Crypto scammer suddenly pleads guilty in trial surrounding EXW fraud

December 13, 2023

Crypto scammer suddenly pleads guilty in trial surrounding EXW fraud

There was surprise in an Austrian courtroom when a defendant suddenly gave up any pretense of innocence, proclaiming, "I've run out of steam, I've finished driving... I plead guilty in full and ask for a lenient and speedy sentence". The judge then had to back up and understand what exactly he was pleading guilty to. The same defendant had earlier admitted to some guilt, but denied the fraud had been planned from the start. Later, he said that he had indeed planned from the beginning to steal the funds.

The scam in question was a Ponzi scheme called EXW, in which the eight defendants stole at least €17.6 million (~$19.3 million) from at least 40,000 victims in late 2019 and 2020. The fraud later resurfaced under a different name. However, in court, the ex-girlfriend of the main defendant testified that the scam had actually brought in €80–100 million ($88—$110 million).

One of the defendants, who from reports seems to be the same one who just admitted his guilt in court, reportedly feigned being autistic when he was arrested by police, somehow earning himself enough time to erase the contents of his phone.

He and seven other defendants have been charged with fraud, money laundering, running a pyramid scheme, and operating a criminal organization.

"EXW Wallet indictments, arrests & criminal trial in Austria", Behind MLM [archive]
"EXW-Prozess: Hauptangeklagter bekennt sich schuldig", Salzburger Nachrichten (in German) [archive]
"Angeklagter bekennt sich im Prozess um Kryptobetrug vollumfänglich schuldig", Der Standard (in German) [archive]

December 12, 2023

Blockchain chess platform Immortal Game ditches token after "heavy cheating"

(attribution)

After raising $12 million from crypto-focused venture funds, the Immortal Game blockchain chess platform has announced that they would be nixing most of the blockchain part by shutting down support for their "Checkmate" token and stopping development on play-to-earn and NFT projects. Although they began as a blockchain chess company, they seem to be pivoting to just being a chess company.

"We found that by offering large amounts of cash with no limit barrier to entry, we encouraged heavy cheating on the platform and degraded the user experience for our legitimate player base who want a fair and safe place to play chess online," they wrote. Who could have guessed.

Somewhat ironically, they suggested that they may still intended to look into using web3 technology for "anti-cheat measures".

"Important Update From Immortal Game" [archive]

December 12, 2023

Grifter-in-chief Donald Trump hawks mugshot NFTs

Trading card style illustration featuring the Trump mugshot, with an arrow showing that a scrap of the suit will come with some of the purchases

Promotional image for the Trump NFTs (attribution)

The collapse of the NFT bubble hasn't stopped Donald Trump from trying to cash out. Following in the footsteps of his wife, who timed things much better as far as interest in NFTs goes, the former president launched his first NFT collection in December 2022. He was later accused of using stolen artwork in the collection.

Now, Trump is hawking a new set of $99 NFTs, featuring the August 2023 mugshot taken in connection to his ongoing racketeering lawsuit. Those who purchase 47 of the NFTs — amounting to $4,653 plus fees — are promised a scrap of the suit Trump wore in the mugshot and a dinner with the president-turned-fulltime criminal defendant.

The fine print, however, reserves the possibility that neither promise will come through.

"Donald Trump Unveils New 'Mugshot' NFTs, Stirring Up Prices for His Previous NFTs", CoinDesk [archive]

December 12, 2023

Fraudsters steal more than $25 million in "AI-powered" crypto ponzi

Two fraudsters capitalized on the hype around both cryptocurrency and artificial intelligence, advertising an "artificial intelligence automated trading bot" that they promised would earn large returns for their investors. Instead, however, the fraudsters spent the money on themselves, paying for private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef, and private security guards.

In addition to pulling off the original scam, the fraudsters also came up with a fake investigative agency called the "Federal Crypto Reserve", where they directed victims who were seeking to recover their losses.

The scammers were charged with wire fraud, money laundering, and obstruction of justice, which carry hefty maximum prison terms.

"Two Men Charged for Operating $25M Cryptocurrency Ponzi Scheme", Department of Justice press release [archive]

December 12, 2023

OKX DEX suffers $2.7 million hack

(attribution)

OKX DEX is a service by OKX that aggregates decentralized exchanges (or DEXes) to help users access features and prices across multiple projects. On December 12, an attacker appeared to gain administrative control of the DEX's smart contract. They upgraded the contract such that they could transfer tokens to themselves, then proceeded to do exactly that until they had stolen around $2.7 million in various cryptocurrencies.

It appears the attacker was able to gain access to the smart contract admin key, which gave them the ability to upgrade the contracts to enable malicious functionality.

OKX announced that they would reimburse the losses, and pursue legal action against the exploiter.

"OKX DEX suffers $2.7M exploit after proxy admin contract upgrade", CoinTelegraph [archive]
Tweet by SlowMist [archive]

December 12, 2023

KuCoin fined $22 million in New York

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The KuCoin cryptocurrency exchange has agreed to a settlement in which it will pay a $22 million fine and ban residents of New York state from its platform. The New York Attorney General sued KuCoin in March, alleging they had been serving New York customers despite not being registered in the state.

KuCoin has admitted to allowing New Yorkers to trade securities and commodities on the platform, and representing themselves as an "exchange" without having registered as such.

In addition to paying the fine, KuCoin has agreed to shut down all New Yorkers' accounts in the coming months and prevent residents of the state from signing up for new accounts.

"Kucoin agrees to ban New York residents and pay $22 million in settlement", CoinTelegraph [archive]

December 11, 2023

Yearn Finance accidentally swaps its entire Ip-yCRVv2 treasury, asks nicely for the money back

(attribution)

Periodically, Yearn Finance converts a small quantity of its treasury tokens into stablecoins to spend on operations. However, something went terribly wrong during this process when they went to perform the swap and erroneously converted the entire amount — nearly 3.8 million Ip-yCRVv2 tokens — into a stablecoin. According to one Yearn Finance employee, this pool of tokens comprised around 3% of the project's treasury.

Because there was not sufficient liquidity for such a large trade at the going price, the trade was ultimately fulfilled, but at a 63% loss. Before the trade, that quantity of tokens was priced at around $2.28 million; however, Yearn received only around $780,000 in stablecoins because of the slippage.

Yearn quickly identified the issue and embarked on a campaign to ask nicely for the counterparties in the trade to please give some of their profits back. In on-chain messages, Yearn wrote: "one of yearns multisigs made a costly mistake last night that affected a critical source of yCRVs liquidity. we identified you as having made a profit off of this and are kindly requesting that you return as much as you see reasonable to yearns main multisig: ychad.eth. sorry we have to ask this, but hope you can understand." Doesn't hurt to ask, I guess. So far, only one wallet has taken them up on the offer, returning 2 ETH (~$4,400).

"Incident disclosure - 2023-12-11", Yearn Finance Github [archive]
On-chain message from Yearn Finance [archive]

December 7, 2023

Uranium Finance hacker cashes out in Magic: The Gathering cards

Stacks of <i>Magic: The Gathering - Fallen Empires</i> booster boxes

Magic: The Gathering booster boxes (attribution)

In April 2021, an attacker stole $50 million from the defi exchange Uranium Finance. Blockchain investigator zachxbt now says that he believes this attacker has been able to cash out his ill-gotten funds... in an unusual way.

After tracing the attacker's attempts to launder the money through Tornado Cash and then obfuscate that it had come from the mixing service (something that raises flags at some exchanges), zachxbt observed the funds go to a broker of Magic: The Gathering based in the United States. Altogether, the hacker appeared to be spending millions on starter decks, alpha sets, and sealed boxes — often overpaying by 5-10%. These items routinely sell for hundreds or thousands of dollars.

The thief is probably a creative money launderer rather than an massive MTG fan, and is probably reselling the cards to further obscure the source of the money. Then again, MTG is more than a little addictive.

Tweet thread by zachxbt [archive]

December 7, 2023

Do Kwon reportedly to be extradited to the United States

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Do Kwon, founder of the collapsed Terra/Luna project, will be extradited from Montenegro to the United States once he's completed his four-month-long jail sentence for document forgery, says the Wall Street Journal. Although a Montenegrin court had already approved his extradition, it left the decision of whether to send him to South Korea or the United States up to Justice Minister Andrej Milovic. Milovic has reportedly privately said he intends to send Kwon to the US.

Kwon filed a last-ditch appeal of the extradition decision on December 6. A decision is scheduled on the matter by December 15. Milovic is unlikely to publicly announce Kwon's extradition destination until then.

Both South Korea and the United States have sought Kwon's extradition on criminal charges related to the Terra/Luna scheme. Federal prosecutors in the Southern District of New York indicted Kwon on eight fraud and market manipulation charges in March 2023. He and his company also face a civil lawsuit from the Securities and Exchange Commission.

"Exclusive: Montenegro Plans to Extradite Fallen Crypto Tycoon Do Kwon to U.S.", The Wall Street Journal [archive]

December 5, 2023

The AEUR stablecoin isn't

Chart of the AEUR price in USDT, showing it maintaining its €1 (~$1.08) peg before spiking to over €3, dropping somewhat, and trending back upwards

I don't think "stable"coins are supposed to do that (attribution)

Binance says traders must have missed the memo on the AEUR stablecoin, which was intended to be pegged to the Euro. Shortly after it was listed on Binance, high demand caused the token — which had a limited supply of 5 million — to begin trading for as high as €3 per token. "[U]sers ... might not have realized its standing as a stablecoin" wrote Binance in an announcement, published the day after the exchange suspended trading in the token due to "abnormal volatility".

Binance announced a compensation plan for users who purchased the token during an eligibility period and who were unable to resell, in an apparent attempt to placate the angry traders who accused Binance of "scamming" them by halting trading.

AEUR was issued by Anchored Coins, a Swiss stablecoin issuer.

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