CoinList reportedly allowed 89 users to sign up for accounts on the platform, most of whom had stated that they were residents of Russia but provided addresses in Crimea.
CoinList reaches $1.2 million settlement with OFAC over Russian sanction violations
The Californian cryptocurrency exchange CoinList has settled a lawsuit from the Treasury Departments Office of Foreign Assets Control (OFAC) for $1.2 million. OFAC charged CoinList for processing almost 1,000 transactions between April 2020 and May 2022 on behalf of residents of Crimea, a Ukrainian territory occupied by Russia in 2014 and sanctioned by the United States shortly after.
- "OFAC Settles with CoinList Markets LLC for $1,207,830 Related to Apparent Violations of the Ukraine-/Russia-Related Sanctions Regulations", Department of the Treasury enforcement release [archive]
Money launderers charged over $80 million crypto romance scam
Four individuals who helped launder money through shell companies and various bank accounts have been charged in connection to an $80 million "pig butchering" cryptocurrency scam. The scam reportedly involved at least 284 transactions, though it's not clear how many victims were involved.
- "Four Individuals Charged for Laundering Millions from Cryptocurrency Investment Scams", Department of Justice press release [archive]
Australian victims lose estimated $1.3 billion to prolific scammers' HyperVerse project
Many investors have reported losses thanks to a cryptocurrency investment scheme called HyperVerse, which operated in Australia from around 2018 to mid-2023. Several financial watchdogs issued warnings about the company, including the UK, Canada, Germany, and New Zealand. The Hungarian central bank warned in August 2022 that the HyperVerse project was a "suspected pyramid scheme... behind which there is no real economic activity... There is a significant chance that investors may permanently lose part or all of their invested capital."
Estimates by Chainalysis suggest that victims have lost a combined $1.3 billion (with a B) to the scam thus far.
The scheme's operators Sam Lee and Zijing "Ryan" Xu were also behind Blockchain Global, a collapsed company that operated the Australian ACX crypto exchange that collapsed in 2019. The company is in liquidation, and creditor claims are expected to surpass $50 million. Although Lee and Xu were reported for investigation to the Australian Securities & Investments Commission, ASIC did not take any action.
Lee has also been involved in other investment platforms, including two that are currently active: StableDao and We Are All Satoshi. Both platforms were the target of cease and desist letters from the Californian Department of Financial Protection and Innovation in September 2023, who described them both as "fraudulent pyramid and Ponzi scheme[s]".
- "Investors lose millions as crypto schemes operate unchecked in Australia", The Guardian [archive]
- "'They are so convincing': Vera Gazzard lost her life savings to HyperVerse", The Guardian [archive]
- "Crypto Scam Revenue Dropped 46% in 2022, While Blockchain Analysis Finds Links Between What Appear to be Distinct Scams", Chainalysis [archive]
- "More than $50 million owed to creditors after collapse of Blockchain Global's cryptocurrency exchange", ABC News [archive]
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]
Blockchain chess platform Immortal Game ditches token after "heavy cheating"
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".
Grifter-in-chief Donald Trump hawks mugshot NFTs
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.
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]
OKX DEX suffers $2.7 million hack
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.
KuCoin fined $22 million in New York
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.
Yearn Finance accidentally swaps its entire Ip-yCRVv2 treasury, asks nicely for the money back
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]