Connect with us

Regulation

US ramps up enforcement actions against global crypto scams

Published

on



The United States has taken actions against international hackers responsible for the theft of millions of dollars in cryptocurrency.

On September 16, the U.S. Department of Justice, U.S. Department of Homeland Security, and the U.S. The Department of the Treasury’s Office of Foreign Assets Control announced it has imposed sanctions on two Russian nationals who used a sophistication phishing campaign to steal at least $16.8 million from the customers of three virtual currency exchanges in 2017 and 2018 — including two based in the United States.

The pair, Danil Potekhin and Dmitrii Karasavidi, created multiple websites impersonating legitimate crypto exchanges to steal the login information for unsuspecting victims, before using accounts verified with stolen identities to move the crypto assets through various intermediaries and execute pump and dump schemes targeting altcoins with low market capitalization.

“The individuals who administered this scheme defrauded American citizens, businesses, and others by deceiving them and stealing virtual currency from their accounts,” said secretary of the treasury, Steven Mnuchin.

“The Treasury Department will continue to use our authorities to target cyber criminals and remains committed to the safe and secure use of emerging technologies in the financial sector.”

On the same day, the U.S. Department of Justice announced that two hackers had been arrested in Malaysia in connection with computer hacking campaigns that targeted more than 100 companies, universities, governments, and non-profit organizations internationally.

The pair are each facing charges carrying up to 77 years in prison. Five Chinese nationals are still at large, including one individual who has claimed ties to China’s Ministry of State Security.

The group penetrated computing infrastructure to steal source code and other proprietary business information, customer account data, and to launch ransomware and cryptojacking schemes. David Bowdich, deputy director of the FBI, stated:

“Today’s announcement demonstrates the ramifications faced by the hackers in China but it is also a reminder to those who continue to deploy malicious cyber tactics that we will utilize every tool we have to administer justice.”

The indictment targeting the Malaysians was unsealed last month, while indictments for the Chinese hackers were unsealed in August 2019 and August 2020.



Source link

Regulation

ICO issuer charged with fraud by SEC for selling unregistered security

Published

on

By



The United States Securities and Exchange Commission, or SEC, has charged a cryptocurrency issuer for “making materially false and misleading statements” in connection with an unregistered security offering conducted between August 2017 and January 2018, offering further evidence that regulators were still targeting initial coin offerings from the last major market mania. 

Loci Inc., the platform behind LOCIcoin, and CEO John Wise were formally charged on Tuesday. The SEC claims that Loci and Wise misled investors about the company’s revenues, employee numbers and user base during the $7.6 million crowdsale. The regulator also alleges that Wise misused $38,163 in investor proceeds for personal expenses.

“Loci and its CEO misled investors regarding critical aspects of Loci’s business,” said Kristina Littman, the head of the SEC Enforcement Division’s cyber unit, adding:

“Investors in digital asset securities are entitled to truthful information and fulsome disclosures so they can make informed investment decisions.”

The order also requires that Loci and Wise pay a $7.6 million civil penalty for their transgressions.

Handing out penalties to cryptocurrency businesses is nothing new for U.S. authorities. Regulators from the SEC, Commodity Futures Trading Commission and Financial Crimes Enforcement Network have imposed fines of more than $2.5 billion on cryptocurrency-related businesses since 2014, underscoring the murky regulatory climate surrounding digital assets.

Elliptic Enterprises, a blockchain analytics firm headquartered in the United Kingdom, reported Tuesday that the $2.5 billion in penalties covered a broad range of infractions, including fraud, the selling of unregistered securities and a failure to uphold Anti-Money Laundering regulations.

The SEC accounted for the lion’s share of the penalties at $1.69 billion. The CFTC imposed penalties of $624 million and FinCEN slapped crypto businesses with $183 million in fines. The Office of Foreign Asset Control handed out the smallest fines among the regulators at $606,000.

Cryptocurrencies have been described by many as the wild west of finance. Tens of thousands of crypto-centric projects have launched in the wake of Bitcoin’s genesis block in early 2009. Many of these companies got their start in 2017 during the height of the initial coin offering boom.

Related: With US regulators handing out $2.5B in fines since 2014, crypto is not the ‘wild west’ of finance

ICOs allowed crypto startups to raise millions of dollars without having to meet the stringent regulations of more traditional security offerings. ICO funding reached the tens of billions in 2017 and 2018 combined, attracting unwanted attention from securities regulators. The SEC successfully charged the founders of several crypto companies, which effectively put an end to the mania — in the United States, at least.