scammers have cloned the websites of crypto media outlet Blockworks and Ethereum blockchain scanner Etherscan to trick unsuspecting readers into interacting with a phishing site.
A cloned Blockworks site displays a fake "BREAKING" news report of a supposed multimillion-dollar “approvals exploit” on the decentralized exchange Uniswap and encourages users to a faked Etherscan website to rescind approvals.
The fake Etherscan website, displaying a purported token and smart contract approval checker, instead contains a smart contract that would likely drain a crypto wallet when connected.
Related: 85% of crypto rug pulls in Q3 didn’t report audits: Hacken
An age check of the domains shows the fake Etherscan site — approvalscan.io — was registered on Oct. 25, with the faked Blockworks site — blockworks.media registered a day later.
Magazine: Ethereum restaking — Blockchain innovation or dangerous house of cards?
Fantom Foundation's wallet was reportedly drained of funds by a “Fake_Phishing” account.
Fantom Foundation, developers of the Fantom network, have reportedly been hacked for over $6.7 million worth of cryptocurrency.
Blockchain data shows that an address labeled “Fake_Phishing188024” was sent over 2,000 Convex (CVX) tokens and other cryptocurrencies from a known Fantom Foundation wallet. On-chain sleuth Spreek reported the attack on X (formerly Twitter) and estimated losses at $6.7 million. Security platform CertiK has estimated losses at only $657,000. The Foundation has yet to confirm the attack.
total attacker profit (may not all necessarily be from fantom or related wallets) seems to be ~$6.7m pic.twitter.com/0rkDHULsdI
— Spreek (@spreekaway) October 17, 2023
The Fantom Foundation is the developer behind Fantom network, an Ethereum Virtual Machine (EVM)-compatible smart contract platform. The network has over $45 million in assets locked within its contracts, according to DeFiLlama. The attack was against the foundation itself and not the Fantom network.
On October 17, on-chain sleuth Spreek reported that the foundation was “allegedly” attacked, based on a report from Telegram. They later listed the hacked wallets and estimated losses at $6.7 million, though the drained funds may have included other sources outside the Fantom Foundation.
Related: Fantom DEX rescued at eleventh hour following planned shutdown
Blockchain security platform CertiK confirmed that the foundation had been hacked but estimated the losses at only $657,000. Delving into the blockchain data shows that Fantom Foundation Wallet 1 on Ethereum sent over 2,000 Convex (CVX) tokens, 1,000 Dai (DAI), 4,500 USDC (USDC) and other tokens to a wallet labeled “Fake_Phishing188024.” In addition, Fantom Foundation Wallet 20 on Fantom network sent over 1 million Fantom (FTM) tokens to an account labeled “Fake_Phishing32.” When a development team sends funds to a known scam account, this generally indicates that the team’s private key has been stolen.
At the time of publication, the team has not yet made an announcement regarding the incident.
In their thread on X, Spreek stated that Fantom wallets 16 and 19 have been drained of funds as well.
This is a developing story, and further information will be added as it becomes available.
Leaked mobile phone numbers have given scammers an easy way to drain Friend.tech user accounts.
A single scammer has reportedly managed to steal around $385,000 worth of Ether (ETH) in less than 24 hours amid a scourge of SIM-swap hacks seemingly targeting Friend.tech users.
On Oct. 5, blockchain sleuth ZachXBT reported the same scammer had pilfered 234 ETH over the past 24 hours by SIM-swapping four different Friend.tech users.
The on-chain movement of crypto assets was traced back to the same hacker who drained the accounts of the four victims.
The same scammer profited $385K (234 ETH) in the past 24 hours off SIM swapping four different FriendTech users. pic.twitter.com/03BoBEqGax
— ZachXBT (@zachxbt) October 4, 2023
One of the reported victims of the most recent chain of SIM-swap attacks posted to X (Twitter) following the attack:
“Got sim swapped. Apparently, dude was able to do it from an Apple store and switched it to an iPhone SE. Don’t buy my keys, that wallet is compromised.”
X user “KingMgugga” reported an attack targeting them happening in real time, posting to X that they were “getting f---ing sim swapped watching it happen” and asking for help. Meanwhile, another X user, “holycryptoroni,” confirmed they were similarly attacked, lamenting, “I got swapped sorry.”
Earlier this week, a further four Friend.tech users claimed to have their accounts drained as a result of a SIM-swap or phishing attack, totaling around 109 ETH stolen.
I was just SIM swapped and robbed of 22 ETH via @friendtech
— daren (friend, friend) (@darengb) October 3, 2023
The 34 of my own keys that I owned were sold, rugging anyone who held my key, all the other keys I owned were sold, and the rest of the ETH in my wallet was drained.
If your Twitter account is doxxed to your real… pic.twitter.com/5wA86mjYEG
Friend.tech allows users to purchase “keys” of individuals, which grants access to private chat rooms with them.
The SIM-swap scam occurs when scammers gain access to the victim’s phone number and use it to acquire authentication, which enables them to access their social media and crypto accounts.
Manifold Trading, a firm building tools for the ecosystem, estimated that $20 million of Friend.tech’s $50 million of total value locked could be at risk. It called for the platform to beef up its account security measures by enabling two-factor authentication (2FA).
Related: How easy is a SIM swap attack? Here’s how to prevent one
There have also been calls for X to implement 2FA security measures to prevent mobile phone numbers from getting leaked following the high-profile hack of Vitalik Buterin’s account in September, which was also due to a SIM swap attack.
“0xfoobar,” founder and CEO of wallet security firm Delegate, advised removing phone numbers from social media accounts.
crypto twitter is like a neighborhood where once a day somebody leaves their front door open, gets robbed, and everybody comes together to lament the loss, leaving their own front doors open. instead of retweeting the 75th simswap of the week go remove your phone from everything
— foobar (@0xfoobar) October 5, 2023
Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis
The US government, Thai police, and the world’s largest crypto exchange platform by volume just toppled a multi-million-dollar crypto scam. In a new company blog post, crypto exchange Binance says that it has contributed to taking down the criminal network that ran an elaborate scheme that targeted novice traders with fake investment platforms. “The Cyber […]
The post US Government, Binance and Thai Police Take Down ‘Pig Butchering’ Ring As $277,000,000 Seized From Scammers appeared first on The Daily Hodl.
Pond0x reported that its DEX reached $100 million in cumulative volume, citing a Dune dashboard as evidence.
The Pond0X decentralized exchange (DEX) has reached more than $100 million in total trading volume, according to a September 28 social media post from its official channel. Investors previously lost over $2 million in the launch of the exchange’s native token, PNDX, when the coin turned out to have a transfer function that allowed anyone to transfer it without the owner's permission. But supporters claim these losses were not the fault of the developer.
$108,000,000 Trade Volume ✅
— Pond Coin (@Pond0x) September 28, 2023
And counting.
What comes next…?
pic.twitter.com/lpetFqJAkq
As evidence for Pond0X DEX’s trading volume, the official channel cited a Dune dashboard created by user mogie, which shows over $111 million in all-time trading volume as of September 29.
The PNDX token launched on July 28. At the time, critics accused the project of being a “rug-pull” or exit scam. At issue was the unorthodox way that the project’s founder, Jeremy Cahen (also known as “Pauly”), launched the coin. In the launch post on X (formerly Twitter), Cahen posted the URL to an app that allowed people to deposit a fixed amount of Ether (ETH) to receive a fixed amount of PNDX. He also posted the contract address for the token.
In response, some investors started buying the coin on Uniswap, using its contract address to identify it, while others deposited ETH into the app to receive PNDX. The price on Uniswap quickly rose above that of the ETH needed to mint PNDX, so minters started selling their coins into the market at a profit. Critics claimed that this process transferred over $2 million of wealth from those who bought the coin on Uniswap to those who minted it using the app. The ETH deposited through the app went into a contract that contained no means of reclaiming the funds, leading critics to allege that the whole project was intended to drain funds from investors and send it to Cahen.
In addition, coding experts began claiming that the token lacked a normal transfer function. Instead of only allowing the token owner to transfer it, PNDX allowed anyone to transfer tokens. This meant that each PNDX owner could lose their tokens at any moment, since any programmer could “steal” their PNDX using developer tools. On July 29, Solidity enthusiast and blogger sm-stack claimed they ran a test in Foundry that proved this point.
However, more than two months after the project’s launch, it continues to garner hundreds of supporters on Twitter, with replies to official posts routinely saying such things as “FEELS GOOD MAN” and “Best DEX, don’t see a reason for people to use other tbh.”
Best DEX, don’t see a reason for people to use other tbh
— Lemur (@OGLemur) September 28, 2023
On July 29, crypto trader and blogger Antony Williams claimed to have read the app’s smart contract code and determined how it works. According to him, Pond0x is “fundamentally an LP Farm” and not a complete scam. The app issues each user an ID that determines the user’s share of a pool of Pepe (PEPE) tokens. Users can increase the Pepe rewards they are entitled to by calling the “BribeforLevelUp” function. To call this function, the user must deposit 0.26 ETH. This ETH is used to purchase Pepe tokens, which then get deposited into the pool to pay out rewards. The exchange also issues a “Score” to each user. Higher scores represent more potential rewards from trading fees collected, all other factors being held constant.
Related: BALD token developer denies rug pull as price falls 85% post-launch
Williams did not say these rewards could be claimed immediately, but asserted that the developer “likely” has the intention to pay them out at some point in the future. He also claims that the PNDX token “is essentially valueless,” which may have been created ithis way “to avoid legal complications.”
The project launched its decentralized exchange on September 1. According to the Dune dashboard cited above, this DEX has now reached over $100 million in trading volume, showing that at least some traders are undeterred by Pond0X criticism.
Five people have reportedly been arrested in Thailand for allegedly fleecing millions of dollars from victims in a crypto and gold investment scheme. According to a new report from the Bangkok Post, Thailand’s Cyber Crime Investigation Bureau (CCIB) says that four Chinese nationals and a Lao citizen have been arrested in connection with perpetrating a […]
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