Round-up of Cryptocurrency Crimes
Do Kwon remains caught in a power struggle between the United States and South Korea, while prosecutors continue to crack down on cryptocurrency mixers. The month of April has seen significant developments in the world of crypto crime.
Starting with Changpeng Zhao, who has been sentenced to four months in prison for facilitating money laundering at Binance. This makes him the richest man ever to be sent to prison, although critics argue that this is an “egregious miscarriage of justice” since prosecutors were seeking a three-year sentence. In contrast, doomed entrepreneur Sam Bankman-Fried has received a 25-year jail term.
Surprisingly, SBF has agreed to assist investors in FTX, the same company that led him to bankruptcy, in pursuing legal action against celebrities who endorsed the exchange. This turn of events is particularly strange considering that the former CEO would have been responsible for hiring these celebrities in the first place. This news may be disheartening for NFL legend Tom Brady, who reportedly lost $30 million when the trading platform collapsed.
Another prominent figure in the world of crypto, Do Kwon, has recently been in the spotlight. As co-founder of Terraform Labs, he went on the run after the collapse of two cryptocurrencies resulted in a $40 billion market loss. Kwon was arrested in Montenegro last year as he attempted to fly to Dubai using a fake passport. He has since been embroiled in a legal battle between the U.S. and South Korea, both of which have filed competing extradition requests in order to bring him to face criminal charges. However, the legal back-and-forth has prevented his extradition so far. In the meantime, a civil case against Kwon and Terraform Labs has progressed rapidly in New York, resulting in a jury finding them guilty of fraud charges. The Securities and Exchange Commission is now seeking a staggering $5.3 billion penalty.
There have also been several other arrests and convictions related to crypto crime. Social media influencer Jabara Igbara, also known as “Jay Mazini,” has been sentenced to seven years in prison for defrauding Muslims of over $8 million through a crypto scheme. Prosecutors portrayed him as a “conman” who deceived unsuspecting victims by pretending to be successful on Instagram and then squandered his ill-gotten gains.
The U.S. Department of Justice has continued its relentless campaign against crypto mixers, bringing charges against Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill. These charges stem from concerns that such tools are being used by malicious actors to launder funds and evade sanctions. If convicted, Rodriguez could face up to 20 years in prison. As a result, Samourai Wallet’s website has been seized.
In addition to the legal actions, there have been several notable hacks. One trader fell victim to a phishing attack on Ethereum, losing over $180,000 worth of crypto in just 50 minutes. El Salvador’s state-controlled Bitcoin wallet, “Chivo,” experienced a second data breach, with hackers leaking source code and VPN credentials for ATMs. Earlier this month, personal information belonging to five million Salvadorans was also exposed online.
Scammers targeted a 71-year-old digital artist in India who was selling NFTs, posing as interested buyers. An investor lost a staggering $800,000 due to two malicious Google Chrome extensions that potentially contained keyloggers.
High-profile social media accounts have also been targeted by hackers. Spider-Man star Tom Holland had his account taken over by attackers who falsely promoted “SPIDER” tokens and Spiderverse NFTs. The fake posts claimed that these digital assets were being launched in partnership with Binance but directed users to a scam website. In a bizarre twist, it appears that the hacker may have uploaded a selfie to Holland’s account.
Despite these incidents, CertiK reports that the damage from hacks and scams in the crypto industry has reached its lowest level since 2021.
