BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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In summary: I don't know if this actually happened, but...?In summary, the website of major bitcoin exchange MtGox was offline Tuesday amid reports it suffered a debilitating theft. Around midmorning in the U.S., the company released a statement saying it had closed off transactions "to protect the site and our users." It offered no further details.
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  • #772
Vanadium 50 said:
Somehow this reminds me of "The issue is not whether we broke a few rules, or took a few liberties with our female ...
I love the way he winks at Dean Wermer
 
  • #773
Atomic wallet (a closed source hot wallet) has suffered a breach, thousands of people's funds are being drained. I do not understand why people use a closed source wallet to keep their funds, as even noobs know that security throufh obscurity doesn't pay off in the long run.

Ledger, a Feench company selling ''cold wallets'' just revealed they would perform a firmware update that would allow the extraction of.the seeds of their users on the Internet, which defeats the purpose of owning such a wallet. They made false advertising claiming it was physically impossible to do so, and now if a police warrant ask them the seeds of anyone, they will just comply. Another closed source security mistake.
 
  • #774
fluidistic said:
Another closed source security mistake.
Rather, selling such kind of wallet was a teeny bit fishy to start with...
If crypto (and all or any part of that) is expected to become some kind of legit banking/investing/money transfer thing then compliance is expected, regardless of any previous advertising about being 'restraint and authority free'.
 
  • #776
Like all crypto exchanges, Binance is a criminal operation.
https://www.reuters.com/legal/us-se...lleging-securities-law-violations-2023-06-05/
The SEC also alleged that from at least September 2019 until June 2022, Sigma Chain, a trading firm owned and controlled by Zhao, engaged in wash trading that artificially inflated the trading volume of crypto asset securities on the Binance.US Platform....

Binance's global trading platform, Binance.com dominates the crypto trading landscape, last year processing trades worth about $65 billion a day with up to 70% of the market.

The firm has processed at least $10 billion in payments for criminals and companies seeking to evade U.S. sanctions, Reuters has previously reported.

Reuters also reported on May 23 that Binance commingled its customers’ funds with its corporate revenues in Silvergate Bank account belonging to trading firm Merit Peak, in breach of U.S. financial rules that require client money to be kept separate.
 
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  • #777
https://www.sec.gov/news/press-release/2023-102

SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency​

“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” said SEC Chair Gary Gensler. “In other parts of our securities markets, these functions are separate. Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC. Further, as we allege, Coinbase never registered its staking-as-a-service program as required by the securities laws, again depriving investors of critical disclosure and other protections.”
...
The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, alleges that Coinbase and CGI violated certain registration provisions of the Securities Exchange Act of 1934 and that Coinbase violated the securities offering registration provisions of the Securities Act of 1933. The complaint seeks injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief.
 
  • #778

Cryptocurrencies II: Last Week Tonight with John Oliver (HBO)​


 
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  • #779

Binance CEO's trading firm received $11 billion via client deposit company, SEC says​

https://finance.yahoo.com/news/binance-ceos-trading-firm-received-182401221.html

LONDON (Reuters) - Merit Peak, an offshore trading company controlled by Binance CEO Changpeng Zhao, received around $11 billion of client assets through a Seychelles-based firm set up to take customer deposits, a U.S. Securities and Exchange Commission filing shows.

The SEC filing, which on Tuesday asked a U.S. court to freeze Binance's U.S. assets, came a day after the SEC sued Binance, its billionaire CEO Zhao, and the operator of its U.S. affiliate exchange, for allegedly operating a "web of deception."

In its 13 charges, the SEC alleged that Binance and Zhao used Merit Peak and Sigma Chain, another trading firm controlled by Zhao, to commingle corporate funds with client assets and use the monies "as they please." This put customers' assets at risk while Binance sought to "maximize" its profits, the SEC wrote in its civil complaint on Monday.

. . . .
I wonder if those who bought Binance's digital currency can redeem them for real $ and put them in real banks. Do investors even 'own' their digital currency?
 
  • #780
Billionaire Cameron Winklevoss, co-founder of the Gemini Trust Co. crypto platform, outlined what he termed a “best and final offer” for digital-asset lender Genesis Global Holdco’s bankruptcy restructuring.
https://finance.yahoo.com/news/billionaire-winklevoss-outlines-final-offer-032155738.html

The whole organization seems dodgy.

Billionaire starts a company, or maybe he was a millionaire, then became a billionaire by collecting investments claiming to pay high rates of return. Company goes bust but the billionaire keeps the money he payed himself?
 
  • #781
Astronuc said:
but the billionaire keeps the money he payed himself?
As they say, nice work if you can get it.
 
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  • #782
 
  • #783
NEW YORK (AP) — The founder and former CEO of the failed cryptocurrency lending platform Celsius Network was freed on $40 million bail Thursday after pleading not guilty to federal fraud charges alleging that he schemed to defraud customers by misleading them about key aspects of the business.

Alexander Mashinsky, 57, of Manhattan, was charged with securities, commodities and wire fraud in an indictment unsealed in Manhattan federal court. He was also charged with illegally manipulating the price of Celsius’s proprietary crypto token while secretly selling his own tokens at inflated prices.
https://apnews.com/article/cryptocurrency-celsius-mashinsky-arrest-4b4296d01e15d171e51ad5bd94c19c7a

Alex Mashinsky, the founder and former CEO of bankrupt cryptocurrency lender Celsius, has been arrested and charged with fraud, federal prosecutors said on Thursday.

Mashinsky was charged with seven criminal counts, including securities, commodities and wire fraud, according to the U.S. attorney's office in Manhattan. He is also accused of misleading Celsius customers about the company's business, including how it would use their money, while depicting the lender as a bank when in fact it operated as a risky investment fund, according to the indictment.
https://www.cbsnews.com/news/celsius-founder-alex-mashinsky-arrested-charged-with-fraud/

https://www.axios.com/2023/07/13/alex-mashinsky-former-ceo-of-crypto-lender-celsius-arrested

Former Celsius crypto CEO Alex Mashinsky arrested on fraud charges; company to pay $4.7 billion in settlement
https://www.yahoo.com/news/former-celsius-crypto-ceo-alex-213600528.html
 
  • #784
$45M? Wow. His bail bondsman must have him Krazy Glued to his house.

The position of the government is a bit hard to grasp. Is Celsius a security and the price is being manipulated? Or is it not a security and being sold as one?
 
  • #786
What's SBF's defense going to be? It seems like "He's just a big dumb puppy, and there is no way he could have come up with a slick caper like this." This just feeds into the legend.
 
  • #787
https://www.404media.co/crypto-star...osing-password-to-38-9-million-crypto-wallet/
A buzzy startup offering financial infrastructure to crypto companies has found itself bankrupt primarily because it can’t gain access to a physical crypto wallet with $38.9 million in it. The company also did not write down recovery phrases, locking itself out of the wallet forever in something it has called “The Wallet Event” to a bankruptcy judge.

Prime Trust pitches itself as a crypto fintech company designed to help other startups offer crypto retirement plans, know-your-customer interfaces, ensure liquidity, and a host of other services. It says it can help companies build crypto exchanges, payment platforms, and create stablecoins for its clients. The company has not had a good few months. In June, the state of Nevada filed to seize control of the company because it was near insolvency. It was then ordered to cease all operations by a federal judge because it allegedly used customers’ money to cover withdrawal requests from other companies.
My guess would be that wallet is already empty or will be "mysteriously" accessed and the money taken away years from now.
 
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  • #788
nsaspook said:
https://www.404media.co/crypto-star...osing-password-to-38-9-million-crypto-wallet/

My guess would be that wallet is already empty or will be "mysteriously" accessed and the money taken away years from now.
Absolutely mindblowing, totally impossible to believe. They ''lost'' the steel plates that has written on them the seedphrase (i.e. the private key to the 38 M dollars wallet)?

Specialists in security losing all their steel plates which were very likely kept in different places. Not sure who they're trying to fool. Their own grandmothers I guess.
 
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  • #789
"Who was in charge of keeping track of our wallet?"
"Bob":
"Where is he today?"
"Out...something about the Cayman Islands"
 
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  • #790
An interesting legal question: Bob steals some ShadyCrypto from Bill. He then converts it to dollars by selling it to Sue.

Who is the victim here?

Now assume that ShadyCrypto falls in value by a factor 10. Bob, feeling remorse, buys some ShadyCrypto with his gains and puts it back. Bill never noticed it was gone.

Now who is the victim here?
 
  • #791
Feeling remorse? Bob steals the rest of ShadyCrypto and sells it before the dollar value is zero.

Bob is the victim because he should have stolen it all the first time.
 
  • #792
https://www.coindesk.com/policy/202...-of-collapsed-turkish-crypto-exchange-thodex/
Faruk Fatih Özer, the founder of the collapsed Turkish crypto exchange Thodex, his sister Serap Özer and his brother Güven Özer have been sentenced to 11,196 years, 10 months and 15 days in prison, according to local media. A judicial fine of 135 million liras ($5 million approx.) was also imposed.
Thodex was one of Turkey's largest crypto exchanges before it suddenly went offline in April 2021 and Özer went missing. Over 400,000 members were left in the dark without access to deposits of $2 billion in cryptocurrencies. Özer had fled to Albania but was arrested in August 2022 after an Interpol red notice against him.
11,196 years, 10 months and 15 days in a Turkish prison, seems like a just punishment.
 
  • #793
It's the 15 days at the end that gets me. "Your honor, could you make it 13 days? I play golf on Thursdays."

I don;t know why Ozer didn't flee to the UAE or somewhere else without extradition and where money talks - and not too many questions are asked about where it came from.

Also, Turkey is special. They have had and continue to have horrific inflation (seems common to all currencies named the lira) so crypto may in fact be a better store of value than the national currency. So the people who were scammed probably are more ordinary citizens than get-rich-quick schemers. Also, politics may have played a factor - there were elections in Turkey and the number of victims is only 3-4x Ergodan's margin of victory.

If I did the math right, the sentence was 3 minutes per dollar. For bank robbery in the US, it's more like 15 hours. He got off easy.
 
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  • #794
https://news.yahoo.com/robbery-salvadorans-slow-adopt-bitcoin-191002188.html
But two years after El Salvador became the first country in the world to adopt Bitcoin as its currency, alongside the US dollar, "the goals that were pursued... have not been achieved, people hardly use it, they don't have much trust" in crypto, economist and former Reserve Bank governor Carlos Acevedo told AFP.

"The experiment has not worked, it is a crypto winter," he said.

There are no figures available on how many Salvadorans have taken up Bitcoin.

But a poll conducted in May by the Central American University found that 71 percent believed the cryptocurrency "has in no way helped to improve their family economic situation."

On the streets of San Salvador, the verdict is harsh.

"I don't see that money working, it's just propaganda. Where's the benefit? There's no benefit. It's a bad investment," newspaper vendor Juan Antonio Salgado, 65, told AFP.

"It's robbery," he added, in reference to the currency's volatility.
 
  • #795
He's 65, so he clearly doesn't understand the New Economy. Like stonks, crypto only goes up!
 
  • #796
https://www.cnbc.com/2023/09/12/cry...20-years-prison-in-4-billion-ponzi-fraud.html
The co-founder of the fraudulent OneCoin cryptocurrency, a massive pyramid scheme that amassed more than $4 billion from millions of investors worldwide, was sentenced Tuesday to 20 years in prison.

Karl Greenwood, 46, who orchestrated the multibillion-dollar multilevel marketing con, pleaded guilty in December to wire fraud and money laundering charges.

His partner, Ruja Ignatova, 43, known as the “Cryptoqueen” on the FBI’s Top 10 Most Wanted list, remains at large, the U.S. Department of Justice said.

Greenwood “operated one of the largest fraud schemes ever perpetrated,” U.S. Attorney Damian Williams said in a press release.

https://www.fbi.gov/wanted/topten/ruja-ignatova/@@download.pdf

The FBI is offering a reward of up to $250,000 for information leading to the arrest of Ruja Ignatova.
 
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  • #797
https://www.bleepingcomputer.com/ne...-million-worth-of-cryptocurrency-from-coinex/

Hackers steal $53 million worth of cryptocurrency from CoinEx​

Global cryptocurrency exchange CoinEX announced that someone hacked its hot wallets and stole large amounts of digital assets that were used to support the platform's operations.

The incident occurred on September 12 and preliminary results of the investigation show that the unauthorized transactions involved Ethereum ($ETH), Tron ($TRON), and Polygon ($MATIC) cryptocurrency.
 
  • #798
nsaspook said:
The FBI is offering a reward of up to $250,000 for information leading to the arrest of Ruja Ignatova.
Payable in crypto?
 
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  • #799
The NYT is publishing Bankman-Fried's latest scribblings. "Sam Bankman-Fried speaks out" is not news. "Sam Bankman-Fried shuts up" would be.
 
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  • #800
https://www.cnbc.com/2023/09/19/sbf...ions-of-dollars-in-misappropriated-funds.html
The suit goes on to allege that as early as 2019, Sam’s father directly participated in efforts to cover up a whistleblower complaint which threatened to “expose the FTX Group as a house of cards.” The filing also details emails written by Bankman in which he complained to the FTX US Head of Administration that his annual salary was $200,000, when he was “supposed to be getting $1M/yr.”

That grievance was ultimately elevated to his son in an email, according to the lawsuit: “Gee, Sam I don’t know what to say here. This is the first have heard of the 200K a year salary! Putting Barbara on this.”

The filing characterizes the correspondence as Bankman lobbying his son to “massively increase his own salary.” Within two weeks, the suit claims that Bankman-Fried had collectively gifted his parents $10 million in funds coming from Alameda, and within three months, the couple was deeded the $16.4 million property in The Bahamas.
 
  • #802
"So, don't think of me as your father. Think of me as you fence."
 
  • #803
https://www.bnnbloomberg.ca/stanfor...entirety-of-gifts-received-from-ftx-1.1973605
Stanford University plans to return millions of dollars it received from bankrupt crypto exchange FTX and related entities, a university spokesperson said in an emailed statement.

“We have been in discussions with attorneys for the FTX debtors to recover these gifts and we will be returning the funds in their entirety,” the spokesperson said.
 
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  • #804
Getting a university to return a gift is a big deal. They do not like doing that.

Stanford is in the midst of a search for a new president. I bet the canididates are asked some interesting...er...hypotheticals on this.
 
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  • #805
I weep for battered old Stanford.
 
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