Category Archives: Crime

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Dogecoin Founder Develops Script to Combat ETH Giveaway Scams

Dogecoin founder Jackson Palmer has developed a script which helps combat the ETH giveaway scams plaguing Twitter users. Palmer delivered this script directly to Elon Musk, the founder of SpaceX and Tesla, one of many famous Twitter users been targeted by scammers.

The Twitter Ether giveaway scam is done by creating an account with the same profile picture and name as a Twitter user with a large following. The scammer uses the fake account to reply to tweets of the real Twitter account, with an offer of something like ETH 1-3 for every ETH 0.01 sent to a certain address.

The only difference visible between a scammer’s account and the authentic Twitter account is difference in the actual username. Most users spot this difference and don’t fall for the scam. However, many others do fall for the scam, since they don’t see the difference in the username, mistake it for the actual popular Twitter user. The result has been over ETH 8,000 worth more than USD 4 million scammed from Twitter users as of June 2018, and these numbers have probably grown since then.

This scam damages the reputation of Twitter itself, the celebrities that are being targeted, and financially hurts users that fall for it. The Twitter team itself has done little to stop the Ether giveaway scam, and Elon Musk is one of many who is constantly seeing this scam in replies to his tweets, so he reached out to Palmer to fix the problem.

@ummjackson if you can help get rid of the annoying scam spammers, that would be much appreciated

— Elon Musk (@elonmusk) September 17, 2018

ok, *now* I can finally call it a night.

— Jackson Palmer (@ummjackson) September 17, 2018

In less than a day, Palmer did what Twitter could not, and developed a real way to combat Twitter giveaway scammers. He created a script that identifies any users replying to a Tweet that have the same profile picture as the Twitter celebrity being targeted, instantly blocking the fake accounts run by scammers.

This should help curtail Twitter crypto giveaway scammers and perhaps lead to new ideas to stop the scammers that are even more effective. Perhaps a Twitter crypto giveaway scammer could slightly alter the profile picture so the script doesn’t detect them but that already makes the scam way harder and less effective, and the algorithm can be improved to detect the typical wording used for Ether giveaway scams to make it bulletproof.


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Europol: It’s Cash that Funds Terrorism

A 72-page long report recently published by Europol has clarified that it is conventional banking which is the primary source of terrorist funding such as the recent attacks on European cities.

The report explains that such outrages are financed through cash as it is a tried and tested form of funding. Finding an alternative source, such as cryptocurrencies like Bitcoin, which publicly log transactions, is of little interest to terrorist cells operating in Europe, according to the findings.

Europol based in The Hague, the Netherlands, supports the 28 EU Member States in their fight against terrorism, cybercrime and other serious and organized forms of crime. They also work with many non-EU partner states and international organizations.

Also, in line with the findings of the report, in the US last week, a senior member of the Foundation for Defence of Democracies Centre on Sanctions and Illicit Finance spoke out against anti-crypto rhetoric, particularly those aimed at the financing of militant jihad.

A senior member of the center, Yaya Fanusie maintained that despite continual references by governments around the world that cryptocurrency finances terrorist activity, terrorist networks have been mainly unsuccessful in using cryptocurrency to fund their activities. The Europol report agreed, stating:

“…despite the clear potential, none of the attacks carried out on European soil appear to have been funded via cryptocurrencies. The use of cryptocurrencies by terrorist groups has only involved low-level transactions – their main funding still stems from conventional banking and money remittance services.”

It is undeniable that just like cash, cryptocurrencies are on the radar of criminals but the use of Bitcoin in criminal activity has dropped to 35% of the market share from a peak of 80% when the flagship digital currency was its infancy. It is now known that criminals are more likely to use Zcash and Monero across the globe than Bitcoin. The report clarifies that:

“While the criminal abuse of cryptocurrencies remains largely within the realm of cybercrime, some Member States reported that they are increasingly encountering their use by non-cyber [organized crime groups].”

The report concludes that law enforcement information sharing and tighter security measures are the best weapons cybersecurity has against cyber-attacks.


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Gaw Miners CEO Sentenced to 21 Months in Prison

Josh Garza, the former CEO of GAW Miners, has been sentenced to 21 months in prison in addition to six months of house arrest and three years of supervised release. He has been found guilty of wire fraud for a string of disasters centering around GAW Miners’ cloud mining operation and Paycoin.

GAW Miners was a popular and reputable source of crypto mining equipment around 2014. Garza actually was considered a crypto celebrity and had pull across social media during that time. However, the company switched its strategy from selling physical crypto mining rigs to offering a cloud mining service, offering “hashlets” to customers which represented a certain amount of mining power.

GAW Miners sold more hashlets than the actual hashing power they had, and it quickly turned into a Ponzi scheme where mining revenues were being paid by new investment rather than actual crypto mining. Like all Ponzi schemes, this could only work if investments exceeded payouts.

Things began to get tight for GAW Miners, as it was a particularly bad bear market and mining wasn’t that profitable. Perhaps due to this, it launched an initial coin offering (ICO) for Paycoin (XPY) to raise more funds. It reportedly spread speculation that Paycoin would become the #1 cryptocurrency and would be accepted by Amazon. None of that came to fruition.

The biggest claim that Paycoin made was that the minimum price would be USD 20 and that GAW Miners would coordinate across exchanges to support this price floor with its own capital. Garza made plenty of posts hyping up this price floor and saying how he was personally going to move the market. This ended up being a complete failure, Paycoin collapsed below USD 20 almost immediately and Garza stopped talking about it, even going as far as deleting past promises regarding the price floor. As of September 2018, Paycoin is worth only about USD 0.01.

GAW Miners collapsed in 2015, leaving Paycoin and hashlet investors holding an empty bag. Heavy litigation followed from the Securities and Exchange Commission (SEC) and the US Justice Department. This has finally come to a conclusion with the prison sentence, in addition to USD 9 million of restitution that Garza must pay. Also, in 2015 when GAW Miners collapsed, it didn’t pay its power bill and was ordered to pay USD 340,000 to the Mississippi Power Company.


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US Defense Expert Slams Crypto For Jihads Rhetoric

In the US, a senior member of the Foundation for Defence of Democracies Centre on Sanctions and Illicit Finance has spoken out against anti-crypto rhetoric, particularly those aimed at the financing of Jihads.

A senior member of the center, Yaya Fanusie maintains that despite continual references by governments around the world that cryptocurrency finances terrorist activity, terrorist networks have been mainly unsuccessful in using cryptocurrency to fund their activities.

He recently suggested in a congressional testimony, that cash is still king in the underworld; particularly in the zones that Jihadists operate in, mainly being locations where high tech hasn’t reached or is unavailable. He maintains that, though the nature of Bitcoin may seem suited to illegal activity amongst the groups such as Al Qaeda, ISIS, and Boko Haram, they continue to use cash to fund their jihads.

Forbes writer Ted Knutson reveals that the Center for a New American Security (CNAS) declared that the use of Bitcoin in terrorist activities between 2015 and 2017 amounted to only about eight bitcoins. The CNAS report released last year revealed that it was purely an anecdotal evidence which continues to back up politicians’ fears of terrorist financing through Bitcoin and other cryptocurrencies. It suggested that attempting to convert fiat to bitcoin may create logistical and security problems of their own for would-be Jihadists.

New legislation and regulation around tightening KYC and AML laws have made the terrorists job even harder with less opportunity to get their bitcoins to where they want them. More sophisticated tracking by exchanges and law enforcement makes any illegal activity even more challenging.

Drug Enforcement Agency (DEA) agent Lilita Infante says that 10% of Bitcoin transactions are associated with illegal activity. This is down from 90% of Bitcoin transactions being used for crime in 2013.

Legitimate Bitcoin trading, investing, and use for goods and services has increased dramatically and is outpacing the use of Bitcoin for illegal activity, even though overall, there is much more money being transacted with Bitcoin for illegal activities now than in 2013.

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Chinese Justice Department Uses Blockchain to Track Parolees

Officials in the southern Chinese city of Zhongshan have instituted a blockchain system to track the movements of those on parole in the district.

The new blockchain network is said to improve the quality of community correction that the justice department can serve, upgrading its ability to track parolees activities around the clock. Monitoring the community prisoners previously had restrictions imposed, including regional and time constraints. The blockchain system, however, lets officials view data at any time from any location.

Changes to the electronic bracelets mean that wearers are no longer required to regularly report their own activities or require officers to make visits to check up on them, meaning less friction is created between parolee and officer.

The new blockchain system also employs data analysis that can detect the possibility of criminals re-offending through sharing the action trajectory and situation of the community prisoners with the Department of Justice. An analysis is done through an accumulative data check of the behavioral tendencies of the parolees and their current situation. If there are any indications that re-offending may occur, staff are triggered to make an early intervention and prevent any criminal activities from occurring.

In this specific use case for blockchain, the Chinese government is able to reduce the manpower required to supervise the offenders, creating both financial savings and preventing potential situations of conflict. Whether it is able to actually reduce the number of re-offending parolees is still a question as the network was only rolled out this month, but the potential to do so is certainly there.

It is not just the government in China committed to developing fresh blockchain solutions; a recent study shows that last year China was responsible for 56% of the world’s blockchain patent applications, with Chinese multinational holding conglomerate Alibaba claiming 10% of the overall total. The study also indicates that the number of blockchain patent filings has increased from just 134 in 2016, to 406 in 2017.


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Future Firefox Browsers Will Block Cryptojacking Malware

In a move to help improve security in the crypto-sphere, Firefox has announced that all future versions of its web browser will automatically block crypto-jacking malware.

Cryptomining scripts that mine cryptocurrencies unknown to the owner of the device will be prevented from autorunning. While it may be a relatively small number of people that experience this themselves, a growing number of incidents have been reported this year. Firefox is providing a secure solution against this, which will help rid the cryptocurrency industry of the arguably undeserved stigma it has received due to negative media reports of incidents such as crypto-jacking.

The decision was made as part of Firefox’s anti-tracking initiative that goes live in the following few months. The aim is to target the negative impacts of unchecked online tracking. Future web browsers will protect users by default from this, and offer users more advanced controls over what information of theirs is shared with third parties.

In addition to blocking crypto-jacking malware, the initiative plans to prevent noticeable effects such as what it describes as ”eerily-specific targeted advertising”, as well as those that users are unable to spot such as unchecked data collection that can lead to major security breaches. Firefox cited a study that indicates a total of 55.4% of time spent loading a web page is actually spent sending information to third parties.

Opera also offers this service

The popular web browser Opera added a similar anti-crypto-jacking function to its desktop adblocker update in December last year, adding that in January it plans to include this feature in its mobile application also.

Opera has become an increasingly popular web browser of choice as earlier this month it announced plans to integrate a cryptocurrency wallet into its desktop web browser supporting a wide variety of tokens. Charles Hamel, Product Lead of Opera describes the integration as a key step in “making cryptocurrencies and Web 3.0. mainstream.”


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Japanese Actress Takes Role with Tokyo Police to Fight Cybercrime

Japanese singer and actress Rie Kitahara has appeared on behalf of the Tokyo Metropolitan Police Department in a public awareness campaign against cybercrime including crypto fraud.

Kitahara, well known in Japan as a singer in girl idol group Ngt48 and ex-band member of Akb48 and Ske48, took on the role of cybersecurity manager in a police department event in Tokyo. Some 1,700 guests attended the event last week which mainly focused on email phishing and fake websites. Ashai TV, who broadcast the event commented:

“Last year, the number of cases with cybercrime victims reported to the Metropolitan Police Department was 13,101 which has been decreasing overall, but the damage of unauthorized access to [steal] virtual currencies such as Bitcoin is increasing.”

The World Economic Forum has warned that cybercrime is one of the major risks in 2018 due to the rate of technological advancement worldwide. Its report, published earlier this year, indicated that the main reason for the increase is due to growing cyber dependency which has added to the volumes of data theft over time.

A chief security scientist has suggested that companies are slow on updating systems as new technologies arrive on the scene. Due to this, eight global economies, the USA, Germany, Estonia, Japan, Holland, Switzerland, Singapore and Malaysia all see cyber-attacks as a major threat

In terms of cryptocurrency trading, the Council of Anti-Phishing Japan has issued its own warnings regarding the use of email in particular, commenting, “We are working to raise awareness of the public not to immediately click the URLs indicated in the email.” It added that recipients should contact a legitimate crypto exchange employee before opening mail.

Reports suggest that the Tokyo Metropolitan Police Department has been cooperating with ten of the country’s largest crypto exchanges; SBI Virtual Currencies, Bitflyer, Bitpoint Japan, GMO Coin, Bittrade, Quoine, Bitbank, Btc Box, Money Partners and Coincheck.

The exchanges have agreed to “mutual cooperation, cybercrime reporting notification, criminal investigation cooperation, information sharing, [and] measures to prevent widespread damage”.


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North Korea to Host Pyongyang Blockchain Conference

The Democratic People’s Republic of North Korea (DPRK) is usually in the crypto news media for all the wrong reasons, but there is an indication that the Republic of Korea’s (South Korea) northern neighbor is stirring again with reports of a blockchain conference set for its capital Pyongyang later this year.

Unconfirmed reports from South Korean news agency Yonhap has suggested that a two-day international blockchain conference will take place starting 1 October. This will mark the first such event to take place in North Korea.

The report, which originated from US-based radio broadcast service Radio Free Asia (RFA), indicates that experts from the blockchain space will hold talks at the event with North Korean business officials, in what has been said is an opportunity to show off its fintech knowledge.

Another report via Yonhap indicates that unsuccessful mining attempts were made last year. The North Korean research unit of South Korea’s state-run Korea Development Bank (KDB) stated that “North Korea appears to have tried to mine cryptocurrencies on a small scale”, adding that North Korea was looking into the “characteristics of cryptocurrencies, including anonymity, difficulties of tracing money and cashability”.

The reason for the lack of crypto mining success is as yet unclear as news of a negative nature rarely emerges from the North Korean state-run media. The mining was said to have been trialled between May and July last year.

The same research unit claims that a North Korean tech company, Chosun Expo, has been working on setting up a Bitcoin exchange platform although details are scant. It does appear, however, that North Korea, albeit late, is starting to show some interest in the technology after introducing a crypto and blockchain course at the Pyongyang University of Science and Technology.

Federico Tenga, an Italian Bitcoin entrepreneur who ran the course, suggests that students had “limited awareness” of crypto but had heard of Bitcoin. The course was also attended by some professors from the university along with a few computer science and finance students.

The KDB report indicated that North Korea is very much underdeveloped even in terms of basic computer connectivity and lacked the essentials with which to develop and meaningful fintech industry such as the lack of a blockchain infrastructure, high-performance computers, electric power, and networks to carry internet. South Korean Speconomy suggested:

“The current situation in which only a few layers of the internet can be connected will dampen the development of the virtual currency industry.”

Until now, Pyongyang’s only connection with the industry is one of alleged hackings and attempted theft from South Korean exchanges, apart from the announcement by Koryo Tours in April that they had released a travel industry coin for exclusive use in the DPRK tourist sector.


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Pro-Bitcoin Maltese PM Targeted by Crypto Fraudsters

Prime Minister Joseph Muscat, Malta’s pro-cryptocurrency prime minister, has been the subject of a recent Instagram scam.

Muscat was targeted by conmen using his name to open a fake Instagram account, in an attempt to promote a Bitcoin investment scheme.

The fake account quickly attracted around 1,300 followers with the promise of “enormous return on investments within a month’s time”. A suggestion that potential investors should contact a “Wang Wei” was made using Prime Minister Muscat’s name, but then the account was quickly removed from Instagram.

Muscat has long been an advocate of Bitcoin and other cryptocurrencies, pushing Malta into the forefront of the industry taking it to third most “crypto-friendly” nation, according to a BlockShow Europe study earlier this year.

Not only is the small country planning to host the world’s first regulation-ready decentralized bank, but Malta’s PM has openly expressed a desire for his country to become the world’s number one blockchain hub.

The island has become increasingly appealing to Bitcoin companies conducting business there due to its positive spin on blockchain technology and its open-minded approach to regulation, linked to a strong economy. It also boasts the largest cryptocurrency trading volume in the world, according to Morgan Stanley. With this new legal-certainty status for cryptocurrencies, the country’s claim as another European “crypto haven” to rival Switzerland may be well founded.

The using of prominent names to set up fake schemes has been particularly popular in the UK of late with a number of TV celebrities being targeted. One is the subject of a legal case against Facebook after money saving expert Martin Lewis was targetted. Alan Sugar, British entrepreneur and presenter of TV’s ‘The Apprentice’, told the UK’s Mail on Sunday that scam cryptocurrency deals targeting celebrities were becoming a routine for many prominent business people.

Others who have suffered damage to their reputations due to crypto crime including Bill Gates, Virgin Boss Richard Branston, and BBC Dragon’s Den’s panel member Deborah Meaden.


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Wirex Next to Get FCA’s e-Money License

The UK’s financial regulator, the Financial Conduct Authority (FCA), has just awarded its third e-money license to date.

This time, the beneficiary was crypto company Wirex, who produces prepaid debit cards for converting crypto to fiat, hot on the heels of Coinbase who received its license in March.

We are more than proud to announce that Wirex Limited is only the third #crypto-friendly company in the world to have been granted an FCA e-money licence ✅✅
What does this mean for us? And more importantly, for you?

— Wirex (@wirexapp) August 23, 2018

The Coinbase thumbs up from the FCA, unlike the Wirex license, doesn’t relate to cryptocurrency dealings. This enables the crypto company’s access to the UK’s faster payment system for supporting pound sterling, although this is still not available for most users who still can only transfer funds to UK Banks from Coinbase using euros, thus incurring an extra transaction fee.

However, many potential clients are dissuaded from signing up to platforms such as Coinbase due to lengthy verification processes, sometimes waiting many weeks before a user’s bank can be verified and linked for payments.

The FCA’s UK fintech sandbox was established along with the licensing program earlier in the year and then updated later to include two British crypto companies, Globacap and BlockEx, who are currently developing their blockchain applications for financial services.

Although the watchdog is proactive in giving new UK crypto companies opportunities to develop and operate within the UK and globally, with 40$ of latest sandbox companies being blockchain-related, warnings are still being issued to the public regarding crypto scams.

Also, the regulator has accepted a small number of crypto-assets related firms as the FCA suggested that it is “keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks”.

A warning was issued last week by the FCA regarding fraudsters, many of which have targeted known figures such as Amstrad Boss and Apprentice host Sir Allen Sugar and other UK media personalities.

Efforts made by the British financial watchdog and its collaborations with government branches indicate that the United Kingdom is to become a significant player in the global movement to create industry regulation frameworks and business innovations.


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