Cryptocurrencies To Watch

Tag: Crime

  • Craig Wright to Serve a Year in Prison for Claiming to be Satoshi

    Craig Wright to Serve a Year in Prison for Claiming to be Satoshi

    The Australian computer scientist Craig Wright, who falsely claimed to be the founder of Bitcoin, has been sentenced to 12 months in prison and suspended for two years. The verdict served by a British Judge was mainly for contempt of court after breaching a High Court order.

    The one-year suspended sentence serves as a warning, allowing Wright to rehabilitate and avoid imprisonment if he complies with the conditions.

    Wright Bags One-Year Prison Sentence

    Earlier this year, Wright lost a legal battle against the Crypto Open Patent Alliance (COPA), a non-profit group that includes crypto firms. The lawsuit argued that the computer scientist falsely claimed to be Satoshi Nakamoto, the pseudonymous creator of Bitcoin. The court barred the accused from launching further legal action related to Bitcoin.

    However, in October, Wright issued another Bitcoin-related claim worth over $1.1 trillion. The court deemed his latest act unremorseful and a flagrant breach of the first court order, a “contempt of court” offense.

    In response, the court threw out Wright’s latest legal claim and ordered him to pay around $181,530 of COPA’s legal costs. His refusal to attend the hearing and subsequent claim that he couldn’t afford to travel to the UK was seen as an attempt to avoid accountability.

    Wright May Face More Penalties

    The court also found Wright guilty of “forgery on an industrial scale.” The Crown Prosecution Service is yet to decide whether to bring criminal charges against him for the hundreds of forged documents related to the case.

    The Bitcoin community has condemned Wright’s actions, with many seeing his claims as an attempt to discredit the crypto and its developers. Notably, the crypto’s original white paper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” was released in 2008 and authored under Satoshi’s name, not Wright’s.

    The prison sentence is a blow to Wright’s reputation, and he will likely face further consequences for his actions.

    Not the First Crypto-Related Sentencing

    Several other figures in the crypto industry have also faced prison sentences for various offenses. One example is Ross Ulbricht, the founder of the Silk Road darknet marketplace, who was sentenced to life in prison in 2015 for money laundering and computer hacking.

    Sam Bankman-Fried, the founder of the bankrupt crypto exchange FTX, pleaded not guilty to the charges. He was later found guilty, sentenced to 8 years in prison, and ordered to forfeit $2.2 billion. He now shares a prison cell with American hip-hop music producer Sean Combs, also known as Diddy.

  • South Korean Congressman Bags 6-Month Jail Term for Concealing Over $6.8M in Crypto

    South Korean Congressman Bags 6-Month Jail Term for Concealing Over $6.8M in Crypto

    A South Korean lawmaker has been sentenced to six months in prison for failing to disclose over 9.9 billion won, equivalent to $6.8 million in crypto assets.

    According to a local source, Kim Nam-kuk, the convicted Congressman, was found guilty of violating South Korea’s Public Official Ethics Act. This act mandates the disclosure of all significant assets, including crypto holdings.

    Kim Converts Cash to Crypto

    The prosecutors noted that Kim deliberately concealed his crypto portfolio by transferring assets across bank accounts to conceal significant profits from crypto investments. This reportedly occurred during his property declarations in 2021 and 2022, while he converted the remaining funds back into crypto to align with his declared total assets.

    This case has gained significant attention due to the ongoing debate over digital asset taxation and regulatory policies in South Korea. Prosecutors also argued that this scheme enabled Kim to avoid thorough examination by the National Assembly Ethics Committee, concealing the substantial profits he earned from crypto investments.

    By altering his financial disclosures, Kim obstructed the committee’s ability to assess his assets accurately, an offense that carries serious legal repercussions in South Korea.

    South Korea’s Crypto Implementation

    Kim’s actions unfold amid the Democratic Party’s ongoing discussions on virtual asset taxation policies. He has openly criticized the party’s efforts to impose stricter crypto tax regulations, dismissing them as ineffective attempts to gain public support.

    However, the Democratic Party has proposed to amend tax laws, raising the tax deduction limit for virtual assets to 50 million won (over $37,000).

    A November report revealed that the country’s ruling Democratic Party of Korea (DPK) has finalized plans to implement a long-awaited crypto tax in January 2025. Initially scheduled for 2022, the country’s 20% tax (22% including local taxes) was postponed following resistance from investors, but modifications to address these concerns are provided.

    Significant changes involve increasing the tax exemption limit from 2.5 million won ($1,795) to 50 million won (approximately $35,500) in annual profits, significantly decreasing the number of investors impacted.

    Meanwhile, the lawmaker’s six-month sentencing comes as a Chinese official received a life prison sentence for selling sensitive and classified state secrets to an unauthorized third party for crypto. Ministry of State Security agents uncovered the official’s activities, revealing he had received over $140,000 via crypto transactions involving Monera tokens.

  • Nigeria Arrests Nearly 800 in Crackdown on Crypto Scam Operation

    Nigeria Arrests Nearly 800 in Crackdown on Crypto Scam Operation

    Nigeria’s anti-corruption agency has apprehended 792 individuals during a raid on a building in the nation’s largest city. The building is suspected to be a central hub for an extensive crypto-based romance scam network.

    The individuals detained on December 10 in Lagos comprised 148 Chinese nationals and 40 Filipinos, according to Wilson Uwujaren, a spokesperson for the Economic and Financial Crimes Commission (EFCC), who shared the information with Reuters.

    “Nigerian accomplices were recruited by the foreign kingpins to prospect for victims online through phishing, targeting mostly Americans, Canadians, Mexicans, and several others from European countries,” Uwujaren said.

    Scamming Pattern & Operations

    Uwujaren further revealed that the arrested individuals operated within a network of fraudulent companies. They used social media, fake websites, and WhatsApp groups to attract unsuspecting investors. These platforms often promised guaranteed profits with minimal risk, a hallmark of classic Ponzi schemes.

    “Staff there would make contact with people through social media and messaging platforms, including WhatsApp and Instagram, then seduce them online or offer them apparently lucrative investment opportunities,” Uwujaren added.

    The EFCC spokesperson also noted that after the Nigerians gained the trust of potential victims, the foreign nationals stepped in to carry out the fraud itself. Once the victims were convinced, they were coerced into sending money for fraudulent crypto schemes and other fictitious projects.

    As such, Uwujaren stated that the Commission was working with international partners and would investigate possible connections to organized crime. During the raid, agents confiscated computers, mobile phones, and vehicles.

    Nigeria has long been a leader in crypto adoption in Africa, with many Nigerians turning to digital assets as an alternative to traditional banking systems. However, the rise of scams has cast a shadow over the growing crypto industry, causing many individuals to fall victim to illicit practices.

    The country’s recent crackdown highlights the urgent need for greater awareness and regulation in the crypto space. While crypto-assets continue to provide opportunities for financial growth and innovation, the dangers of fraud remain a significant challenge.

    A Prison Sentence

    Nigeria is not the only country to find individuals involved in illegal activities. For instance, Juan Tacuri, a senior promoter of the Forcount (Weltsys) Ponzi scheme, was sentenced to 20 years in prison for his involvement in the fraudulent act that reaped millions of dollars from thousands of investors.

    According to the court statements, Tacuri and his allies presented Forcount to investors as a crypto mining and trading firm that allowed investors to buy crypto investment products and receive daily returns on their purchases.

  • Fake Uber Driver Steals Over $300,000 Crypto From Passengers

    Fake Uber Driver Steals Over $300,000 Crypto From Passengers

    A man has been arrested in Scottsdale, Arizona, on multiple felony charges for allegedly posing as an Uber driver and stealing over $300,000 in crypto from customers. The suspect, identified as Nuruhussein Hussein, was taken into custody on December 11.

    An Uber driver is an independent contractor who drives for the ride-hailing company Uber. They use their own vehicles to transport passengers who request rides through the Uber app.

    The $300K Crypto Theft

    According to court documents, Hussein targeted two victims, one in March and one in October, outside the W Scottsdale hotel near Camelback and Scottsdale roads. He allegedly pretended to be an Uber driver, calling out the names of supposed passengers, and then convinced them to hand over their phones. He would then transfer crypto from their Coinbase accounts.

    The victims reported that Hussein used two different methods of obtaining their phones. He would either claim his phone was dead or offer to help troubleshoot the Uber app. Once in possession of the phone, Hussein would quickly transfer the crypto. Although no weapon was seen, one of the victims reported that he made threats implying that he had a gun.

    Prosecutors pushed for a cash-only bond of $200,000, citing the level of skill shown in the fraud and the alleged threats made to one of the victims. The judge obliged and ordered that Hussein be placed under electronic monitoring after the settlement. The Uber scammer will also prohibited from leaving Maricopa County and using the internet.

    Although court documents indicate the thefts totaled around $223,000, the Scottsdale Police Department reported that the total was more than $300,000. The police have advised Arizona residents to be cautious when using ride-sharing services.

    In-Person Crypto Crimes on the Rise

    According to GitHub, there have been at least 19 recorded incidents of in-person crypto crimes in different countries this year. Recent cases include a Chinese man abducted for $1 million crypto ransom and a Bitcoin investor murdered over 3 BTC.

    The blockchain detective, ZachXBT, also claimed to have received multiple messages from victims of crypto home invasion thefts in Western Europe over the past few months. ZachXBT also shared a specific case where a victim was robbed of $4.3 million in crypto during a home invasion in June 2024.

  • Crypto Investor Bags 2-Year Prison Sentence for $3.7M Tax Evasion

    Crypto Investor Bags 2-Year Prison Sentence for $3.7M Tax Evasion

    Frank Richard Ahlgren III, an early Bitcoin investor residing in Texas, has been sentenced to two years in prison for tax evasion. According to the United States Department of Justice (DOJ), he earned about $3.7 million from selling bitcoins in 2017 but underreported his realized capital gains from the digital asset sales.

    Ahlgren’s $3.7M Tax Evasion

    Ahlgren purchased 1,366 bitcoins in 2015 using his Coinbase account. In October 2017, he sold approximately 640 BTC for $3.7 million, using the proceeds to buy a house in Park City, Utah. However, when it came time to prepare his 2017 federal income tax return, Ahlgren lied to his accountant by submitting a false summary of his gains and losses from the sale of his bitcoins.

    In 2018 and 2019, Ahlgren sold additional bitcoins for over $650,000 but did not report these sales on his tax returns. To conceal his transactions, Ahlgren used sophisticated techniques, including moving his bitcoins through multiple wallets, meeting an individual in person to exchange bitcoins for cash, and using mixers to obscure his transactions on the blockchain.

    Sentenced and Fined

    The U.S. District Court sentenced Ahlgren to two years in prison. He will also serve one year of supervised release and pay $1.09 million restitution to the United States.

    Notably, the acting special agent in charge of IRS-Criminal Investigation (IRS-CI), Lucy Tan, acknowledged that the case was the first criminal tax evasion prosecution “centered solely on crypto.” Commenting further on the case, he added:

    “Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. This case demonstrates that no one is above the law. My team at IRS Criminal Investigation has the expertise and tools to track financial activity, whether it involves dollars, pesos, or cryptocurrency.”

    The Future of U.S. Crypto Taxation

    U.S. President-elect Donald Trump recently proposed a zero-tax policy on crypto assets created in the country, such as BTC and XRP. In contrast, others created outside, like ETH, would be subject to taxation. He argued that taxing crypto transactions is unfair, suggesting that Bitcoin should be treated like another form of money and tariffs should be imposed instead.

    Trump also publicly pledged to commute Ulbricht’s sentence if re-elected, drawing cheers from the crowd. Given the president-elect’s growing pro-crypto stance and opposition to Bitcoin taxes, he may extend similar mercy to Ahlgren after the inauguration.

  • South Korean Crypto Investor Bags 5 Years Jail-Term Over $427,800 Theft

    South Korean Crypto Investor Bags 5 Years Jail-Term Over $427,800 Theft

    A South Korean court has sentenced a civil servant to five years in prison for embezzling approximately $427,800 (600 million won) in public funds. The civil servant at Cheongju City Hall was responsible for student work activities and North Korean defector settlement support projects.

    Sentenced to Five Years Jail-Term

    The embezzlement, which started in January 2017, lasted seven years and involved forging various official documents. The stolen funds were used to invest in crypto and stocks. He also used part of it to pay off personal debt.

    The civil servant likely invested the embezzled funds in crypto, intending to make returns and replace the money before being caught. This strategy, often called “robbing Peter to pay Paul,” is common in embezzlement and other financial misconduct cases.

    Perpetrators often attempt to use investments or other financial instruments to replace stolen funds, but these schemes can be complex and challenging to sustain. Whichever reasons he may have had for investing in crypto with stolen funds, the plan ultimately backfired, and he was caught and brought to justice.

    Judge Kwon No-eul of the Cheongju District Court stated that the defendant’s repeated offenses over a long period, combined with the fact that only a portion of the damages were paid, contributed to the severity of the sentence.

    Not the First

    Recently, a Chinese government official was also sentenced to life imprisonment for betraying national trust by selling classified state secrets to an unauthorized third party. Foreign agents exploited his vulnerability, offering him compensation for classified data. He eventually supplied the internal documents for significant sums, receiving over $140,000 via crypto transactions. 

    Chandrahar SR, a former Indian police inspector, was also charged with stealing about $216,000 worth of Bitcoin from hackers. As part of the investigation team, he allegedly accessed the hackers’ Bitcoin wallets and transferred the funds to his accounts while destroying the evidence to cover his tracks.

    Officials’ misuse of power to engage in criminal activities can have far-reaching consequences. To prevent such abuses, the government should have robust systems of accountability and transparency in place. This includes measures such as periodic investigations and whistleblower protection laws.

  • Founder of Crypto Mixer Helix Sentenced Over $300M BTC Launder

    Founder of Crypto Mixer Helix Sentenced Over $300M BTC Launder

    A United States District Court in Columbia sentenced an Ohio man to three years in prison for laundering over 350,000 bitcoins, worth $300 million at the start of the case. Surprisingly, Judge Beryl Howell granted him leniency, considering his valuable cooperation with U.S. prosecutors in investigating other crypto crimes.

    Sentenced to Three Years in Prison

    The case began in 2019 and involved a man identified as Larry Harmon. He is the mastermind behind Grams, a Darknet search engine set up in 2014. Grams eased finding and buying illicit goods, including hacking tools, stolen credit card information, and forged documents.

    He later established Helix, another darknet-based service for crypto laundering. The platform, which functioned as a Bitcoin mixer, concealed transactions from law enforcement. The technology propelled hundreds of drug dealers to operate with less or no fear of punishment by the law. The dark innovator used it to launder funds worth over $31.85 billion.

    Interestingly, Harmon had already shut down Helix two years before his arrest, which Judge Howell took into consideration when deciding on the sentence. The judge noted Harmon’s assistance to law enforcement and his decision to cooperate, stating, “He turned himself around before he was arrested in this case.”

    Fast-forward to today. Following extensive hearings, the judge departed from the prosecutors’ recommended sentence of 8 years, handing Harmon down a 3-year prison term. Notably, the felon was also hit with a $60 million civil fine from the U.S. Treasury Department.

    Meanwhile, Harmon’s brother, Gary, was accused of using his credentials to steal 713 bitcoins from an evidence locker. At the time of prosecution, the stolen assets were worth $5 million. He later pleaded guilty and was sentenced to four years in prison.

    Other Similar Cases

    The Harmon case brings to mind other similar crypto crime cases. Ross Ulbricht is currently serving a life sentence for creating and operating another darknet marketplace, Silk Road. However, President-elect Donald Trump has pledged to reduce his prison time.

    Alexey Pertsev, one of the original developers of the Tornado Cash crypto mixer, has been sentenced to over five years in prison by a Dutch court. Nonetheless, crypto criminals still use the platform to obfuscate blockchain transactions. Recently, the Radiant Capital hacker moved stolen funds to the protocol.

  • Bitfinex Hacker Receives 5-Year Prison Sentence After BTC Theft

    Bitfinex Hacker Receives 5-Year Prison Sentence After BTC Theft

    United States prosecutors are pushing for a five-year prison term for the individual who confessed to stealing 120,000 bitcoin (BTC) from the crypto exchange Bitfinex in 2016.

    At the time of the hack, Ilya Lichtenstein’s stolen bitcoin was worth approximately $70 million. He committed the exploit on Bitfinex, conducting over 2,000 unauthorized transactions to transfer the crypto asset into his possession.

    The stolen BTC is currently worth over $10.5 billion due to the rise in the price of bitcoin.

    A Prison Sentence

    According to a CNBC report, prosecutors informed a Federal Court in Washington, DC, that Lichtenstein should receive a sentence shorter than the 20 years he initially faced after admitting guilt to one count of conspiring to engage in money laundering.

    They contended that a reduced sentence was justified due to his lack of prior criminal record and cooperation, which has helped several investigations.

    The report also noted that prosecutors requested the court sentence Heather Morgan, Lichtenstein’s accomplice and wife, to 18 months in prison for her involvement in laundering the stolen digital asset, citing her cooperation as a mitigating factor.

    Compared to his wife’s sentence, the prosecutors sought a longer sentence for Lichtenstein, noting that he spent months planning the scheme and engaged in additional hacking and financial fraud attempts, including stealing $200,000 from a separate crypto exchange.

    Initially, Lichtenstein and Morgan were only suspected of laundering the hack funds, but Lichtenstein eventually confessed to carrying out the attack.

    Prosecutors stated that a stricter sentence is required to discourage future offenses and emphasize the severity of the crime.

    “While the defendants have certainly cooperated with the government in recovering the residue of the stolen funds following their arrests, it was law enforcement intervention — not any sort of spontaneous remorse on the part of the defendants — that has facilitated those recoveries,” the prosecutor said.

    Couple to Transfer Stolen Crypto Assets

    Prosecutors have further requested that the court mandate both defendants to transfer the crypto assets confiscated from Lichtenstein’s wallet back to Bitfinex as restitution.

    The wallet holds approximately 95,000 BTC, 117,400 Bitcoin Cash (BCH), 117,400 Bitcoin Satoshi Vision (BSV), and 118,100 Bitcoin Gold (BTG), with a combined value currently exceeding $6 billion. 

    Lichtenstein’s sentencing was scheduled for November 14, while his wife will be sentenced on November 15.

  • Chinese Official Bags Life Sentence After Trading State Secrets for Crypto

    Chinese Official Bags Life Sentence After Trading State Secrets for Crypto

    A Chinese local media has recently reported a case involving Wang Moumou, a government official entrusted with sensitive information within a confidential unit. He was sentenced to life imprisonment for betraying national trust by selling classified state secrets to an unauthorized third party.

    Chinese Official Trades State Secrets

    The story starts with Moumou’s financial struggle. He faced monetary crises after investing borrowed funds into crypto, which only accrued losses instead of expected gains. Desperate and frustrated, he started seeking a part-time online job while revealing his government position and high debts.

    Soon after the post, foreign agents contacted him, offering compensation for classified data. Initially hesitant, Moumou’s resolve crumbled, and he supplied internal documents for the agreed sums. His greed intensified, leading him to provide increasingly sensitive information to his clients.

    Eventually, the Ministry of State Security agents uncovered Moumou’s treasonous activities, revealing he had received over $140,000 via crypto transactions involving monera tokens. Convicted of espionage, the national betrayer received life imprisonment and permanent revocation of political rights.

    Nonetheless, Moumou’s case is not the first or only crypto crime perpetrated by a government official. India’s Former Central Crime Branch inspector Chandrahar SR was charged with illegally accessing hackers’ Bitcoin wallets, stealing $216,000 worth of BTC, and destroying evidence. The hackers had stolen $660,000 from exchanges.

    Moumou’s life imprisonment sentence reflects China’s stance on national security and crypto transactions. His treason charges, combined with his violation of the country’s crypto ban, likely led to the harsh penalty. However, the Asian nation has not always been hostile to crypto.

    China’s Stance on Crypto

    China was one of the first countries to embrace crypto. It was home to the exchange BTC China, which launched in 2011 and sparked growth. Baidu, the country’s largest search engine, accepted Bitcoin in 2013, and Bitmain dominated global mining in 2014.

    Security concerns led its regulators to ban initial coin offerings (ICOs) in 2017. It completely banned crypto transactions in 2021, which also affected Bitcon mining firms in the country. While there have been rumors of plans to lift the ban, there has not been any official announcement validating it.

    Meanwhile, Hong Kong, a pro-crypto city, has its own jurisdiction, which separates it from mainland Chinese financial regulations. Recently, it announced its plans to implement regulatory frameworks for stablecoins.

  • Watch Out: Crypto Crimes on the Rise as the Market Surges

    Watch Out: Crypto Crimes on the Rise as the Market Surges

    This week, the crypto market has been experiencing a price upswing, driven by favorable economic developments, including the recent election and FOMC results, with Bitcoin leading the surge. However, this optimism is tempered by crypto-related crimes, which have affected its victims either financially or emotionally.

    Three Crypto Crimes This Week

    Earlier this week, Rooch Network co-founder Haichao Zhu narrowly escaped robbery in Bangkok, targeted upon arrival for Ethereum’s Devcon conference. Likely recognizing his connection to the crypto event, two men wielding knives stole his phone, suggesting that their primary motive was crypto theft as the phone might grant them access to his digital wallet.

    On Wednesday, a Canadian news outlet reported that Dean Skurka, CEO of WonderFi, a Toronto-based crypto firm, was kidnapped downtown during rush hour and released after a $1 million ransom was paid electronically. The incident occurred near University Avenue and Richmond Street West, with Skurka being forced into a vehicle by suspects demanding money.

    The same day, Forbes reported that the Hellcat ransomware group, led by spokesperson Grep, breached Schneider Electric’s developer server, stealing 40GB of data and demanding $125,000 in Monero cryptocurrency. Initially, they jokingly requested payment in French bread.

    Security researcher Hüseyin Can Yuceel considers this a marketing stunt to establish credibility for future ransomware-as-a-service operations. Schneider Electric confirmed the incident and assured its users that products and services remain intact, claiming its Global Incident Response team is investigating.

    Staying Safe Amidst Crypto Crimes

    Crypto crimes include scams and schemes aiming to exploit investors by stealing digital or physical assets. Phishing scams create fake websites or emails resembling legitimate platforms, while Ponzi and pyramid schemes promise unrealistic returns. Fake initial coin offerings (ICOs) and pump-and-dump schemes artificially inflate prices, leaving investors vulnerable.

    As crypto prices surge, more scams targeting industry newcomers are likely to surface. Users can watch for red flags, including unusually high returns, lack of transparency, pressure to invest quickly, unsolicited offers, and manipulative marketing tactics. Legitimate projects provide detailed information, credible teams, and clear objectives.

    Crypto investors can protect themselves by researching projects thoroughly and using secure wallets and connections. Users can enable two-factor authentication, rely on credible sources, and stay updated on crypto trends and security measures. Background checks, whitepaper analysis, and community feedback can also help verify legitimacy.