Tether freezes $225M USDT linked to romance scammers amid DOJ investigation

November 20, 2023 Coin Telegraph

Tether freezes 5M USDT linked to romance scammers amid DOJ investigation

The stablecoin issuer reported the illicit funds had been used by a Southeast Asia-based crime syndicate responsible for a “pig butchering” romance scam.

Stablecoin issuer Tether froze roughly $225 million worth of USDT tokens as part of an investigation into a Southeast Asia human trafficking syndicate launched by the United States Department of Justice (DOJ).

In a Nov. 20 announcement, Tether said it had worked with the DOJ and crypto exchange OKX to freeze $225 million USDT in “external self-custodied wallets.” The firm reported the illicit funds had been used by a crime syndicate responsible for a “pig butchering” romance scam — a technique in which bad actors attempt to develop an online relationship with unsuspecting individuals, often convincing them to invest in legitimate businesses before conning them.

According to Tether, the freezing of the USDT followed a “months-long investigative effort” into the location of the funds between the firm, OKX, DOJ, and U.S. law enforcement agencies. The stablecoin issuer said it would work with U.S. authorities to unfreeze any “lawful” wallets that may have been seized as part of the effort.

“Through proactive engagement with global law enforcement agencies and our commitment to transparency, Tether aims to set a new standard for safety within the crypto space,” said Tether CEO Paolo Ardoino. “Our recent collaboration with the Department of Justice underscores our dedication to fostering a secure environment. We believe in leveraging technology and relationships, such as our collaboration with OKX, to proactively address illicit activities and uphold the highest standards of integrity in the industry.”

Impressive work by @Tether_to and @okx teams, alongside with Law Enforcement to stop bad guys https://t.co/P0U8ydP91x
— Paolo Ardoino (@paoloardoino) November 20, 2023

Tether has previously worked with global law enforcement agencies to freeze assets allegedly linked to criminal syndicates, such as when the firm coordinated with Israel’s National Bureau for Counter Terror Financing to freeze roughly $873,000 worth of USDT used for funding terrorist activities in Israel and Ukraine. The latest $225-million freeze appeared to be the largest in Tether’s history.

Unlike many cryptocurrencies like Bitcoin (BTC), which has the ability to be held outside the control of anyone but the individual with the private keys, stablecoins like USDT are more likely to be issued by a single authority. As a result, the issuers sometimes have the capability of freezing funds and halting transactions in response to requests from law enforcement.

However, crypto moving through exchanges is sometimes subject to the same treatment. In August 2022, Binance said it had restricted account access to $1 million in crypto for a Tezos tool contributor following a request from authorities and similarly froze accounts linked to Hamas militants in October 2023 in response to Israeli law enforcement.

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Google sues scammers over creation of fake Bard AI chatbot

November 14, 2023 Coin Telegraph

chatGPT

Google has filed a lawsuit against scammers offering a malicious version of its AI chatbot Bard that tricks users into downloading and installing malware on their devices.

Google has filed a lawsuit against three scammers for creating fake advertisements for updates to Google’s artificial intelligence (AI) chatbot Bard, among other things, which, when downloaded, installs malware.

The lawsuit was filed on Nov. 13 and names the defendants as “DOES 1-3,” as they remain anonymous. Google says that the scammers have used its trademarks specifically relating to its AI products, such as “Google, Google AI, and Bard,” to “lure unsuspecting victims into downloading malware onto their computers.”

It gave an example of deceptive social media pages and trademarked content that make it look like a Google product, with invitations to download free versions of Bard and other AI products.

*Screenshot of fake “Google AI” social media page used by scammers. Source: Court documents (Google)*

Google said that unsuspecting users unknowingly download the malware by following the links, which are designed to access and exploit users’ social media login credentials and primarily target businesses and advertisers.

The tech giant asked the court for damages, an award of attorneys’ fees, permanent injunctive relief for injuries inflicted by the defendants, all profits obtained by the scammers, a comprehensive restraining order and anything else the court deems “just and equitable.”

The lawsuit comes as AI services, including chatbot services, have seen a significant increase in users worldwide. According to recent data, Google’s Bard bot gets 49.7 million unique visitors each month.

OpenAI’s popular AI chatbot service, ChatGPT, has more than 100 million monthly users with nearly 1.5 billion monthly visitors to its website.

This upsurge in popularity and accessibility of AI services has also brought many lawsuits against the companies developing the technology. OpenAI, Google and Meta — the parent company of Facebook and Instagram — have all been caught up in legal battles in the past year.

In July, Google was brought into a class-action lawsuit. Eight individuals who filed on behalf of “millions of class members,” such as internet users and copyright holders, said that Google had violated their privacy and property rights. It came after Google updated its new privacy policy with data scraping capabilities for AI training purposes.

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UK cryptocurrency scams jump 23%, young investors prime targets: Lloyds Bank

November 10, 2023 Coin Telegraph

Bitcoin Scams

According to the bank, potential cryptocurrency investors usually make an average of three payments before recognizing they’ve fallen victim to a scam.

One of the Big Four banks in the United Kingdom, Lloyds Bank, has said that reports of cryptocurrency investment scams by victims have surged by 23% in the current year compared to the same period in 2022.

According to a press release published by Lloyds Bank, an increasing number of investors face the threat of falling victim to fraudulent schemes through a wave of fake advertisements posted on social media. Each victim of a cryptocurrency investment scam is losing an average of $13,115 (10,741 British pounds), an increase from $8,562 (7,010 pounds) the previous year. This surpasses losses from other consumer frauds, such as romance scams or purchase scams.

*Screenshot of the report from Lloyds Bank. Source: Lloyds Bank*

According to the report, individuals aged 25–34 constitute a quarter of all crypto scam victims, making it the most prevalent age group affected. The criminal organizations orchestrating these scams adapt their strategies to capitalize on emerging trends, deceiving more victims into relinquishing their money. Recently, their focus has expanded to include younger investors, enticed by the allure of quick riches through cryptocurrency trading.

Potential cryptocurrency investors usually make an average of three payments before recognizing they’ve fallen victim to a scam. It takes approximately 100 days from the initial transaction date before they report it to their bank. Unfortunately, the funds are usually irretrievable for the bank by this time.

This Lloyds Bank report corresponds with findings from a Coinbase report on the cryptocurrency landscape, indicating that younger Americans are more receptive to unconventional avenues for financial independence, including crypto, than older generations. This susceptibility makes them vulnerable to scams.

Younger generations actively explore new economic opportunities, laying the foundation for a modernized system and a revitalized version of the “American Dream.” As the report outlines, they see technologies like cryptocurrency as a tool to modernize the system.

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JPEX scandal: Taiwan determines new suspects in alleged fraud — Report

November 9, 2023 Coin Telegraph

Coin Telegraph

Taiwan prosecutors want Chang Tung-ying, chief partner at JPEX’s office in Taiwan, to be held in custody over alleged fraud.

The saga of the imploded cryptocurrency exchange JPEX continues to develop as Taiwanese prosecutors have reportedly found new alleged suspects.

The Taipei District Prosecutors Office (TDPO) requested Chang Tung-ying, the chief partner at JPEX’s office in Taiwan, be held in custody over alleged fraud, the local TV channel TVBS News reported on Nov. 9.

Taipei prosecutors reportedly searched nine locations related to the JPEX investigation and summoned Chang and three other alleged suspects. The authorities identified Chang and JPEX lecturer Shih Yu-sheng (also called Shi Yu) as suspects in the case for violating the Banking Act and the Money Laundering Control Act.

Other defendants were released, including JPEX salespersons Liu Chien-fu and Niu Keng-sheng. According to the report, Liu was released on bail of 50,000 new Taiwan dollars ($1,550), while Niu, a registered person in charge of JPEX Taiwan, was released after questioning.

The report also noted that Nine Chen, a Taiwanese celebrity and singer who once represented JPEX as a brand ambassador, was also summoned by prosecutors. Prosecutors reportedly named Nine Chen as a defendant after initially calling him to testify as a witness.

*Nine Chen as JPEX brand ambassador. Source: JPEX*

Once a successful crypto exchange, JPEX abruptly halted some services in mid-September 2023, citing a liquidity crisis triggered by “unfair treatment” from several institutions in Hong Kong. The abrupt implosion fueled allegations about JPEX misleading investors by claiming to have applied for a crypto trading license and other issues.

JPEX quickly became the center of a major scandal in the industry. Hong Kong authorities launched an investigation after receiving over 2,000 complaints from JPEX users reporting nearly $180 million in losses. The implosion of JPEX has become a significant concern for financial regulators in Hong Kong, Taiwan and other countries, with many authorities initiating new measures to protect investors from losses due to similar incidents.

As of Sept. 25, law enforcement has arrested at least 11 alleged suspects in the JPEX case, while the alleged masterminds are still at large.

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BNB Smart Chain scam losses dropped 75% in Q3: Report

November 7, 2023 Coin Telegraph

Coin Telegraph

Security firm HashDit says the lower amount lost to scams on BSC could be due to an uptrend in security products addressing the threat.

Scams facilitated on BNB Smart Chain (BSC) decreased from $55.4 million in the second quarter of 2023 to $13.6 million in the third quarter, according to an AvengerDAO report contributed to by security firm HashDit. This represents a 75% drop in the amount lost to scams.

According to the security firm’s analysis, the drop can be attributed to various factors, including an increase in overall awareness among community members, an uptrend in security products flagging malicious websites and activities, and community members identifying scams early and giving warnings before the scammers can succeed.

*Amount lost to BSC scams in 2023. Source: HashDit*

Despite the drop, rug pulls represented 67% of total losses on the blockchain in the third quarter. According to HashDit, this remains BSC’s most common attack vector. With rug pulls, maliciously acting projects entice investors with marketing efforts but don’t deliver their promised products, and the founders run away with investor funds.

Reserves and price manipulation were also prevalent on BSC in Q3 2023. According to the report, this is because hackers are exploiting “poorly designed smart contracts.”

On Oct. 20, various security experts highlighted that malicious actors may prefer BSC because it’s cheaper and is perceived as having lower security than the Ethereum blockchain. According to CertiK security researcher Joe Green, fees on BSC are much lower than Ethereum, but the network’s stability and speed are the same. The researcher believes that because of this, hackers face “no financial pressure” when using BSC.

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FTX clients face deceptive priority withdrawal scam

October 21, 2023 Coin Telegraph

Coin Telegraph

FTX users have reported receiving deceptive emails purportedly sent by FTX Trading, West Realm Shires Services and FTX EU.

FTX users are reportedly being targeted in a withdrawal scam. X (formerly Twitter) user and FTX creditor advocate Sunil cautioned FTX account holders about the phishing scam and urged them to avoid clicking on dubious links.

Sunil’s X post highlights the ever-evolving tactics online scammers employ.

FTX users have reported receiving deceptive emails purportedly sent by FTX Trading, West Realm Shires Services and FTX EU. The emails falsely offer FTX creditors an exclusive chance for immediate asset withdrawals, bypassing waiting periods and legal proceedings. One example of a fraudulent email states:

“We are excited to offer the valued priority clients of FTX Trading Ltd., West Realm Shires Services Inc., and FTX EU Ltd., a special opportunity starting today, Oct. 20, 2023. As a priority client, you can now undergo the withdrawal process for your assets on the FTX platform and deposit them directly into your wallet, eliminating any waiting period and court outcomes.”

The email targets users keen to withdraw assets amid ongoing legal disputes involving Sam Bankman-Fried, the former CEO of the exchange.

The scam emerged shortly after FTX creditors achieved a notable milestone by announcing the resolution of customer property disputes.

Pending approval from a bankruptcy court, the revised plan envisions significant relief for FTX’s global customer base. According to the proposal, customers will obtain over 90% of the distributable value.

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EtherHiding: Why hackers may prefer Binance’s BNB Smart Chain

October 20, 2023 Coin Telegraph

BNB Chain

According to cybersecurity analysts at 0xScope and CertiK, threat actors may prefer using BNB Smart Chain contracts because it’s cheaper and seen as having lower security than Ethereum.

Despite the name “EtherHiding,” the new attack vector that hides malicious code in blockchain smart contracts doesn’t have much to do with Ethereum at all, cybersecurity analysts have revealed.

As reported by Cointelegraph on Oct. 16, EtherHiding has been discovered as a new way for bad actors to hide malicious payloads inside smart contracts — with the ultimate goal of distributing malware to unsuspecting victims.

These cybercriminals tend to prefer using Binance’s BNB Smart Chain, it is understood.

Speaking to Cointelegraph, a security researcher from blockchain security firm CertiK, Joe Green, said most of this is due to BNB Smart Chain’s lower costs.

“The handling fee of BSC is much cheaper than that of ETH, but the network stability and speed are the same because each update of JavaScript Payload is very cheap meaning there’s no financial pressure.”

EtherHiding attacks are initiated by hackers compromising WordPress websites and injecting code that pulls partial payloads buried in Binance smart contracts. The website’s front end is replaced by a fake update browser prompt which when clicked pulls the JavaScript payload from the Binance blockchain.

The actors frequently change the malware payloads and update website domains to evade detection. This allows them to continuously serve users fresh malware downloads disguised as browser updates, Green explained.

Screenshot of malware updates being deployed in BSC smart contract. Source: Certik

Another reason, according to security researchers at Web3 analytics firm 0xScope, could be because of increased security-related scrutiny on Ethereum.

"While we are unlikely to know the EtherHiding hacker's true motives for using BNB Smart Chain over other blockchains for their scheme, one possible factor is the increased security-related scrutiny on Ethereum.”

Hackers may face higher risks of discovery by injecting their malicious code using Ethereum due to systems such as Infura’s IP address tracking for MetaMask transactions, they said.

The 0xScope team told Cointelegraph they recently tracked the money flow between hacker addresses on BNB Smart Chain and Ethereum.

Key addresses were linked to NFT marketplace OpenSea users and Copper custody services, it reported.

Payloads were updated daily across 18 identified hacker domains. This sophistication makes EtherHiding hard to detect and stop, the firm concluded.

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Tim Draper warns of crypto scams using his AI-synthesized voice

October 19, 2023 Coin Telegraph

Advancements in AI have made it possible to create deepfake videos and voices in which scammers write the scripts to try and illegally obtain others' crypto.

American venture capitalist Tim Draper issued a warning on social media that scammers are attempting to con crypto users using an artificial intelligence (AI) voice generator.

In an Oct. 19 post on X (formerly Twitter), Draper warned his roughly 254,000 followers to be mindful of “thieves” using AI to create an approximation of his voice. According to the venture capitalist, “AI is getting smarter” as evidenced by followers seemingly reporting Draper tried to get them to send cryptocurrency.

Apparently AI is getting smarter, and people are using my voice to try to get you to send money (crypto). Please know that I will never ask the public X followers for money. If anyone asks, it is not me. They are thieves.
— Tim Draper (@TimDraper) October 19, 2023

Recent advancements in AI have made it easier for the average person to hear their favorite celebrity’s voice or watch a video of politicians saying whatever they want through certain programs. Following the collapse of FTX in November 2022, scammers created a deepfake video of former CEO Sam Bankman-Fried offering compensation to affected users. A similar situation occurred with a deepfake of Tesla CEO Elon Musk in May 2022.

Draper, who once predicted that the price of Bitcoin (BTC) would hit $250,000 by 2023, was an early investor in the cryptocurrency. Despite losing roughly 40,000 BTC when Mt. Gox collapsed in 2011, he has continued to be an advocate for the space and digital assets.

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Scammers prefer banking customers over crypto investors in Ireland: Report

October 16, 2023 Coin Telegraph

Banking

To date, Irish authorities managed to recover approximately 4 million euros of the 20 million euros lost in banking scams since January 2023.

Fraudsters in Ireland prefer targeting traditional banking customers instead of cryptocurrency investors amid a two-year-long bear market.

The frequency of cryptocurrency scams is often directly proportional to the hype and profits around the ecosystem at a given time. It appears that the ongoing crypto bear market has helped eradicate at least some of the bad actors, including scams and businesses, while it has largely retained serious investors who believe in due diligence.

The resultant difficulty in targeting crypto investors has led scammers in Ireland to focus on banking customers. According to the Irish Independent, in 2023, Irish people lost nearly 20 million euros ($21.8 million) to scammers posing as banking officials. A source revealed:

“In the last few months, what has become more and more common is that victims have been contacted often by phone or by email by fraudsters who are saying they work for legitimate, high-profile British banks or trading houses.”

Fraudsters mimicking traditional banks approach unwary customers through phone calls and emails. The Irish police are currently investigating numerous frauds of a similar nature and have been successful in retrieving 2 million euros ($2.1 million) from one of the scammers.

Irish authorities have recovered approximately 4 million euros of the 20 million euros lost to banking scams since January 2023. Detectives confirmed with the Irish Independent that crypto scams are no longer the dominant form of investment scams despite accounting for 95% of scams at its peak.

Instead of plotting complex crypto scams, fraudsters mimic banking websites and brochures to convince victims to part with their savings. Detectives have identified well over 20 bank accounts in the United Kingdom being used by the fraudsters but are yet to dismantle the operation.

The Bank of Ireland warned customers to be suspicious of banking employees pressurizing them into acting quickly and without thinking — a technique commonly used by scammers to dupe investors.

While Ireland investigates the rising scams against banking customers, an Australian bank recently claimed that 40% of scams “touch” crypto.

During a panel at the Australian Blockchain Week on June 26, Sophie Gilder, managing director of blockchain and digital assets at Commonwealth Bank, said:

“One in three of the dollars that are scammed from Australians touch crypto, one in three. So it’s the single largest lever that we have to reduce this impact on our customers.”

Nigel Dobson, banking services portfolio lead at ANZ, referred to data from the Australian Financial Crimes Exchange suggesting that the figure may be even higher, at 40%.

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