According to The Information, MoonPay never disclosed that $150 million of the Series A funding was used to purchase shares from insiders including Soto-Wright, and never went to the company. Several weeks after the funding round, Soto-Wright purchased a $38 million Miami mansion.
MoonPay executives pocketed $150 million raised from Series A
According to a report from The Information, MoonPay executives including CEO Ivan Soto-Wright pocketed $150 million from their $555 million Series A funding round completed in November 2021. MoonPay is a crypto payments platform known for its NFT "concierge" service popular among celebrities, and for the various allegations of undisclosed promotion leveled against it related to some of those celebrity deals.
Apparent whitehat exploits El Dorado Exchange, claiming developers built in a backdoor to steal user funds
The new Arbitrum-based El Dorado Exchange (EDE) was exploited for around $580,000. In an interesting twist, the attacker claimed to be a whitehat who was exposing that the developers had "implemented a backdoor that allowed them to force liquidate any position they desired. This activity involved intentionally signing incorrect prices to manipulate users' positions and steal their funds".
The attacker promised to return all funds, minus a 10% "white hat fee", if the developers "admit to manipulating the prices", and also offered to disclose other vulnerabilities they claimed to have found in the project.
The project founders wrote in response: "Yes we acknowledge making an ill-advised decision to manipulate the price. However our intention was to blacklist those who had previously exploited the system, fully aware that all transactions are recorded on the blockchain. We did not aim to misappropriate users funds as this would leave a traceable record. We will promptly remove the problematic bomb contract."
The exploiter began returning funds shortly afterwards.
BKEX crypto exchange halts withdrawals due to money laundering investigation
The BKEX crypto exchange announced on May 29 that they would be suspending withdrawals, claiming it was related to a police investigation. "Recently, the platform users' funds were involved in 'money laundering' and BKEX is currently cooperating with the police to collect evidence, for which we will suspend withdrawals to cooperate with the work", they wrote in an announcement on their website.
The exchange offered no estimate of when withdrawals might be re-enabled.
Coinone employees "admit to facts" in case regarding token listing bribes
A lawyer for a broker and the former director of the South Korean cryptocurrency exchange Coinone have told a court that their clients "admit the facts of the prosecution". The director, "Mr. Jeon", is accused of accepting more than ₩2 billion (~$1.5 million) in bribes in exchange for listing shady tokens on the exchange. In one case, the exchange was the only platform to list a token called "Furiever Coin", which has been linked to a kidnapping and murder investigation in Seoul.
Four executives were arrested in connection to the investigation in April, under suspicion that they had received ₩2.4 billion (~$2.2 million) in bribes in exchange for listing dozens of coins.
Coinone is one of the most popular South Korean cryptocurrency exchanges. In July 2022, it was among the seven exchanges raided by Korean authorities in the wake of the Terra/Luna collapse, as the country began applying harsher scrutiny to crypto platforms.
Morgan DF Fintoch likely exit scams for around $31 million
A Ponzi scheme called Morgan DF Fintoch lured consumers by claiming to be owned by the American banking giant Morgan Stanley. Morgan Stanley themselves warned of the scheme, writing that it was an impersonator, and that any claims of affiliation were false. The government of Singapore also issued a warning about the firm in early May. The company advertised a wallet which they claimed would "pay 1% per day,36% 30 Days and 100% in 63 days".
On May 23, crypto sleuth zachxbt tweeted that the project appeared to have executed their exit scam, bridging around 31.6 million Tether to various addresses. Platform users began to report that they could not withdraw funds.
Croatian cryptocurrency investment company BitLucky reportedly collapses; more than $75 million allegedly missing
Croatian company BitLucky told its customers that it would invest their money in cryptocurrencies, promising 5–25% monthly profits. However, its director Luka Burazer wrote an email to clients on May 19, explaining: "Dear clients, with a series of bad trades and decisions, unfortunately, I have brought the state of the company into a crisis situation. We will have more information in the following days". He and the company co-founder have since gone dark, turning off their cell phones, not replying to emails, and deleting their social media presence. According to Croatian news outlet Jutarnji list, a secretary for the company reached on the phone explained, "the director went crazy and spent all the money". The losses allegedly involve crypto assets notionally worth €70 million (~$75.7 million), and affect at least 700 individuals.
Some have expressed the opinion that BitLucky was a Ponzi scheme all along, given the unreasonable promises of 5–25% monthly returns. The editor of a crypto news outlet also expressed that "there was a 'line of [red] flags'", including that Burazer never wanted to appear in the media or have his picture shown online.
- "Najveća domaća kripto prevara? Riječanin klijentima uzeo 70 milijuna €. Upravo je u bijegu", Jutarnji list (in Croatian)
Coin Cafe to pay $4.3 million restitution after instituting high fees without informing customers
Cryptocurrency trading platform Coin Cafe will pay $4.3 million in restitution to customers who were charged high fees after signing up for a "free" crypto custody service. The firm instituted fees for its wallet service in September 2020, but never informed customers. They also increased the fees four times without informing their users. At one point, they charged 7.99% of the account balance or $99, whichever was greater, per month if a user did not transact that month. This resulted in some investors being charged fees equal to 96% of their holdings. One investor was charged more than $51,000 in fees in 13 months; another was charged $10,000 in a single month.
The New York Attorney General found that Coin Cafe's misleading fee structure was still in effect even after the company obtained a BitLicense from the Department of Financial Services.
Former Fabric CFO accused of siphoning $35 million into his crypto startup and losing it all
Nevin Shetty, the former chief financial officer of the Fabric e-commerce platform, was federally indicted for wire fraud after allegedly misappropriating $35 million from Fabric to put into his cryptocurrency platform HighTower. Shetty stole the money in April 2022, shortly after being told he would be fired from Fabric for performance reasons.
According to the grand jury indictment, Shetty planned to put the funds into cryptocurrency positions that "could have yielded returns of 20 percent or more annually", and planned to return 6% to Fabric, keeping the difference. This so-called "investment" contradicted the conservative investment strategy that Shetty had helped to draft for Fabric, and he concealed both the existence of the transfer and his involvement with HighTower.
Shetty "lost virtually all of [Fabric's] money" "within a matter of weeks", at which point he fessed up to Fabric. Shetty had placed all of the funds into protocols based around the Terra stablecoin, which collapsed dramatically only a month later.
Shetty has pled not guilty, and has been released on bond.
South Korean legislator Kim Nam-kuk resigns over allegations of improper crypto dealings
South Korean lawmaker Kim Nam-kuk has resigned over a cryptocurrency scandal. On May 8, 2023, The Korea Times reported that Kim cashed out around 800,000 Wemix tokens priced at around ₩6 billion (~$4.5 million) in previously unreported cryptocurrency assets shortly before Korea's March 2022 imposition of the travel rule, which requires disclosures around the identities of those involved in large crypto transactions. Kim denied the allegations, claiming he had simply moved the assets to another exchange. Other legislators and citizens expressed shock at Kim's apparent crypto wealth, as he had portrayed himself as someone who was not affluent.
Other concerns arose regarding the discovery of the assets. Some were worried about possible conflicts of interest, particularly in relation to Kim's 2021 proposal of a bill that would delay taxation of crypto profits. Others were worried about the source of the funds used by Kim for crypto trading; Kim claims he did not receive money from anyone to use for trading, and obtained the money through the sale of stocks.
On May 10, the Democratic Party recommended Kim sell his crypto holdings, and launched an investigation. Kim said later that day that he would perform the sales, and "transparently disclose data to the investigation team and undergo the inquiry faithfully".
On May 14, Kim resigned from the Democratic Party "for a while", continuing to deny the allegations but expressing wishes to not burden the party and its members over the controversy.
The subsequent day, Korean authorities raided the offices of Korean crypto exchanges Bithumb and Upbit in connection to the scandal, seeking transaction records and other information. Kim was reported to use those services for his crypto wallets.
CZ smacks down Justin Sun for trying to game SUI airdrop
"Binance LaunchPool are meant as air drops for our retail users, not just for a few whales," tweeted Changpeng "CZ" Zhao, the CEO of Binance, after seeing an alert showing that Justin Sun had transferred $56 million to Binance. "LaunchPool" is a process in which Binance users can farm various tokens — now including SUI — and receive rewards. "Our team told Justin, if he uses any of these to grab the LaunchPool Sui token, we will 'take action against it'. SMH." wrote CZ.
Indeed, it later turned out that Sun's team had farmed around 279,000 SUI (SUI does not yet have a reliable dollar price because it is set to launch later this month). Sun blamed the event on a TUSD market maker, writing, "Regrettably, some of our team members were not fully aware of the intended purpose for these funds and inadvertently used a portion of them to participate in exchange campaigns. Upon realizing this error, we immediately contacted the exchange team and arranged for a full refund of the funds." Those replying to his comment seemed more than a little skeptical that the incident was truly a mistake.