Tag: Schemes And Hacks

Top 30 Altcoin Explodes After U.S. Authorities Crack 120,000 Bitcoin (BTC) Theft Case

by Dailyhodl

A top-30 crypto asset by market cap is skyrocketing after the U.S. Department of Justice announced it had seized nearly 80% of Bitcoin (BTC) stolen years ago from the Bitfinex crypto exchange.

UNUS SED LEO (LEO), the utility token of the Bitfinex crypto exchange, is up 43% over the last 24 hours.

At time of writing, LEO is trading at $7.12. The utility token of the Bitfinex crypto exchange currently boasts a market cap of $6.7 billion, ranking it as the 26th–largest crypto asset by valuation.

In a statement announcing the seizure by the US authorities, Bitfinex says that if it receives the seized Bitcoin, it will use 80% of the funds to repurchase LEO tokens before sending them to an inaccessible wallet address.

“If Bitfinex receives a recovery of the stolen Bitcoin, as described in the UNUS SED LEO token white paper, Bitfinex will, within 18 months of the date it receives that recovery use an amount equal to 80% of the recovered net funds to repurchase and burn outstanding UNUS SED LEO tokens.”

According to the U.S. Justice Department, federal authorities seized more than 94,000 Bitcoin directly linked to the August 2016 hacking of Bitfinex. Alongside the seizure, two individuals were arrested in Manhattan, NY, and charged with a conspiracy to launder the billions of dollars worth of Bitcoin.

The seized Bitcoin is currently worth over $3.6 billion. Approximately 119,754 Bitcoin were stolen from Bitfinex in the 2016 security breach. Bitcoin was trading at around $600 in August of 2016, giving the stolen Bitcoin a value of just under $72 million at the time of the theft.

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Justice Department Seizes Over $3.6 Billion Worth of Bitcoin Linked to Bitfinex Hack

by Dailyhodl

The U.S. Justice Department has seized $3.6 billion worth of Bitcoin, marking the largest seizure of cryptocurrency of all time and the biggest financial seizure ever.

In a statement, the Justice Department says it seized over 119,754 BTC from 34-year-old Ilya Lichtenstein, and his wife, 31-year old Heather Morgan.

The Bitcoin seized by the feds was directly linked to the Bitfinex hack of 2016 when the crypto exchange experienced the biggest digital asset hack in history.

According to court documents seen by the Justice Department, Lichtenstein and Morgan allegedly attempted to launder Bitcoin that was stolen from Bitfinex after a hacker breached the exchange’s systems, and then sent the stolen crypto to a wallet under Lichtenstein’s control in over 2,000 unauthorized transactions.

“Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan.

The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack. After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein.”

The Department says that the files seized by the agents contained the private keys required to access the alleged money launderers’ crypto wallets and recover the BTC.

After allegedly getting ahold of the stolen Bitcoin, the feds say that Lichtenstein and Morgan used a series of complex strategies to try and obfuscate their digital paper trail, including sending the crypto to darknet markets, utilizing fake identities, and using US-based business accounts to legitimize their banking activity.

Last week, the stolen BTC was spotted moving around the blockchain in a flurry of massive transactions. Currently, it’s unclear whether that activity was related to the US government seizing the Bitcoin.

The two suspects are charged with conspiracy to commit money laundering, a crime that carries a maximum sentence of 20 years in prison, plus conspiracy to defraud the United States, which carries a maximum sentence of five years in prison.

FBI Deputy Director Paul M. Abbate warns aspiring crypto money launderers that US authorities have the ability to prevent illicit digital activity.

“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead…Thanks to the persistent and dedicated work of our FBI Investigative teams and law enforcement partners, we’re able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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North Korea Allegedly Funding Missile Program With Stolen Crypto: Report

by Dailyhodl

The United Nations (UN) says that North Korea is using cryptocurrency acquired in cyberattacks to help fund its illicit weapons program.

In a new report, Reuters says it has reviewed the confidential document submitted to the UN Security Council by independent sanctions monitors last Friday.

The document alleges that the rogue nation continues to violate international sanctions against weapons testing and launches dating back to 2006.

The monitors say,

“Although no nuclear tests or launches of ICBMs (intercontinental ballistic missiles) were reported, DPRK [Democratic People’s Republic of Korea] continued to develop its capability for production of nuclear fissile materials…

DPRK continued to seek material, technology and know-how for these programs overseas, including through cyber means and joint scientific research.”

The UN report cites cyberattacks as a source of funding for North Korea’s weapons program, including stealing over $50 million from several crypto exchanges from 2020 to 2021.

Chainalysis released an in-depth analysis of North Korea’s cybercrime methodology last month. The data firm says that North Korea utilized phishing, malware and code exploits to launch more than half a dozen cyberattacks that netted almost $400 million in 2021.

Chainalysis highlights the sophisticated nature of North Korea’s money laundering infrastructure, saying,

“DPRK is a systematic money launderer, and their use of multiple mixers – software tools that pool and scramble cryptocurrencies from thousands of addresses – is a calculated attempt to obscure the origins of their ill-gotten cryptocurrencies while off ramping into fiat…

Chainalysis has identified $170 million in current balances… that are controlled by North Korea but have yet to be laundered through services…

DPRK has massive unlaundered balances as much as six years old.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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U.S. Treasury Department Issues Warning, Says NFTs May Be Used for Money Laundering

by Dailyhodl

The U.S Treasury Department is issuing a warning to investors that non-fungible tokens (NFTs) could be used to launder money.

In a new study, the agency says that the ability to transfer NFTs instantaneously across the world using the internet makes the nascent crypto sector a prime candidate for illicit activities.

“The emerging online art market may present new risks, depending on the structure and incentives of certain activity in this sector of the market (i.e., the purchase of non-fungible tokens).

The ability to transfer some NFTs via the internet without concern for geographic distance and across borders nearly instantaneously makes digital art susceptible to exploitation by those seeking to launder illicit proceeds of crime, because the movement of value can be accomplished without incurring potential financial, regulatory or investigative costs of physical shipment.”

The department finds that one popular method to launder money using NFTs is when one entity acts as both the buyer and seller of an asset during a transaction in order to create a record of sales for it on a blockchain.

The bad actors would then sell the asset to an unsuspecting buyer in order to receive clean funds, according to Treasury Department.

“NFTs can be used to conduct self-laundering, where criminals may purchase an NFT with illicit funds and proceed to transact with themselves to create records of sales on the blockchain. The NFT could then be sold to an unwitting individual who would compensate the criminal with clean funds not tied to a prior crime.”

The Treasury Department also says that another risk that comes with NFTs is that transactions offer a certain degree of anonymity.

“It is also possible to have direct peer-to-peer transactions of NFT-secured digital art without the involvement of an intermediary, and these transactions may or may not be recorded on a public ledger.

These digital art assets are inherently easier to transfer between transacting parties than traditional art because, in most cases, the parties do not need to physically move the art or pay for shipping services such as insurance, transport, or customs duties, although users may incur transaction fees.”

You can read the complete study here.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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New Malware Emerges That Targets Coinbase Wallet, MetaMask and Other Crypto Extensions: Report

by Dailyhodl

A new type of malware has surfaced that can compromise crypto wallets and extensions, putting investors at risk of hacks.

According to a new blog post by network security expert 3xp0rt, a piece of malware known as Mars Stealer – an improved version of information bootlegger Oski Stealer – has emerged to prey on web browsers, crypto extensions and crypto wallets.

Some of the popular web browsers the malware affects are Internet Explorer, Firefox, Microsoft Edge and Thunderbird.

It also preys on crypto extensions such as MetaMask, TronLink, Binance Chain Wallet and Coinbase Wallet while also targeting wallets such as Bitcoin Core and its derivatives. Wallets under MultiDoge and Ethereum could also potentially be affected.

However, 3xp0rt notes that the malware only targets crypto extensions on Chromium-based browsers other than Opera.

The cybersecurity expert says that Mars Stealer operates by getting a handle of a computer’s internal library files to conduct a complex series of technical coding reconfigurations to do its bidding.

To steal a user’s wallet information, the malware targets sensitive data stored in the wallet.dat file. The file contains information such as the address and private key access data, according to the internet security expert. The malware also has a built-in grabber, loader, and self-removal feature.

“Mars Stealer is an improved version of Oski Stealer. [It] has added [functionality]: anti-debug check, crypto extension stealing, but Outlook stealing is missing. The code has been refactored, but some algorithm remained stupid as in Oski Stealer.”

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Nearly $2.3 Billion Worth of Bitcoin Moved Out of Wallet Involved in 2016 Bitfinex Hack: Whale Alert

by Dailyhodl

Nearly $2.3 billion worth of Bitcoin (BTC) stolen in the infamous 2016 Bitfinex exchange heist is moving to a new wallet.

Crypto tracker Whale Alert reports that the hacker’s account shifted more than 64,641 Bitcoin across 21 separate transactions on Monday, all of which were sent to the same new wallet.

The BTC trove was valued at nearly $2.3 billion at the time of the transactions.

Blockstream Explorer reports that the receiving address now holds more than 94,643.298 BTC, worth more than $3.66 billion at time of writing. It is currently the fifth-richest Bitcoin address in the world, according to BitInfoCharts.

In August 2016, Bitfinex was hacked for more than 119,756 BTC, worth roughly $72 million at the time and worth more than $4.6 billion today.

In February 2019, Bitfinex published a report stating that the US government had managed to retrieve only around 27 BTC stolen in the hack.

In August 2020, the exchange announced it would award 5% of any recovered funds to anyone who could put the company in contact with the hacker. Bitfinex also said it would allow the hackers themselves to keep 25% of any property that’s recovered if they cooperated with the exchange.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Money Laundering Accounts for Less Than 1% of All Crypto Transactions Last Year: Chainalysis Report

by Dailyhodl

New data from Chainalysis reveals that while money laundering schemes involving digital assets rose last year, they still comprise a tiny fraction of overall crypto transactions.

In a new report, the market analytics firm finds that while 5% of the global gross domestic product is laundered every year in fiat currency, just 0.05% of all crypto transactions involve money laundering.

“Overall, cybercriminals have laundered over $33 billion worth of cryptocurrency since 2017, with most of the total over time moving to centralized exchanges.

For comparison, the UN Office of Drugs and Crime estimates that between $800 billion and $2 trillion of fiat currency is laundered each year – as much as 5% of global GDP. For comparison, money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021.”

Chainalysis also finds that money laundering through crypto assets is heavily concentrated, with most of the funds moving from illicit wallets to a “surprisingly” small number of entities.

“A group of just 583 deposit addresses received 54% of all funds sent from illicit addresses in 2021. Each of those 583 addresses received at least $1 million from illicit addresses, and in total, they received just under $2.5 billion worth of cryptocurrency.

An even smaller group of 45 addresses received 24% of all funds sent from illicit addresses for a total of just under $1.1 billion. One deposit address received just over $200 million, all from wallets associated with the Finiko Ponzi scheme.”

The market intelligence firm says that the sector of the crypto market most affected by money laundering is decentralized finance (DeFi), which saw a 1,964% year-over-year increase in the total value of funds received from illicit addresses.

Chainalysis also finds that the overall amount of money laundered through cryptocurrencies in 2021 was $8.6 billion, a 30% increase from 2020.

You can read the full Chainalysis report here.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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YouTuber Hacks Crypto Hardware Wallet and Recovers $2,000,000 in Lost THETA

by Dailyhodl

A computer hacker that once testified before the U.S. Senate helped a crypto investor recover millions of dollars worth of tokens that were trapped in limbo.

Joe Grand, also known as Kingpin, tells his 39,300 YouTube subscribers how he went about rescuing the altcoin Theta Network (THETA) from a Trezor One hard wallet after the owners forgot their password and PIN.

After 16 failed attempts at entering the seed phrase, the wallet by design resets the private key – meaning that the contents inside were locked.

Starting in early 2021, Theta rose dramatically from under $2 to an all-time high above $15 in April. Electrical engineer Dan Reich and his friend, who had bought their THETA for $0.21 each in 2018, had lucrative reasons to seek a solution to access their tokens.

After months of preparation and testing before meeting with Reich to hack into the actual device, Grand was able to manipulate an older design feature of Trezor wallets where the private key and/or PIN are temporarily transferred to the RAM (random access memory).

Although the successful hack was accomplished in May of last year, Grand only posted a video documenting the experience this month, prompting Trezor to respond to concerns about its products being vulnerable to hacks.

“Hi, this is an outdated exploit that is not a concern for current users and that we fixed in 2017, right after a report we received through our responsible disclosure program.

The attack requires physical access to the device and there is no record of any funds being compromised.”

Back in 1998, Grand and other young hackers testified before the U.S. Senate Committee on Governmental Affairs about internet security.

At time of writing, THETA is off 81.7% from its peak lat April and trading for $2.89.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Crypto Crime Surges to All-Time High in 2021, but Plummets in Terms of This Metric, Says Chainalysis

by Dailyhodl

Crypto-related crime levels skyrocketed to an all-time high in 2021 – but that statistic doesn’t paint a complete picture, according to Chainalysis.

In a new report, the analytics firm notes that illicit addresses received $14 billion worth of crypto in 2021, a new record and an increase of more than 79% from the $7.8 billion illicit addresses received in 2020.

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Source: Chainalysis

However, total crypto transaction volume surged to $15.8 trillion in 2021, a whopping 567% increase from the previous year.

Explains Chainalysis,

“In fact, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower.

Transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction volume in 2021 despite the raw value of illicit transaction volume reaching its highest level ever.”

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Source: Chainalysis

The analytics firm does caution that the 0.15% figure will probably rise as more crypto crime is identified. The previous year’s figure, for example, was initially identified as 0.34% of 2020’s total crypto transaction volume, but it eventually almost doubled to 0.62%.

Scamming crypto revenue surged by 82% in 2021, reaching a total value of $7.8 billion, Chainalysis adds. More than $2.8 billion of that total was a result of rug pulls.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Here’s What the US Government Does With Its Secret Stash of Bitcoin: Report

by Dailyhodl

Authorities are revealing what the US government does with all the Bitcoin (BTC) and other crypto assets they seize from bad actors.

In new interviews with CNBC, US officials say that most of the cryptocurrencies they seize are liquidated and the proceeds are then distributed between federal government agencies.

Jarod Koopman, director of the Internal Revenue Service’s (IRS) cybercrime unit, says the liquidations happen via fair market auctions and notes that the government never tries to “time” or “play with the market” in an attempt to sell crypto at its peak price.

“You basically get in line to auction it off. We don’t ever want to flood the market with a tremendous amount, which then could have an effect on the pricing component.”

The proceeds of crypto auctions are typically deposited into either the Treasury Forfeiture Fund or the Department of Justice Assets Forfeiture Fund, according to the report.

Koopman says Federal agencies can then request access to the money to fund upcoming operations.

“We’re able to put in a request and say, ‘We’re looking for additional licenses or additional gear,’ and then that’s reviewed by the Executive Office of Treasury.”

After that, it’s not clear exactly where the funds go as an anonymous Department of Justice spokesperson told CNBC that he’s “pretty sure” there isn’t a central database of seized digital assets.

As Alex Lakatos, a Washington D.C.-based lawyer who advises clients on government forfeiture says,

“I don’t believe there’s any one place that has all the crypto that the U.S. Marshals are holding, let alone the different states that may have forfeited crypto. It’s very much a hodgepodge.

I don’t even know if someone in the government wanted to get their arms around it, how they would go about doing it.”

Jud Welle, a former federal cybercrime prosecutor, says that the US government will have to update its playbook on how to handle crimes involving crypto.

“This is not the kind of thing that would show up in your basic training… [In three to five years] there will be manuals edited and updated with, ‘this is how you approach crypto tracing’ [and] ‘this is how you approach crypto seizure.’”

According to previous reports, the IRS  seized $3.5 billion in crypto assets during the fiscal year of 2021.

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Bitcoin (BTC) $ 26,171.01 0.68%
Ethereum (ETH) $ 1,585.84 0.42%
Litecoin (LTC) $ 63.86 1.28%
Bitcoin Cash (BCH) $ 213.65 1.06%