The attacker later moved the stablecoins to a new wallet, and exchanged about half of them for 10,625 ETH.
Crypto holder loses over $55 million to apparent phishing attack
Someone holding almost $55.5 million in the DAI stablecoin was apparently phished, signing a transaction to reassign ownership of their DAI stash to a phishing address. The victim appeared to realize their error several hours later, attempting to withdraw the tokens only to have the transaction fail since they were no longer the owner of the assets.
Former CEO of Heartland Tri-State Bank sentenced to more than 24 years in prison after putting bank funds into crypto scheme
Shan Hanes, the former CEO of the Kansas Heartland Tri-State Bank, was sentenced to 293 months (24 years, 5 months) imprisonment after pleading guilty to embezzlement by a bank officer. Hanes had fallen for a "pig butchering" scam, where he believed he could earn returns by "investing" funds under the bank's control into a cryptocurrency scheme.
Between May and July of 2023, Hanes transferred $47.1 million of the bank's funds to the fraudulent scheme. This ultimately led to the bank collapsing, with equity investors losing $9 million and the FDIC footing the bill. "There were people who lost 70, 80% of their retirement" as a result of their investment losses, stated a community member.
Hanes had also taken money from a local church, an investment club, and his daughter's college savings. These funds were reportedly used to buy cryptocurrency after those running the scheme told him they needed more money to "unlock" the returns on his investments — a common tactic with these scams.
- "Former CEO of failed bank sentenced to prison", U.S. Attorney's Office, District of Kansas [archive]
- "Cryptocurrency 'pig butchering' scam wrecks Kansas bank, sends ex-CEO to prison for 24 years", NBC News [archive]
FutureNet founder arrested for alleged crypto fraud
Roman Ziemian, a co-founder of the alleged crypto pyramid scheme FutureNet, was arrested in Montenegro, where he was living under a false identity. He had previously been arrested in Italy in October 2022, but fled the country after being released to home confinement. Ziemian’s co-founder, Stephan Morgenstern, had also fled authorities after being arrested and released to home confinement in Greece, but was arrested again in Albania in August 2023.
Ziemian was wanted on international warrants from Poland and South Korea. FutureNet, which was established in 2018 and purported to be a crypto trading platform, is alleged to have defrauded numerous people of a combined $21 million. Victims were encouraged to buy "participation packages", and earn rewards for referring others to the scheme. Polish authorities warned that FutureNet might be a pyramid scheme in 2019, and South Korea began an investigation into the company in 2020.
Ziemian faces fraud, money laundering, and theft charges, which could be punished by life imprisonment in South Korea.
- "U Podgorici uhapšeno međunarodno traženo lice koje se sumnjiči za višemilionske prevare", Vlada Crne Gore (in Montenegrin) [archive]
- "Co-founder of crypto fraud scheme FutureNet arrested in Montenegro", ReadWrite [archive]
Twitch streamer DNP3 pleads guilty to wire fraud after gambling away funds invested in crypto charity project
In January 2023, Twitch streamer DNP3 issued a statement admitting that he had gambled away investor funds while chasing losses. "Eventually I lost everything. In addition to my own life savings, I also irresponsibly used investor funds to try and 'get my money back' from the casino," he wrote. He had founded crypto projects including CluCloin, the Gridcraft metaverse project, and the Goobers NFT project.
Now, Austin "DNP3" Taylor has pleaded guilty to wire fraud after stealing around $1.14 million in investor funds from his CluCoin project, which had claimed it would "help others in need". DNP3 himself had built up a reputation of making generous gifts while livestreaming. He transferred the stolen funds to online casinos, where he then gambled them away.
Taylor faces up to 20 years in prison. The statement from the U.S. Attorney's Office announced that authorities would be notifying identified victims via NFT, and encouraging them to submit statements to the FBI.
- "Founder of Miami-Based Cryptocurrency Token CluCoin Pleads Guilty to Wire Fraud", U.S. Attorney's Office, Southern District of Florida [archive]
Crypto holder loses $100,000 to "Coinbase support" scammer, found via a Google ad
After encountering issues trading his cryptocurrency holdings on Coinbase, a man in his 60s decided to contact Coinbase support for help. He Googled "Coinbase" and clicked on a promoted result that displayed a Coinbase support phone number. After calling the number, the man was convinced to share his Coinbase password and to open his online banking account with the person on the other end, who was in fact a scammer impersonating Coinbase's customer support. By the time the man realized what was happening, thanks to a fraud alert from his bank, he had lost $100,000 in bitcoin, ether, and US dollars.
Scammers impersonating crypto company support representatives are everywhere on social media and elsewhere. Now, it seems, they are purchasing Google ads to rise to the top of Google search rankings. While Google says they attempt to remove fraudulent advertisers, some slip through the cracks.
While phishing attacks like this are prevalent both in crypto and in tradfi, crypto platforms often do not have similar safeguards as major banking platforms to try to thwart unauthorized transactions, nor do they have the same ability to reverse transactions that are made.
SEC charges promoters of NovaTech pyramid scheme
Following a lawsuit from the New York Attorney General in June, the SEC has filed a lawsuit against the promoters of the NovaTech crypto pyramid scheme and affinity fraud. Cynthia and Eddy Petion particularly targeted victims of Haitian descent, promoting their schemes in Creole, leveraging their victims' religion, and promising them "financial freedom" and "freedom from the plantation".
The SEC's lawsuit also targets six other promoters of the NovaTech scheme, all of whom the agency says used "religious overtones" when attracting new investors. Ultimately, the scheme was revealed to be a Ponzi scheme, with new investors' money being used to pay out previous investors, as the promoters also took money for themselves.
- "SEC Charges NovaTech and its Principals and Promoters with $650 Million Crypto Fraud", US Securities and Exchange Commission [archive]
FTX settles complaint from the CFTC with $12.7 billion payout
FTX will pay $8.7 billion in restitution and another $4 billion in disgorgement to settle the lawsuit from the CFTC, which was filed shortly after FTX collapsed in November 2022. All $12.7 billion, or what is available of it among FTX's remaining assets, will go to creditors rather than to the agency.
Defendants Sam Bankman-Fried, Caroline Ellison, and Gary Wang, as well as the FTX and Alameda Research companies, will be prohibited from commodities trading, including trading bitcoin, ether, USDT, or other assets considered "digital asset commodities" by the CFTC. However, with Bankman-Fried already beginning a 25-year prison sentence, and Ellison and Wang due to be sentenced, this may be low on their list of worries.
- "Judge approves $12.7 billion settlement between FTX and CFTC, bringing 20-month-long lawsuit to an end", The Block [archive]
- Permanent injunction, document #44 in CFTC v. Bankman-Fried [archive]
North Korean developers steal $1.3 million from crypto project treasury
According to blockchain investigator zachxbt, North Korean developers using fake identities were able to steal $1.3 million from a cryptocurrency project after pushing malicious code.
zachxbt traced the payment addresses for roughly 21 developers involved in this kind of activity, which he found had been working for at least 25 different cryptocurrency projects. They had earned around $375,000 over the past month.
Ripple fined $125 million by the SEC
A judgment has been issued in the long-running case against Ripple by the SEC, and the company has been fined $125 million for violations of securities laws in its institutional sales of its XRP token. The SEC has also obtained an injunction against the company, with the judge in the case opining that there was a "likelihood that [Ripple] will eventually (if it has not already) cross the line" again with respect to securities laws.
Ripple and others in the crypto world have been celebrating the judgment as a victory, in part because it is a substantially smaller penalty than the $1 billion in disgorgement and $900 million in penalties sought by the agency.
The SEC has already signaled throughout the case that they were likely to appeal an eventual outcome, after objecting to the judge's decision that several other types of token sales were not unlawful securities offerings.
Trump-themed $DJT token rug-pulls, people blame Martin Shkreli or Barron Trump
Surprising just about no one, a wallet holding around 20% of the supply of the $DJT Trump-themed memecoin suddenly dumped its holdings, crashing the token price by around 90%. The token price had briefly spiked in June, when it was falsely reported that the token was "an official Trump token". However, the token's price had already dwindled since that time, and before the sudden dump.
People were quick to blame those behind the project, primarily "Pharma Bro" Martin Shkreli (who has been accused of dumping his own token before). Shkreli was quick to shift the blame to Donald Trump's youngest son, Barron, who he has also claimed is behind the token (although this has not been independently confirmed). However, the owner of the wallet that dumped its tokens is not definitively known.