Tag: MONEY LAUNDERING

$265M in BTC Withdrawn from Binance in 2018 Suspected of Money Laundering

by Blockchain News

A prominent Bitcoin address has come under the spotlight for allegedly laundering approximately $265 million through various Bitcoin mixers. The address in question, 1EU2pMence1UfifCco2UHJCdoqorAtpT7, was initially funded with 9,999.99 BTC from Binance in May 2018, as reported by crypto analyst ZachXBT today, on 28 August 2023.

The nature of the transactions has raised eyebrows in the crypto community. ZachXBT highlighted that the deposits were all on-chain, making them easily traceable. “With this much volume it’s harder to hide,” he commented.

The use of the term “laundering” has sparked debate among crypto enthusiasts. The Intelligent Investor, a known figure in the crypto space, pointed out the challenges of truly hiding such a significant amount. “If you got a black box that ‘mixes’ a few million dollars of peon size common transactions, then a whale shows up one day to ‘mix’ $250m, surveillance is just gonna track all outputs that day,” they remarked.

Others questioned the use of the term “laundering,” seeking clarity on whether the funds were illicitly obtained. ZachXBT responded by emphasizing the suspicious nature of the transactions. “It was spread out across smaller deposits to avoid detection,” he noted, adding that using a centralized exchange as a mixer would be more effective for such a large amount if the source was not illicit.

ZachXBT further stated that casual mixer use for privacy enthusiasts is typically associated with platforms like Samourai or Wasabi, rather than the methods observed in this case.

The debate highlights the persistent challenges and concerns about crypto laundering and its potential misuse. As the industry evolves, the imperative for transparency and accountability becomes even more pronounced.

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Tornado Cash Founders Face Legal Action Over Money Laundering and Sanctions Violations

by Blockchain News

A number of charges, including breaches of sanctions and involvement in money laundering, have been brought against the individuals who created the cryptocurrency mixer known as Tornado Cash.

The co-founders of Tornado Cash, Roman Storm and Roman Semenov, have been accused on counts of conspiracy to conduct money laundering, conspiracy to commit sanctions breaches, and conspiracy to run an unlicensed money transmitting company. The charges arise from claims of money laundering, sanctions breaches, and running an unauthorized money transmission service. The indictment was unveiled on August 23, 2023.

Roman Storm has been apprehended in Washington state, while Semenov remains elusive. In August 2022, another co-founder of the firm, Alexey Pertsev, was arrested in the Netherlands on money laundering charges.

The duo is accused of creating, managing, and promoting Tornado Cash. This platform is suspected of facilitating the laundering of over a billion dollars in illegal proceeds. Of significant concern is the claim that the platform processed hundreds of millions for the blacklisted North Korean cybercrime entity, the Lazarus Group.

The United States Attorney for the District of Maryland, Damian Williams, claimed that “while publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes.”

On August 23, the list of Specially Designated Nationals and Blocked Persons (SDN) maintained by the Office of Foreign Assets Control (OFAC) of the United States Treasury was updated to include Roman Semenov. The OFAC has blacklisted 44 USD Coin (USDC) and Ethereum addresses by the year 2022, which made it impossible for those living in the United States to use Tornado Cash.

Strong reactions have been given by the crypto community in response to these activities. Coinbase provided legal assistance to the six plaintiffs in a case in which they contended that the Treasury Department overstepped its bounds by imposing sanctions on Tornado Cash. A similar action was taken by the advocacy organisation Coin Centre, which filed a lawsuit, and by Representative Tom Emmer of the United States House of Representatives, who questioned the decision in a letter to Treasury Secretary Janet Yellen.

The cryptocurrency sector is being subjected to persistent difficulties and widespread scrutiny, as seen by the legal steps taken against the inventors of Tornado Cash. It is still unknown how regulatory organisations will tackle the many problems that are linked with digital currencies and the platforms on which they are traded as the industry continues to undergo further development.

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European Union Introduces Comprehensive Crypto Law

by Blockchain News

The European Union (EU) has made history by introducing the world’s first comprehensive crypto law. Lawmakers in the EU voted 517-38 in favor of the Markets in Crypto-Assets (MiCA) licensing regime, with 18 abstentions. The new law requires crypto wallet providers and exchanges to seek a license to operate across the bloc, and issuers of stablecoins tied to the value of other assets to maintain sufficient reserves. The EU also voted in favor of a separate law known as the Transfer of Funds regulation, which requires crypto operators to identify their customers in a bid to halt money laundering.

The new regulations have been introduced to protect consumers and safeguard financial stability and market integrity. They are expected to apply from next year. In a tweet, the European Commission’s Mairead McGuinness hailed the vote as a “world first” for crypto rules.

According to Stefan Berger, the lawmaker who led negotiations on the law, the EU’s crypto-asset industry now has regulatory clarity that does not exist in countries like the US. “The sector that was damaged by the FTX collapse can regain trust,” Berger said in a statement released by the European Parliament.

The introduction of MiCA puts the EU “at the forefront of the token economy,” said Berger. The EU’s move towards regulating the crypto industry is seen as a positive step in preventing fraudulent activities such as money laundering, which has been a growing concern in the industry. The Transfer of Funds regulation requires crypto operators to identify their customers, which should help to prevent the use of crypto assets for illicit purposes.

However, the European Securities and Markets Authority (ESMA) warned that investing in crypto assets is still a risky endeavor with limited safeguards at this stage. The EU agency added that it would announce its timetable for drafting secondary legislation under MiCA in due time.

The introduction of comprehensive crypto regulations by the EU is likely to have implications beyond Europe. Other major jurisdictions may also follow suit, as governments around the world grapple with the challenge of regulating the fast-evolving crypto industry.

In conclusion, the introduction of the Markets in Crypto-Assets licensing regime and the Transfer of Funds regulation by the European Union represents a significant milestone in the regulation of the crypto industry. The move is expected to provide greater regulatory clarity and protection for consumers, while also safeguarding financial stability and market integrity. The EU’s decision to introduce comprehensive crypto regulations is likely to be closely watched by other major jurisdictions around the world.

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Turkish Crypto Exchange Founder Arrested

by Blockchain News

The founder of Turkish cryptocurrency exchange, Thodex, Faruk Fatih Ozer, has finally been arrested after two years on the run. Ozer was detained by the Istanbul Airport Police Department on April 20, following his arrival at Istanbul Airport from the Albanian capital of Tirana. The 27-year-old is facing charges of fraud and money laundering relating to allegations of an exit scam involving at least $2 billion worth of cryptocurrency stolen from Thodex.

The saga of the Thodex exchange began on April 22, 2021, when the platform abruptly halted trading and withdrawals amid reports of police raids at its offices. Local publications speculated that the suspension was part of an exit scam involving Ozer, who was alleged to have fled Turkey with the stolen cryptocurrency. Interpol subsequently issued a red notice for Ozer, who reportedly ran to Albania.

About a year after Thodex collapsed, Ozer was arrested in Albania in August 2022, and Turkish authorities issued a warrant for his extradition. After several months of legal proceedings, Ozer was finally extradited to Turkey to face charges. The detained founder is expected to undergo health check-ups and then will be taken to the Istanbul Police Department for questioning.

Following the collapse of Thodex, Turkish police detained 62 people over alleged involvement in the exit scam, including some of the then-missing CEO’s siblings. The detainees were charged with fraud, money laundering, and membership of a criminal organization. Turkish authorities have been working with international law enforcement agencies to track down the missing funds, which have been reported to be in various cryptocurrency accounts and exchanges.

The Thodex saga highlights the risks associated with investing in unregulated cryptocurrencies, particularly in countries where the legal and regulatory framework is still evolving. The collapse of Thodex and the subsequent arrest of Ozer has sparked a debate in Turkey about the need for greater oversight and regulation of the cryptocurrency industry. The Turkish government is reportedly working on a new regulatory framework for cryptocurrencies, which is expected to be unveiled later this year.

In conclusion, the arrest of Thodex founder Faruk Fatih Ozer marks a significant development in the ongoing investigation into the alleged exit scam involving the Turkish cryptocurrency exchange. While the recovery of the stolen funds remains a challenging task, the arrest of Ozer sends a strong message to other would-be cryptocurrency fraudsters that they cannot evade justice indefinitely.

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Tornado Cash Developer Set to be Released

by Blockchain News

Alex Pertsev, the developer behind the popular crypto mixing service Tornado Cash, is set to be released from prison after nearly nine months of detention. Pertsev was arrested by Dutch authorities in August last year on suspicion of being involved in money laundering through Tornado Cash, which had dozens of its addresses placed on the OFAC sanctions list by the United States Treasury Department.

The news of Pertsev’s release under surveillance was met with rejoicing in the crypto community, as it allows him to prepare his defense fully. His partner, who has been advocating for his release, expressed regret for the wasted time that he spent in prison, which had a powerful effect on both of their lives.

Pertsev’s case centers around Tornado Cash, a crypto mixing service that makes transactions anonymous and difficult to trace. Crypto mixers such as Tornado Cash are often used to obfuscate the origin of crypto transactions. These platforms mix one cryptocurrency transaction with others and send them to different wallet addresses, making it challenging for authorities to track the flow of funds.

Prosecutors argue that Pertsev acted as a central figure in Tornado Cash’s operation, making him an essential target in the investigation into money laundering. However, Pertsev’s legal team has maintained that he did not do anything wrong and that the platform was merely providing a privacy-enhancing service.

In November, a Dutch court denied Pertsev’s plea to be released under surveillance, citing concerns that he posed a flight risk. His bail was denied again in February. However, with the latest decision to release him under surveillance, Pertsev will now be able to walk around and work on his defense, which was virtually impossible while detained.

The Tornado Cash platform was one of the most popular mixing services before the sanctions were imposed, highlighting the growing trend of crypto users seeking greater privacy and anonymity in their transactions. The case involving Pertsev will be closely watched by those interested in the legal implications of crypto mixing services and their role in facilitating money laundering.

In conclusion, Pertsev’s upcoming release from prison has been welcomed by the crypto community, but his case is far from over. As the use of crypto mixing services continues to gain popularity, regulatory authorities will need to grapple with the legal implications of such platforms and their role in enabling financial crimes.

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EU Proposes Cap on Anonymous Crypto Transfers

by Blockchain News

The European Union has taken a step towards greater financial transparency with a proposal to limit anonymous crypto transfers to 1,000 euros ($1,083) to combat money laundering and terrorist financing. According to a statement from the European Parliament published on March 28, the new limit would apply to transfers where a customer cannot be identified. Cash transactions would also be capped at 7,000 euros ($7,585).

The proposal is part of the Anti-Money Laundering and Countering the Financing of Terrorism package and is expected to be confirmed in a plenary session in April. Negotiations on the final shape of the bills will then begin. The new regulations will be enforced by the European Anti-Money Laundering Authority (AMLA), which was formed in June 2022.

The AMLA’s co-rapporteur, Emil Radev, stressed the importance of close cooperation between the new authority and national supervisors. He also called for the AMLA to directly supervise the riskiest crypto asset service providers and companies in the financial sector that operate in several member states.

Lawmakers overwhelmingly approved the text relating to anonymous instruments, including crypto assets, with 99 votes in favor, eight against, and six abstentions. The move is part of a wider push towards greater transparency in the financial sector, with the EU seeking to tackle the threat of money laundering and terrorist financing.

Crypto assets have long been seen as a potential haven for illicit activities due to the ease with which they can be transferred anonymously. The new regulations seek to address this issue by increasing transparency and accountability in the crypto sector.

The proposal is part of a wider push by the EU towards greater financial regulation. The European Central Bank has previously called for a global approach to regulating cryptocurrencies, warning that they could pose a threat to financial stability. The EU’s proposals also follow recent moves by other countries, such as China, to tighten regulations on crypto assets.

While the EU’s proposals have been welcomed by many in the financial sector, some have raised concerns about the potential impact on privacy and the practicalities of enforcing the new regulations. Nonetheless, the EU remains committed to tackling money laundering and terrorist financing, and the new regulations are just one step towards achieving this goal.

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Former OneCoin Executive Charged with Fraud

by Blockchain News

The United States Department of Justice has charged Irina Dilkinska, a former executive of the fraudulent cryptocurrency scheme OneCoin, with wire fraud and conspiracy to commit money laundering. Dilkinska, who was extradited from Bulgaria, now faces up to 40 years in prison for her alleged role in aiding the laundering of over $400 million of OneCoin’s proceeds.

OneCoin was a cryptocurrency scheme that has been accused of being a Ponzi scheme and a fraudulent operation. The scheme was founded in 2014 by Ruja Ignatova, who was later indicted by the US government for her role in the scheme. Ignatova is currently a fugitive, and her brother, Konstantin Ignatov, has pleaded guilty to his role in the scheme.

Dilkinska was OneCoin’s former head of legal and compliance and is accused of aiding in the laundering of OneCoin’s proceeds. According to the Department of Justice, Dilkinska allegedly destroyed incriminating evidence and sent incriminating messages upon hearing of a co-conspirator’s arrest. Each count of wire fraud and conspiracy to commit money laundering carries a maximum potential sentence of 20 years in prison.

The OneCoin scheme has been accused of defrauding investors of billions of dollars, and the US government has been actively pursuing legal action against those involved in the scheme. The scheme operated by convincing investors to buy OneCoin tokens, which were then traded on the OneCoin exchange. However, the exchange was found to be fraudulent, and the tokens were worthless.

The OneCoin scheme has been the subject of numerous investigations and legal actions around the world. In addition to the charges against Dilkinska and Ignatova, several other individuals have been indicted in connection with the scheme. The US government has also seized millions of dollars in assets and bank accounts connected to the scheme.

The case against Dilkinska is another example of the US government’s commitment to pursuing those involved in fraudulent cryptocurrency schemes. The government has been increasing its efforts to regulate the cryptocurrency industry and crack down on fraudulent schemes in recent years. The Department of Justice has created a cryptocurrency enforcement framework to help prosecutors identify and investigate cryptocurrency-related crimes.

In conclusion, the charges against Dilkinska highlight the ongoing legal action against those involved in the OneCoin scheme. Dilkinska faces a potential prison sentence of up to 40 years for her role in aiding the laundering of OneCoin’s proceeds. The case is another example of the US government’s efforts to crack down on fraudulent cryptocurrency schemes and regulate the cryptocurrency industry.

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Signature Bank Under Investigation by US Government Bodies

by Blockchain News

Signature Bank, a cryptocurrency-friendly bank, is reportedly under investigation by two United States government bodies over concerns that it did not take adequate measures to detect potential money laundering by its clients. According to a Bloomberg report on March 15, investigators with the Justice Department were examining whether Signature was taking preemptive measures to monitor transactions for “signs of criminality” and properly vetting account holders. A separate probe by the Securities and Exchange Commission was also “taking a look” at the bank, although details regarding the nature of the SEC’s probe were not reported.

The investigations may have contributed to the recent decision by New York state regulators to close the bank, although it is unclear when the investigations began and what effect, if any, they had on the closure. Signature and its staff are not accused of wrongdoing, and the investigations may be finalized without any charges or further action taken by the SEC or the Department of Justice.

The report comes after a class action lawsuit was filed by Signature shareholders on March 14, alleging that the bank and former executives claimed to be “financially strong” just three days before it was forcibly shuttered. Barney Frank, a former board member of Signature Bank, has claimed that the regulators wanted “to send a very strong anti-crypto message” and that the bank became the “poster boy” for this message, despite there being “no insolvency based on the fundamentals.”

Signature Bank was closed on March 12 as part of a series of bank closures that also included Silvergate Capital and Silicon Valley Bank. The DOJ and the SEC have reportedly since initiated separate investigations into the collapse of Silvergate Capital and SVB. The regulators will examine the events leading up to the bank’s collapse, including scrutinizing security filings that disclosed the sale of SVB shares by the firm’s CEO Greg Becker and CFO Daniel Beck that took place two weeks prior to its downfall.

The SEC has not formally commented on the matters, but SEC chair Gary Gensler said on March 12 that it “will investigate and bring enforcement actions if we find violations of the federal securities laws.” The investigations into Signature Bank and other cryptocurrency-friendly banks highlight the increasing scrutiny of the cryptocurrency industry by regulatory bodies, particularly in the United States.

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Bitcoin of America indicted for operating unlicensed kiosks

by Blockchain News

Bitcoin of America, a Bitcoin technology firm, and three of its executives are facing charges of money laundering, conspiracy, and other crimes connected to the operation of more than 50 unlicensed crypto kiosks in Ohio that knowingly benefited from victims of cryptocurrency scams. The firm, which operated as S&P Solutions, allegedly pocketed a 20% transfer fee each time a scam occurred and continued to do so even after learning they were fraudulent.

According to the prosecuting attorney Andrew Rogalski, romance scammers, law enforcement impersonators, and “robocallers” exploited the lack of Anti-Money Laundering protections in the firm’s systems to transfer funds out of users’ crypto wallets. These scammers directed the victims, who are often elderly or otherwise vulnerable, to specifically go to Bitcoin of America ATMs, take money that they’ve withdrawn from their savings accounts or 401Ks, and put the cash into the machine in exchange for BTC in a wallet they think is theirs but have no control over.

During a press conference, Rogalski commented that “these ATMs are ready-made for scammers,” adding that they take advantage of victims who are often elderly or otherwise vulnerable. In one instance, an elderly gentleman lost $11,250 in three transactions to one of the dodgy kiosks in under an hour to this scam.

The firm and its executives allegedly operated the kiosks without a money transfer license and were able to do so by making written misrepresentations regarding the nature of their business to government agencies. Authorities seized 52 Bitcoin ATMs last week, but the firm has more in Ohio and other states. Bitcoin of America made $3.5 million in profit from cash deposits at these unlawful kiosks in 2021, Rogalski said.

Officials believe the firm has been operating and evading regulatory safeguards and financial compliance requirements since 2018. The investigation into the firm and its executives was reportedly spearheaded by the United States Secret Service’s Cyber Fraud and Money Laundering Task Force.

This indictment comes after the FBI’s Miami Field Office warned in October that crypto ATMs were becoming a popular vehicle for scammers to defraud victims in an increasing trend of “pig butchering” scams. It highlights the importance of proper regulation and compliance in the cryptocurrency industry to protect vulnerable individuals from fraudulent activities.

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Spanish Authorities Arrest Bitzlato Exchange Executives for Money Laundering

by Blockchain News

The chief executive officer, sales executive, and marketing director of the Hong Kong cryptocurrency exchange Bitzlato have been detained in Spain, according to a story that was published on February 2 by the Turkish news agency Anadolu. In all, six Russian and Ukrainian people were taken into custody in connection with the transaction as a result of a collaborative operation by law enforcement agencies from the United States of America, France, Portugal, and Cyprus.

According to the information provided by the Spanish authorities, the anonymity provided by the exchange made it possible for it to become the platform of choice for criminal groups wanting to launder money through cryptocurrencies. In connection with the investigation, the authorities were able to recover digital assets worth $19.8 million (18 million euros), luxury vehicles, cash, cellphones, and other goods. Additionally, they were able to freeze over 100 exchange accounts.

This move comes just two days after Bitzlato co-founder Anton Shkurenko stated in an interview that 50% of the Bitcoin (BTC) held in Bitzlato wallets could be withdrawn the same day the exchange relaunches after investigators seized approximately 35% of users’ funds held in the exchange’s hot wallets. The move comes just two days after Shkurenko stated that 50% of the Bitcoin (BTC) held in Bitzlato wallets could be withdrawn the same day. In relation to this topic, Shkruenko provided further information by stating that the new Bitzlato would have its headquarters in Russia and will be “beyond the grasp of law enforcement officials.”

The United States Department of Justice (DOJ) took enforcement action against Bitzlato on January 18, alleging that the cryptocurrency exchange did not comply with Know-Your-Customer and Anti-Money Laundering regulations, which allowed cybercriminals to launder more than $700 million through the Bitzlato platform. On the same day, the websites associated with Bitzlato were taken down, and a percentage of the cash associated with the exchange were confiscated by the authorities. Anatoly Legkodymov, a Russian citizen who was living in the People’s Republic of China at the time of his detention, was one of the company’s co-founders and was taken into custody in Miami on the same day.

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Bitcoin (BTC) $ 26,609.13 0.09%
Ethereum (ETH) $ 1,594.86 0.57%
Litecoin (LTC) $ 64.49 0.39%
Bitcoin Cash (BCH) $ 208.33 0.09%