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UK’s First Auction of Seized Cryptocurrency by Independent Body Scheduled

UK's First Auction of Seized Cryptocurrencies by Independent Body Scheduled

An independent auction house in Northern Ireland has become the first of its kind worldwide to facilitate a sale of seized cryptocurrency assets.

The sale of 167.7 monero coins with a current exchange rate of £6,655.36 is to sell via a 24-hour live auction, enabling investors to have the chance to take part and place bids on the crypto.

This is not the first time that seized cryptocurrency assets have been sold off in this way by an independent auctioneer. Last year, Bavarian prosecutors auctioned off seized cryptocurrency worth nearly USD 14 million, estimated to be the highest such sale in German history.

That sale involved 1,312 Bitcoins (BTC) and other digital currencies including 1,399 Bitcoin Cash, 1312 Bitcoin Gold, and 220 Ethereum. The funds were confiscated as part of an investigation into online platform LuL.to

In October of 2018, the US Marshals Service (USMS) announced that the US Department of Justice (DOJ) was auctioning off approximately USD 4.2 million of the cryptocurrency acquired from various criminal proceedings.

The auction overseen by Wilsons of Northern Ireland will be the first of a series after winning a contract with the Belgium Federal Government’s Asset Management Office to facilitate the storage and sale of seized cryptocurrencies. The company is currently working with 40 government and law enforcement agencies across the globe in order to auction off assets impounded by police. The auction house’s head of recovery said that the company was:

“Able to offer government and law enforcement agencies throughout the UK, Ireland and internationally a secure solution so that the ever-increasing problem of seized cryptocurrencies can be managed by an auction company with significant experience dealing with seized assets.”

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New Irish AML Bill Could Impact Crypto Adoption

New Irish AML Bill Could Impact Crypto Adoption

The Irish government has approved a bill which targets money laundering in the Irish Republic and makes reference to cryptocurrency as a source of terrorist funding.

The European Union’s (EU) directive on money laundering effectively gives Ireland the rights as one of its 28 members to enact amendments to existing Irish Law to counter money laundering and terrorist activity.
Despite extensive research demonstrating that cash is the major source of funding for terrorist activity, the Irish government bill proposes the EU addition to its AML laws.

The law will restrict any use of “virtual currencies for terrorist financing and limiting the use of prepaid cards” and also give the Irish police (Garda) the right to access personal bank records during any money laundering investigations. Minister of Justice, Charlie Flanagan, referred to the EU add-on but made no reference to cryptocurrency being used for illegal activity:

“The reality is that money laundering is a crime that helps serious criminals and terrorists to function, destroying lives in the process… Criminals seek to exploit the EU’s open borders and EU-wide measures are vital for that reason. Ireland strongly supports the provisions in the fifth EU money laundering directive.”

If the bill goes through there may be an impact on new cryptocurrency adopters in the Republic due to banks’ tighter KYC controls. The amended legislation is a reflection of the EU’s new stance on money laundering which gives member states rights to tighten controls and include cryptocurrency exchanges in AML regulations.

 

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Wells Fargo to Pay out $575 Million for Scamming Customers After Rejecting Crypto Credit Card Transactions

wells fargo, cryptocurrency, credit card, payouts

In what could be the most ironic case for cryptocurrency investors in 2018 Wells Fargo, the third largest bank in the US has been hit with a $575 million settlement after scamming its customers over a period of 15 years.

The settlement will be of particular interest to cryptocurrency investors who have been repeatedly told by the banking giant that customers couldn’t use their credit cards to purchase cryptocurrencies due to them being a risky investment. In a statement, Wells Fargo cited the “multiple risks associated with this volatile investment.”

“Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency,” a bank rep said in a statement. “We’re doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment.”

After a nationwide investigation, it has been revealed that Wells Fargo employees opened unauthorized credit cards and bank accounts using customers names between 2002 and 2017. The fraud occurred according to employees as they were worried about losing their jobs if they didn’t meet Wells Fargo sales targets.

The result was that many bank clients were illegally charged for financial services they didn’t receive, having not actually signed up for them, including life insurance and protection insurance on millions of auto loans. California attorney general Xavier Becerra commented on the company’s violation of consumer protection standards:

“Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products — from bank accounts to insurance — that they never wanted.”

The settlement is to be distributed amongst all 50 US states and the District of Columbia, followed by a restitution review to ensure all customers illegally charged for services are reimbursed.

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Taiwanese Crypto Miner Hits Local Electricity Supply With $3 Million Power Theft

Taiwanese, bitcoin, mining, electricity

A Taiwanese Bitcoin miner has been charged by local police for mining more than $14 million in cryptocurrency by using over $3 million worth of stolen electricity from the grid.

The miner named only as Yang by Taiwanese authorities has been accused of operating 17 illegal mining operations by employing fake storefronts in Tianjin, Taoyuan, and Hsinchu.

Yang set up his mini-industry by rewiring power supplies in the buildings which he had partially rented to house his fake shops, usually an internet café or in other cases doll shops, then diverted the power directly to his personal units.

His enterprise was foiled by police when Taiwan Power, the country’s national supplier, was alerted to an abnormal power surge problem in one of Yang’s doll shops and went to investigate. Wang Zhicheng, deputy head of Taiwan’s Criminal Investigation Bureau commented:

“The group recruited electricians who managed to break into the sealed meters in order to add in private lines to use electricity for free before that usage reaches the meters.”

Electricity theft for cryptocurrency mining is also a recurring problem in mainland China. Last year in April, Chinese police in Tianjin confiscated 600 Bitcoin mining computers in one of the country’s largest cases of power theft.

Mining has taken a hit in China due to last year’s poor performance of cryptocurrency on the markets. As Bitcoin News reported yesterday Bitmain, the world’s largest maker of cryptocurrency mining chips is reported to be laying off up to 50 percent of its staff in 2019.

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Goldman Sachs Faces Criminal Charges in Malaysia, Calls for Blockchain Transparency

1MDB

Criminal charges were filed this week against leading investment bank Goldman Sachs by Malaysia’s Attorney General as part of ongoing investigations into Malaysia’s highly-controversial USD 2.7 billion 1MDB development fund scandal.

The charges were filed under Malaysia’s security laws against the NY banking giant and its former bankers Tim Leissner and Roger Ng, former 1MDB employee Jasmine Loo and financier Jho Low in connection with the bond offerings.

The Wall Street Journal cites that a statement confirmed that the bank omitted material information and published untrue statements with the prosecution claiming that out of USD 6.5 billion worth of bonds arranged by Goldman Sachs, USD 2.7 billion were embezzled, creating a USD 600 million profit for Sachs. Malaysia’s Attorney General Tommy Thomas stated:

“The charges arise from the commission and abetment of false or misleading statements by all the accused in order to dishonestly misappropriate USD 2.7 billion from the proceeds of three bonds issued by the subsidiaries of 1MDB, which were arranged and underwritten by Goldman Sachs.”

A Sachs spokesman responded that the charges were misdirected and the bank would cooperate with the investigation. If convicted those involved could face up to ten years imprisonment under Malaysian law and face fines well in excess of the allegedly misappropriated funds.

Speaking of the bank’s credibility following the accusations, Attorney General Thomas said that, “Having held themselves out as the pre-eminent global adviser/arranger for bonds, the highest standards are expected of Goldman Sachs. They have fallen short of any standard.”

In a statement quoted by the Wall Street Journal, Goldman Sachs said:

“At a time when some are calling for aggressive regulation of cryptocurrencies, this case illustrates the potential that exists for blockchain technology and cryptocurrency systems to create a positive disruption within the existing banking paradigm which permits or even encourages theft and inefficiency through opaque processes and practices.”

These unexpected views from the bank although numerous reports this year have suggested that Goldman Sachs is considering offering crypto custodial services for clients. The bank has hinted recently that they would be expanding on its crypto trading desk to develop a bitcoin derivative known as a “non-deliverable forward” due to demand from clients. The Sachs statement quoted by the Wall St Journal continued:

“The complete transparency offered by cryptocurrencies makes it very unlikely that a single sticky-fingered public official would realistically get away with diverting the better part of a billion dollars, aided and abetted by private bankers whose only real interest is in their fees – USD 600 million in this case.”

 

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Japanese Police Investigate 700% Increase in Suspicious Crypto Activity

Japanese Police Investigate 700% Increase in Suspicious Crypto Activity

Japan’s National Police Agency (NPA) has announced a huge hike in reports of dubious cryptocurrency transactions, most which occurred between January and October of this year.

In all, 5,944 reports from cryptocurrency exchanges were recorded, possibly linked to money laundering and tax evasion. These figures represent an eight-fold increase from the 699 cases reported in 2017.

Japan has the world’s most progressive regulatory climate for cryptocurrencies with a buoyant and energetic market. Its regulator has tightened regulation om trading and exchanges over time in order to provide a secure business environment and now requires all cryptocurrency exchanges to be screened and registered by the Financial Services Agency (FSA). In 2017, this vigilance was stepped up by the FSA also requiring a form of mandatory reporting expecting exchanges to report any suspect trading activity to the regulator.

These laws appear to have done little to prevent an escalation in cases of illegal activity, although they are at least now being brought into the public light. An NPA official commented, “It’s already been some time since the reporting system began, and it has been embraced by the industry through guidance from the Financial Services Agency.”

The cost of this crime, however, is alarming, with the JPY 660 million stolen from crypto exchanges and individual wallets swelling to a huge JPY 60 billion in only the first half of 2018.

Just this week, the National Safety Commission released its latest report on the state of the industry with regards to the misuse of cryptocurrency funds, a factor that many nations’ leaders cite as being the main deterrent towards civic adoption by central governments and banking institutions.

The main areas of misuse thrown up by the report include factors such as reuse of the same face photo by several users with different names and birth dates, multiple trading accounts initiated from a single IP address, logins from overseas on accounts with Japan addresses, as well as registration of out-of-use mobile phone numbers.

But FSA registrations continue, with 16 recent exchanges passing the screening process and another three awaiting the green light to operate, highlighting that the FSA feels that it has this situation under control.

 

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North Korean Cybercriminals Target Individuals After Tighter Crypto Exchange Security

North Korean Cybercriminals Target Individuals After Tighter Crypto Exchange Security

North Korea-based cybercriminals have cast their attention on to individual cryptocurrency investors and away from larger exchanges, according to a report from the South China Morning Post.

Founder of cyber warfare research group IssueMakersLab, Simon Choi, has confirmed the growing change in tactics by cybercriminals from South Korea’s northern neighbor. This, after a step up to tighten security controls by high-value financial institutions and centralized crypto exchanges over past months. According to the Post:

“Direct attacks on exchanges have become harder, so hackers are thinking about alternatively going after individual users with weak security. They targeted staff at the exchanges, but now they are attacking cryptocurrency users directly. With the US, the UN and others imposing sanctions on the North Korean economy, North Korea is in a difficult position economically, and cryptography has come to be seen as a good opportunity.”

Hackers have now begun to infect individuals’ computers with infected email attachments as a means of stealing crypto assets. Once the computer is compromised, the hackers have free range access private files and keys. Kwon Seo-Chul, the CEO of Cuvepia, has discovered 30 such cases of individual cryptocurrency investors being targeted recently. He commented that there may be more just around the corner with all of the cited incidents occurring very recently, since April of this year.

One of the major problems appears to be that there is no way of reporting such attacks, most of which have seen seasoned cybercriminals targeting private South Korean investors. This is resulting in hackers becoming braver and less concerned about intervention from the authorities. Kwon explained that the victims were just “just simple wallet users investing in cryptocurrency” adding, “When cryptocurrency wallets are hacked, there is nowhere one can make complaints, so hackers are increasingly hacking into digital currency accounts.”

South Korea has frequently accused the Pyongyang government of state-backed cybercrime following a number of high profile incidents and a recent increase in North Korea’s cryptocurrency mining activity. NSA cybersecurity official Priscilla Moriuchi asserts:

“North Korea has pursued other avenues for obtaining cryptocurrencies as well, including mining of both Bitcoin and Monero, ransom paid in Bitcoin from the global WannaCry attack in May and even commissioning a cryptocurrency class for North Korean students in November.”

North Korea is currently on the South Korean Exchange giant Bithumb’s list of banned countries after Kim Jong-un’s Pyongyang regime has repeatedly been accused over a period of years of heists and hacks against cryptocurrency exchanges, banks, and multinational organizations in attempts to raise desperately needed hard cash for its failing economy.

 

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USA Sanctions Bitcoin Addresses For The First Time

For the first time in history, the United States has issued sanctions against Bitcoin addresses, held by two Iranians who allegedly helped facilitate a ransomware scheme. The addresses that are banned include 149w62rY42aZBox8fGcmqNsXUzSStKeq8C and 1AjZPMsnmpdK2Rv9KQNfMurTXinscVro9V.

These addresses are controlled by Ali Khorashadizadeh and Mohammad Ghorbaniyan, who are accused of converting Bitcoin into Iranian Rial (IRR) for hackers who seized up people’s computers and demanded ransom payments in association with the SamSam ransomware scheme.

The United States Treasury Department Office of Foreign Assets Control, who issued the sanctions, says those in the compliance and cryptocurrency communities should ban those addresses and investigate any association with those addresses. People in the United States are prohibited from sending Bitcoin to those addresses, and anyone who does is subject to secondary sanctions.

That being said, it is actually impossible to truly sanction a Bitcoin address, due to Bitcoin’s inherent decentralization and cryptographic security. People can still choose to send Bitcoin to those addresses since they cannot be shut down by any government or entity. This is one of the strengths of Bitcoin, it is immutable and no Bitcoin account can ever be frozen so long as only owners control their wallets.

Someone is having fun with these Iranian Bitcoin addresses despite the sanction. A day after the sanction was issued, on 29 November 2018, USD 0.08 of Bitcoin was sent into a sanctioned address from two addresses with the prefixes 1JEWS and 1MOSSAD, an obvious reference to the national intelligence agency of Israel. At the other sanctioned Bitcoin address, three people have sent small amounts of Bitcoin, seemingly defying the sanctions.

In any case, Bitcoin wallet owners can also simply generate new addresses to receive Bitcoin, while some wallets, like Blockchain.com, automatically generate a new address after each deposit. Khorashadizadeh and Ghorbaniyan have the ability to generate virtually unlimited addresses, making the sanctioning of any single Bitcoin address non-meaningful.

 

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FBI Arrests AriseBank CEO Over $4 Million Crypto Fraud

FBI Arrests AriseBank CEO Over  Million Crypto Fraud

The US Federal Bureau of Investigation (FBI) has arrested AriseBank CEO, 30-year-old Jared Rice Sr, who is accused of defrauding investors out of over USD 4 million.

AriseBank, self-described as being the home of the first digital asset bank with over 700 cryptocurrencies, has been accused of operating illegally, with no authorization to operate banking services in Texas, with no FDIC insurance and also no partnership with Visa despite offering its customers both FDIC-insured bank accounts and Visa-linked debit and credit cards.

The Justice Department is also accusing Rice of fabricating a story that he had raised USD 600 million in just a few weeks through an ICO earlier this year. It appears that Rice already has a checkered record, having already been sued by the SEC with his co-founder Stanley Ford for alleged fraud and issuing unregistered securities in another ICO. This resulted in the Texas Department of Banking serving a cease-and-desist order to AriseBank in January.

A court document revealed this week that Rice had been promoting the platform from around June last year through press releases, public video interviews, social media outlets and his own websites. Erin Nealy Cox, the US Attorney for the Northern District of Texas, said:

“My office is committed to enforcing the rule of law in the cryptocurrency space. The Northern District of Texas will not tolerate this sort of flagrant deception – online or off.”

Rice faces further charges arising from being on probation from an indictment in 2015 for theft and tampering with government records Collin County. He is also under an earlier felony indictment for assault in Dallas County, Texas. If convicted on the latest charge of fraud , Rice faces up to 120 years in federal prison, the Attorney’s Office said.

Another cryptocurrency trader, Joseph Kim, has been sentenced by the US Department of Justice to 15 months in prison, and the Commodities Futures Trading Commission (CFTC) has ordered Kim to pay USD 1.146 million of restitution after the rogue trader was found to have committed trading-related fraud over a period of six months,  resulting in total losses of USD 1.146 million.

The SEC has currently tightened control over ICOs in the country with little or no new projects granted regulatory approval. While it is trying to open up to the process with a new FinHub that provides instant feedback regarding regulations on securities and securities offering, the SEC still maintains an iron fist on the proceedings with one of the toughest approval processes in the world.

 

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Trump’s Head Lawmaker Under Fire for Bitcoin Time Travel Role

Acting US attorney general Matthew G Whitaker, appointed to replace the outgoing Jess Sessions fired by President Trump this month, is already under the microscope due to his association with Time Travel X, a “theoretical time travel commodity tied directly to the price of Bitcoin”.

Time Travel X was a product of World Patent Marketing, which was shut down in 2017 and fined USD 26 million after an investigation by the Federal Trade Commission (FTC). The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anti-competitive business practices, such as coercive monopoly.

The company is now being investigated by the FBI and Whittaker is being examined himself for any connections he had with the company. The crypto-related product Time Travel X is one of many inventions marketed by World Patent Marketing which has been identified as a scam. It never actually got off the ground but was launched as “a technology, an investment vehicle and a community of users”.

World Patent Marketing Asserted that time travel could be “possible, perhaps within the next decade” and attempted to raise funds in order to use Bitcoin for time-travel research carried out by one of Whitaker’s fellow board members, promising users might “relive moments from your past” or “visit your future”.

The products marketed by World Patent Marketing are thought to have fooled its inventor clients with bogus patent contracts, and subsequently defrauded consumers out of millions of dollars. The Wall St Journal has suggested that Whittaker was paid USD 9,375 for a position on the company’s advisory board, monies that he hasn’t returned despite legal proceedings against the company. The Washington Post claims that Whittaker even spurned an October 2017 subpoena from the FTC asking for any personal records relating to his time as an adviser for the company.

The Washington Post has cited a Justice Department (DoJ) statement reading that “acting Attorney General Matt Whitaker has said he was not aware of any fraudulent activity. Any stories suggesting otherwise are false”.

 

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