A recent Bitcoin scam on Twitter that compromised several major companies verified accounts came from a third-party app, tech news outlet the Next Web (TNW) reports Friday, Nov. 16, citing social media officials.

Speaking to TNW, a Twitter spokesperson confirmed that the attack came from an outside software provider and not from Twitter’s own system. However, the official refrained from naming the app.

The spokesperson reportedly explained that the attackers exploited a third-party marketing solution to launch a Bitcoin (BTC) giveaway from several verified accounts, including Google’s G Suite and major U.S. department store retailer Target.

The information was implicitly confirmed by Target. Its representatives told TNW that the hackers used a third-party marketing app, authorized to post content on Target’s behalf.

As Cointelegraph previously reported, on Wednesday, Nov. 14, hackers took overG Suite and Target accounts (800,000 and 1.92 million followers, respectively) and posted malicious cryptocurrency giveaway links. The message in G Suite’s account also falsely claimed that users could make payments in G Suite using cryptocurrencies.

Moreover, in early November several verified Twitter accounts, including those of film production firm Pathe U.K. and U.S. politician Frank Pallone Jr., were breached to pose as Elon Musk. Once hackers gained control of accounts, they changed the profile picture and name in order to pose as Elon Musk and offer scammy Bitcoin giveaways.

Bitcoin scammers have already posed as Elon Musk for several times, prompting the Tesla founder to seek help from Jackson Palmer, the creator of Dogecoin (DOGE), who claimed to have invented an anti-scam script.

This post credited to cointelegraph Image source: Cointelegraph 

Earlier this week, a crypto exit scam in South Korea called “Pure Bit” disappeared with more than $30 million in user funds.

On November 4, the group conducted an initial coin offering (ICO) to raise nearly $30 million using Ethereum(ETH) to build a cryptocurrency exchange.

On November 13, as CCN reported, Pure Bit and its operators shut down all of their social media handles including KakaoTalk groups, kicking out investors in various public chat groups with the message “I’m sorry.”

Within hours after the incident occurred, every finance and business-focused mainstream media outlet in South Korea reported the case, raising awareness and reporting to the authorities.

One publication went as far to track the Ethereum address of Pure Bit to request Upbit, the second largest cryptocurrency exchange in South Korea, to block the account of the scammers and freeze their funds. Upbit accepted the request and immediately froze the funds.

Weird Turnaround

Cryptocurrency Exchange pure bit exit scam

Possibly due to the involvement of law enforcement agencies and the unexpected support from the country’s mainstream media to provide extensive coverage on the scam, the group already partially refunded several victims and promised to refund all of the remaining funds.

The group released a statement which was reported by BlockchainROK, apologizing for its fraudulent operation. The CEO stated that he was “blinded by money” and made an “unforgivable mistake” that cannot be turned around.

“This is Pure Bit. First off, I would like to apologize to everyone that was affected by the ICO. Since November 5, I raked in 16,000 ETH and did not open a crypto exchange as promised. I kicked out everyone in our social media chat groups and disappeared without any message. I negatively affected investors in the project psychologically and financially.

“I made an unforgivable mistake that cannot be turned around, blinded by money. It has been less than a day and I have already started to suffer from guilt. Although it cannot be compared with the hardship faced by the investors, I also felt significant guilt. I sincerely apologize to all of the investors in the ICO who were affected by the operation.”

The CEO went on to state that the scam project will reimburse all of the funds possible out of the 16,000 ETH, disregarding the fee a third party company received to initiate the ICO on behalf of the group.

Out of Guilt or Fear?

In the statement, the CEO claimed that he was burdened by guilt and ultimately decided to refund victims of the scam.

Over the past several months, the local police, Korea Internet & Security Agency, and the Financial Services Commission (FSC) have put in a significant effort to crack down on scams and crypto exchanges with poor internal management systems.

Given the magnitude of the case and the unprecedented level of media coverage the case received, it is entirely possible that the operators of the scam reckoned the operation went out of control, past the expectations of the group.

After all, an individual with a level of empathy demonstrated by the aforementioned statement would not initiate a scam that could affect millions of people psychologically and mentally in the first place.

This post credited to ccn Images from Shutterstock

Pure Bit, a cryptocurrency exchange in South Korea, has allegedly pulled an exit scam, disappearing with more than $30 million worth of user funds.

On Nov. 9, as BlockchainROK, a trusted news source in South Korea reported, the management team of Pure Bit started to delete social media handles of the exchange and kicking users out of KakaoTalk chat groups.

The official KakaoTalk account of Pure Bit was renamed to a formal phrase in Korean, which translates to “I’m sorry.”

Screenshot of Pure Bit’s KakaoTalk group shared by HanKyung

Initially, around 13,000 Ethereum (ETH) was moved from the address of Pure Bit. Over the last 24 hours, nearly $10 million worth of ETH was moved from Pure Bit’s address.

$30 Million Stolen

According to HanKyung, a mainstream business-focused mainstream media outlet in South Korea, Pure Bit executed an exit scam with more than $30 million in user funds.

Earlier this year, Pure Bit raised $30 million in an initial coin offering (ICO) to create a cryptocurrency exchange. Within months since its token sale, the team behind the token sale disappeared with all of the funds raised during the ICO.

Pure Bit tried to send a portion of the stolen user funds to Upbit, the second largest cryptocurrency exchange in the local market. But, after discovering that the funds from the scam were sent to the exchange, Upbit disabled the account operated by Pure Bit and froze the funds.

Speaking to HanKyung, an expert in the local cryptocurrency sector said that with proper ICO regulations and policies in place, the exit scam could have been prevented.

“The case could have been prevented if the government had implemented proper guidelines and regulatory frameworks related to ICOs. If the government does not establish proper regulations in the short-term, more scams in the local ICO sector could occur.”

In an exclusive interview with CryptoSlate, BlockchainROK founder Heslin Kim stated that the government has not decided whether to completely ban out ICOs or regulate the market.

Kim suggested that, as local publications in South Korea have reported, the government will likely release a statement regarding the legalization or the regulatory state of the ICO market by the end of November.

“These kinds of exit scam scenarios unfold in an unregulated market. Korean legislation has been in a stalemate as to whether or not to fully ban ICOs for over a year now, and we are likely to hear the verdict by the end of November. This will not be a beneficial case study for the pro-blockchain party. However, there is still light in the darkness. STO policy discussions have begun recently and this falls in line heavily with what regulators have been saying is necessary. Is it the decentralized, trustless landscape we all thought would result from the fiat to crypto flippening? No, clearly not, but is it a step in the right direction for the long game? We’ll see.”

Second Exit Scam in a Month

Last week, CryptoSlate reported that MapleChange, a small cryptocurrency exchange in Canada, also pulled an exit scam.

Minor Crypto Exchange Pulls Off Exit Scam, Steals All User Funds
Related: Minor Crypto Exchange Pulls Off Exit Scam, Steals All User Funds

The fraudulent operation of Pure Bit is more of an ICO fraud than a cryptocurrency exchange exit scam, but given that the funds were provided to the company to launch an exchange, Pure Bit has been categorized as a cryptocurrency exchange scam by local investigators.

It remains uncertain whether government regulation will improve the ICO ecosystem or prevent fraudulent operations. Investors will need to conduct proper due diligence before investing in projects, especially ICOs that have complete control over the funds that are sent by investors.

This post credited to cryptoslate  Image source: Unsplash

The Financial Services and Markets Authority (FSMA) has added 21 new websites of suspected cryptocurrency scams to its blacklist.

Belgium’s financial regulator published the list on its official website, bringing their tally of suspected crypto scams in the country to 99. The agency found that despite their prior warnings concerning the risks associated with crypto investments, Belgium is witnessing a growth in online fraud cases. Among the blacklisted companies, many are offering financial services without complying with the Belgian financial legislation. Moreover, the listed firms are also involved in attracting victims to their allegedly fake investment schemes.

The FSMA blacklist also names websites that reach out to the victims of earlier crypto frauds. These persons running these websites pose themselves as financial advisors, lawyers, and accountants. They promise victims that they would arrange compensation or to recover their losses in exchange for a fee. The financial contribution by the victim, however, does not result into anything substantial. The FSMA refer these scam websites as ‘Recovery Rooms.’

Outside Belgium Jurisdiction

The blacklisted firms cannot be charged in Belgium for falling outside the jurisdiction of FSMA, the details revealed. Agence Des Analystes Financiers, for instance, is one of the denounced companies in the list but is reportedly based in Germany. Another firm BK-COIN appears to have offices in cities all across the world, including London, Tokyo, Meyrin, and Paris, the validity of which remains unconfirmed.

Similarly, firms mentioned in the FSMA blacklist are appearing to operate from all around the globe but Belgium.

Nevertheless, the agency has requested investors always to verify the companies with the concerned regulatory agencies. The advisory specified that FSMA couldn’t charge websites active in the cryptocurrency space in the absence of legal supervision, but an alert could still minimize the risks.

“Be wary as well of companies that claim to hold authorizations from supervisory authorities and refer you to such authorizations,” the regulator wrote. “This is a very frequently used technique. However, these are often cases of identity theft. Feel free to ask the FSMA to confirm the information you have received.”

Identifying a Swindler

The FSMA advisory laid out the typical characteristics of an online crypto scam. The regulator said that swindlers usually contact victims by phone in a process called cold calling. They try to offer them a variety of investment options claiming they could yield maximum profits in a minimum span. They attempt to influence a victim into purchasing security tokens of a newly-launched blockchain product or participate in a multi-marketing scheme by investing cryptocurrencies. Regardless of the type of marketing pitch, the promises of a scammer include:

  1. high monthly or annual returns
  2. high liquidity (users can withdraw funds anytime they want)
  3. investments are protected by real-world collateral (it won’t fall below the value at which investments were made, even during a market crash)

“All these promises are worthless, however: if an offer is fraudulent, the promises that accompany it are equally so,” the FSMA added.

Readers can find the FSMA crypto blacklist here.

This post credited to ccn Image from Shutterstock.

Cybersecurity company Recorded Future has released a lengthy expose claiming that North Korea uses cryptocurrency to skirt U.S.-imposed economic sanctions alongside a shady network of collaborators and enablers in Singapore.

The company claims that in addition to mining coins like bitcoin and monero, North Korean leaders have also been involved in promoting cryptocurrency scams that have bilked investors around the world of millions of dollars.

North Korea’s Technology-Backed Evasion of Sanctions

North Korea’s use of cutting edge technology to get around the effects of economic sanctions imposed on Kim Jong Un’s regime is well documented. In September, CCN reported that Washington-based financial experts Lourdes Miranda and Ross Delston accused North Korea of using crypto mining and coin scams as means of generating revenue. Earlier this month, CCN also reported that a notorious North Korean hacker group called “Lazarus” is responsible for the theft of more than $571 million in cryptocurrency.

The Recorded Future report claims that North Korean leaders mine bitcoin and monero at a relatively small scale, with the bulk of their efforts in the cryptocurrency space from the first quarter of 2018 to date now focused on exploiting growing worldwide crypto awareness for the purpose of launching investment scams. Two coins in particular are identified as North Korean scam projects, namely HOLD coin and Marine Chain.

HOLD Coin, also previously known as Interstellar, HUZU and Stellar (not to be confused with XLM) used a fraudulent staking scheme to collect investor money, having been variously listed and delisted across a number of exchanges before disappearing with all funds.

Marine Chain on the other hand, was part of a more sophisticated scam that runs right to the heart of the North Korean government’s ability to consistently diminish the effectiveness of UN-imposed economic sanctions that would ordinarily cripple the regime. Billed as a tokenisation framework for maritime vessels, an investigation by Recorded Future into Marine Chain revealed a complex network linked to Singapore with potentially far-reaching implications for cybersecurity in Southeast Asia.

The Singaporean Connection

According to information gleaned from LinkedIn, an advisor called HyoMong Choi and the CEO of Marine Chain, Captain Jonathan Foong Kah Keong are the key figres in Marince Chain’s fradulent activities. Capt. Foong reportedly has connections to Singaporean companies that facilitate North Korean activities designed to circumvent U.N. sanctions. Activities these companies have been involved in include manipulating flag registries for three countries to give prohibited North Korean vessels the ability to sail under flags of convenience.

This means that more than just being a run-of-the-mill cryptocurrency scammer, Capt. Foong is actually part of the key strategy employed by the North Korean regime to skirt sanctions that should ordinarily make it the most isolated regime on earth, and keep itself in power. The appearance of Capt. Foong in the context of North Korean crypto scams is significant of a wider pivot in the regime’s criminal activities as it looks to harness the possibilities presented by a new wave of technology including blockchain technology.

This post credited to ccn Image from Shutterstock.

Producer DJ Khaled and boxer Floyd Mayweather have allegedly been sued over their involvement as celebrity endorsers with the Centra Tech cryptocurrency scam.  


An exclusive report from TMZ said boxer Floyd Mayweather and well-known producer DJ Khaled are involved with a lawsuit claiming they participated in the Centra Tech cryptocurrency scam.

Reporting from the outlet said a class action lawsuit noted how the duo were celebrity endorsers who promoted the virtual currency on social media.

The TMZ report said investors are looking to get their money back, plus damages, from company founders and the celebrity endorsers.

As of press time, it was not clear if TMZ had new information or was reporting based off of already-released information. Former investors in the virtual currency filed a class action lawsuit earlier in the year that claimed Centra Tech was in violation of federal securities laws with their token sale.

In late June, a magistrate judge published a report that said the tokens released via the Centra Tech ICO were securities under federal law.

AUTHORITIES: CENTRA TECH IS A SCAM

The three co-founders of Centra Tech, Raymond Trapani, Sohrab Sharma, and Robert Farkas, were arrested in April and were later accused of defrauding investors with a token sale.

Authorities said the trio allegedly,

Made false claims about their product and about relationships they had with credible financial institutions.

They said the actual CTR tokens were sold in an illegal ICO.

In May, Bitcoinist reported that the co-founders lied about partnership deals, and said Centra Tech struck collaboration deals with entities like Visa and Mastercard.

They also made up a fake CEO so the project would appear more credible. Overall, investors purchased about $60 million dollar’s worth of CTR tokens.

Right now, the three co-founders are looking at a total of 65 years in prison, according to an indictment. They are also subject to paying financial penalties for their actions.

PROMOTION BY CELEBRITIES ON SOCIAL MEDIA

Mayweather and Khaled both endorsed the project and worked to promote it on their own social media accounts.

Both Mayweather and Khaled made Instagram posts promoting the offering before the token sale launch.

Screenshots from TechCrunch showed Mayweather’s post encouraging people to “join Centra’s ICO on Sept. 19th.”

DJ KHALED

@djkhaled

I just received my titanium centra debit card. The Centra Card & Centra Wallet app is the… https://www.instagram.com/p/BZj_hJzgEIp/ 

Khaled wrote in his Instagram post that “The Central Card & Central Wallet app is the ultimate winner in Cryptocurrency debit cards.”

Around the time Centra’s ICO was going live, Mayweather also Tweetedhow followers should get CTR tokens “before they sell out.” The famous boxer said he “got mine” in the same Tweet.

Floyd Mayweather

@FloydMayweather

Centra’s (CTR) ICO starts in a few hours. Get yours before they sell out, I got mine https://www.facebook.com/floydmayweather/posts/10155338608688113 

In November 2017, the U.S. Securities and Exchange Commission issued a warning about celebrity-backed ICOs. The regulator said people should be wary of opportunities “that sound too good to be true.”

 

This post credited to bitcoinist  Image source: Bitcoinist

The alleged mastermind of the bitcoin fraud scheme which saw a Finnish investor lose 5,564 bitcoins in Thailand has been arrested.

Prinya Jaravijit, who is the principal suspect in swindling Finnish national Aarni Otava Saarimma out of bitcoin worth 797 million baht (approximately US$24 million) was arrested at Bangkok’s Suvarnabhumi Airport on October 11, according to the Bangkok Post. The alleged mastermind of the fraudulent scheme had been living in the United States where he fled to after the arrest of his younger brother, Thai television actor Jiratpisit Jaravijit aka Boom, who was also implicated in the conspiracy.

After interrogation by Thailand’s Crime Suppression Division, Prinya was taken to court early Friday where the police raised objections to his bail arguing that he was a flight risk. Prinya faces two charges of colluding in fraud and colluding in money-laundering.

Surrender Order Ignored

The arrest comes nearly a month after Prinya was issued with a surrender order. As reported by CCN, the Criminal Suppression Division had given Prinya until September 17 to surrender but he remained at large. Prior to the surrender order, Prinya had been asked to avail himself for interrogation on September 14 but he failed to show up. This led the Crime Suppression Division to issue a warning to the effect that extradition proceedings would be initiated if Prinya continued to disregard summons.

“The suspect was then asked to come in on Monday and if he still ignores it, relevant agencies will be contacted to try to bring him back to face prosecution,” the deputy commander of the Crime Suppression Division, Chakrit Sawasdee, said then.

Earlier this week it was revealed that Thailand’s foreign ministry had revoked Prinya’s passport and this was done at the request of the Crime Suppression Division. This rendered Prinya’s stay in the United States untenable since he wasn’t in possession of a valid passport. With his passport revoked, his travel back to his homeland was facilitated by the Thai embassy in the United States.

All in the Family

While the case in which Prinya and his accomplices are accused of inviting the Finnish investor to put his money in a range of investments including publicly listed companies had initially even roped in a prominent Thai stock trader, Prasit Srisuwan and a technology entrepreneur, Chakris Ahmad, now the suspects’ list is largely composed of members of the Jaravijit family. This is after Saarimaa reached a settlement with the two businessmen.

Besides his younger celebrity brother, Jiratpisit, other members of the Jaravijit family who are now suspects include Prinya’s younger sister, Supitcha. Additionally, Prinya’s parents and his older brother, Tanasit, are scheduled to appear in court next week to answer to charges of money laundering.

This post credited to ccn Featured image from Shutterstock.

This week, a United States federal district judge ruled that an allegedly fraudulent crypto token meets the definition of a commodity. That brought the case under the Commodity Futures Trading Commission’s (CFTC) purview, which has long argued that virtual currencies constitute commodities. Here what it means — and how the watchdog has been supporting its stance on cryptocurrencies’ legal status.

Are cryptocurrencies commodities or securities? Well, they can be both

The regulatory approach to cryptocurrencies in the U.S. is complex. While the Congress holds supreme power over federal regulatory agencies like the Securities and Exchange Commission (SEC) and the CFTC, it has not issued any guidelines on the matter to date.

Because there’s no definitive set of rules that all agencies can abide by, every regulator takes its own approach, even if it clashes with other perspectives. Namely, the SEC views cryptocurrencies as securities while the CFTC treats them as commodities, and both watchdogs have attempted to secure their viewpoints in court.

However, those different approaches actually seem to coexist. As CFTC Commissioner Brian Quintenz explained to Bloomberg in October 2017, “Crypto-tokens offered in a presale can transform. They may start their life as a security regulated under the SEC from a capital-raising perspective but then at some point — maybe possibly quickly or even immediately — turn into a commodity.” In February 2018, the agencies held a joint session on their roles in the crypto industry, where they mentioned they were willing to work together to create a regulatory framework.

Further, in May 2018, CFTC Commissioner Rostin Behnam delivered a speech that further stressed the increasing collaboration between his agency and the SEC:

“I spoke about my position on the CFTC and the SEC efforts to harmonize rules. Given the large number of dually registered market participants and overlapping policy, there is a real opportunity for the CFTC and SEC to harmonize redundant rules and leave both market participants and regulators in a stronger position.”

Soon after that, in June, the SEC Corporation Finance Director William Hinman clarified that his agency doesn’t view either Bitcoin (BTC) or Ethereum (ETH) as securities, because they have become largely decentralized “in their present state,” and that it would focus instead on Initial Coin Offerings (ICOs).

The CFTC, in turn, has been arguing that virtual currencies are a commodity covered by the Commodity Exchange Act (CEA) since 2015. Citing the document, the agency states that cryptocurrencies are closer to gold than to conventional currencies or securities, as they are not backed by the government and don’t have liabilities attached to them.

In July 2017, the CFTC first granted approval to trade Bitcoin futures. The agency cleared an institutional Bitcoin derivatives trading and clearing platform Ledgerx as a fully regulated Bitcoin options exchange and clearinghouse under the CEA:

“By a unanimous vote of the Commission, it has issued an order granting Ledgerx, LLC (Ledgerx) registration as a derivatives clearing organization under the Commodity Exchange Act (CEA) […] Under the order, Ledgerx will be authorized to provide clearing services for fully collateralized digital currency swaps.”

CFTC vs. crypto fraudsters

On Sept. 26, Judge Rya W. Zobel of the Massachusetts District Court denied a motion to dismiss a case against Randall Crater and his company My Big Coin Pay Inc. That secured yet another win for the CFTC’s perspective that cryptocurrencies are commodities.

The CFTC argued that Crater’s Nevada-based company My Big Coin Pay was a crypto scheme in which they offered the sale of a “fully functioning” virtual currency named “My Big Coin” (MBC). According to the details of the case, the defendants lured customers to buy MBC by making false statements. Specifically, they lied that MBC was “backed by gold,” could be used anywhere Mastercard was accepted, and was being “actively traded” on various exchanges. That violated the Commodity Exchange Act (CEA), the regulator argued.

Moreover, the accused were also alleged to have “arbitrarily” manipulated the value of MBC to imitate the price fluctuations of a proper cryptocurrency. Investors could view their account balance on the website, but “could not trade their MBC or withdraw funds.” My Big Coin Pay affiliates obtained more than $6 million from a total of 28 investors as a result of these actions.

Crater’s lawyers tried to dismiss the CFTC’s case, arguing that the token was neither a tangible good nor service on which futures contracts are based and hence should escape the regulator’s purview. They also allegedly compared the token to Bitcoin in the process.

Zobel ruled in favor of categorizing both MBC and BTC as virtual currencies in which “contracts for future delivery are […] presently dealt in.” Essentially, Zobel granted the CFTC’s argument that, for the purposes of the CEA, a “commodity” is broader than any particular type or brand of that commodity, also pointing to the existence of Bitcoin futures contracts:

“Here, the amended complaint alleges that My Big Coin is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin). That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a ‘commodity’ under the Act.”

The CFTC has proven that virtual commodities are already commodities

As mentioned above, it wasn’t the first case when the CFTC proved that it could directly oversee the crypto market via the CEA. Importantly, Zobel referenced the preceding ruling in the case as a precedent.

Thus, in March 2018, U.S. District Judge Jack Weinstein of the New York Eastern District Court oversaw the CFTC case against Patrick McDonnell and his company Coin Drop Markets (CDM). According to the agency’s claim, CDM’s customers never received the financial advice they paid for, as well as the fact that CDM was never registered with the CFTC.

Weinstein agreed with the CFTC that virtual currencies are commodities under the CEA, and, hence, the CFTC could take action against McDonnell and his company over virtual currency fraud. More specifically, the judge upheld that determination by arguing that it was supported by the plain meaning of the word “commodity” and that the CFTC had “broad leeway” to interpret the federal law.

In August, the CFTC won the court order to permanently ban another crypto-related firm run by Patrick McDonnell called CabbageTech Corp. for “bold and vicious fraud.” Similar to the Massachusetts case, McDonnell argued that the CFTC did not have the authority to regulate his commercial operations. The judge rejected that claim and ordered the defendant to pay $290,429 in restitution and $871,287 in penalties.

Will the CFTC regulate more in the near future?

Despite securing a couple of crucial wins in court, the CFTC still approaches crypto fraudsters on a case-by-case basis. It seems that the regulator still lacks the power to massively detect and ban questionable outlets, but it is also important to note that the CFTC has been handling cryptocurrencies with care. Indeed, in a September interview with CNBC, the CFTC Chairman Christopher Giancarlo stressed that crypto needs a “do no harm” approach from regulators to flourish:

“I’m advocating the same approach to cryptocurrencies and all things having to do with this new digital revolution of markets, and of currencies, and of asset classes.”

Nonetheless, Giancarlo distinguished between the CFTC’s short-term approach of tackling criminal activity on the crypto market and the watchdog’s longer-term decisions on policy making for the industry:

“When it comes to fraud and manipulation, we need to be strong. When it comes to policy making, I think we need to be slow and deliberate and well informed.”

The CFTC’s recent actions are seen as part of a more general trend of U.S. regulators extending their purview within the crypto industry during past months. Still, there is no sign of comprehensive crypto legislation coming anytime soon. In May, Giancarlo stated that he doesn’t see such a framework coming from the federal level in the near future, pointing out that the statutes by which the CFTC is operating were written in 1935, and embracing something “as new and as innovative” as Bitcoin within such terms will take time.

This post credited to cointelegraph  Image source: Cointelegraph

Earlier this month, Danske Bank, the biggest bank in Denmark, faced its largest scandal to date for laundering more than $230 billion. Despite the billions of dollars banks launder on a daily basis, critics are still focused on crypto exchanges.

On Sept. 28, Erik Voorhees, the CEO of popular cryptocurrency exchange ShapeShift, responded to the coverage of WSJ which compared the amount of money laundered by banks and crypto exchanges over the past two years. In the last 24 months, banks have laundered $2.7 billion every day while crypto exchanges have allegedly processed $9 million in illicit funds.

$2.7 billion times 730 days (two years) is equivalent to $1.97 trillion, or $1,971,000,000,000. Banks are said to have laundered $1.97 trillion in the past two years by laundering $2.7 billion on a daily basis.

In contrast, crypto exchanges have laundered $9 million in the entire period of two years, meanwhile banks laundered $1.97 trillion.

Is it an Issue of Money Laundering or Establishing a Narrative?

Based on the numbers alone, it is fairly evident that the problem lies in the institutions that are laundering $1.971 trillion in every two years rather than organizations that allegedly launder $9 million in 48 months.

Hence, if the concern of money laundering in the crypto market was really about the problem of funneling illicit funds, then the focus of government agencies and the media has to be established on banks.

Last week, it was revealed that the biggest commercial bank in Denmark laundered $230 billion in Estonia.

Danske Bank former Chief Executive Thomas Borgen, who resigned immediately after the scandal, said:

“It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia. I deeply regret this.”

Karel Lannoo, the CEO of Center for European Policy Studies, a Brussels-based think tank, stated that the proportion of the scandal is so large that it may single-handedly harm the reputation of the country, which has been acknowledged as not of the cleanest in the world.

“This is a scandal of enormous proportions. We are talking about a country that has the reputation of being one of the cleanest in the world. And this is their largest bank.”

Yet, less than two weeks after the biggest scandal in the history of Denmark, the focus on money laundering has somehow shifted to crypto. A WSJ investigative report revealed that ShapeShift laundered a grand total of $9 million in the past two years, which has not been conclusively proven.

But, assuming that ShapeShift did process $9 million in illicit funds, it is nowhere close to the amount of money laundered by banks on a daily basis.

The WSJ reported:

“A parade of suspected criminals has taken advantage of ShapeShift’s services since the exchange began in 2014, according to law-enforcement officials, independent researchers and the Journal’s investigation.”

Crypto is Criminal Money

The narrative of critics against cryptocurrencies since the beginning was that it is the go-to form of money for criminals. However, as Europol recently disclosed, cash remains as the dominant money laundering tool amongst criminal groups, because of its anonymity.

Erik Voorhees

@ErikVoorhees

1/2 We are aware of the poorly-researched piece written against us by someone at WSJ. The implications are disingenuous and misleading. pic.twitter.com/IIyOjactGk

View image on Twitter

Erik Voorhees

@ErikVoorhees

2/2 Author cherry-picked data, excluding facts contrary to vilification narrative. $9m figure is less than 0.2% of our volume over the time-period. Meanwhile global money laundering through banks is 2-5%. Op-ed forthcoming.

Cryptocurrencies by nature, contrary to most reports, are not anonymous. Bitcoin wallets and transactions, for instance, can be tracked using a block explorer and even with mixing tools in place, startups like Chainalysis have developed sophisticated tools to untangle transactions.

 

This post credited to cryptoslate Image source: Unsplash

New Zealand’s police department has urged the public to be vigilant of online investment schemes offering heightened returns with investments in cryptocurrencies like bitcoin.

Police in the region of Canterbury in New Zealand issued a public alert on the department’s website on Wednesday, reminding residents to be wary of crypto-investment schemes after an incident wherein a victim lost NZD$320,000 (approx. $212,500) to an online scam.

While the police withheld specific details of the scam and its operators, “[t]he scam involved investments in cryptocurrencies, such as bitcoin,” the notice said. To solicit investments from its victims, the company offered lucrative returns in exchange for a small investment.

“The investment grew as more money was deposited, but soon began to decline,” police added. The spiral continued with the scammer contacting the victim on several occasions to obtain more investments that were deposited on the scheme’s website.

Reminding the public to veer away from investment schemes offering inflated returns on investments, Senior Sergeant Paul Reeves stated:

“Members of the public should seek advice before making any online investments they are unsure of. Scammers are extremely persistent and can seem very credible, as they are highly versed in their trade. “

The alert also redirected residents to a crypto advisory, by CERT New Zealand, the country’s cybersecurity watchdog. With a quick explainer on the advantages and risks in cryptocurrency investments, the advisory – refreshingly – suggests cryptocurrency adopters to store their coins in offline storage to minimize hacking risks.

As things stand, the cryptocurrency industry is largely unregulated in New Zealand. As reported by CCN in November 2017, the Financial Markets Authority (FMA) – the country’s financial regulator – published its official stance on cryptocurrencies and initial coin offerings (ICOs), deeming them securities.

Within weeks, the FMA had issued an official warning against a teenager’s NZD$220 million cryptocurrency venture that was withdrawn less than a week after its launch.

This post credited to ccn Featured image from Shutterstock.