OneCoin operated out of Bulgaria, and was founded by Greenwood and "Cryptoqueen" Ruja Ignatova, the latter of whom has been on Europol's most wanted list since May 2022. The fraud amounted to around $4 billion and affected at least 3.5 million victims.
- "Co-Founder Of Multibillion-Dollar Cryptocurrency Scheme “OneCoin” Sentenced To 20 Years In Prison", press release by the U.S. Attorney's Office, Southern District of New York
Simultaneously, Binance.US announced it would be cutting 1/3 of its employees, or more than 100 people. This is the second staffing cut since the SEC lawsuit was filed in June — Binance.US cut around 50 positions, then around 10% of employees, shortly after the lawsuit was announced. The primary Binance entity also fired more than 1,000 people in July.
- "Binance.US CEO Leaves Embattled Crypto Exchange", The Wall Street Journal
CoinEx is based out of Hong Kong, and was recently forced to stop serving US customers as part of a settlement with the New York Attorney General which also required them to pay a $1.7 million fine.
Remilia is a very controversial group, particularly after it was exposed that leader Charlotte Fang was a major figure in a white supremacist cult known as Kali Yuga Accelerationism (abbreviated "kaliacc"), and involved in a 4chan suicide cult.
Fang announced the theft on September 11 in a tweet accompanied by a glitch art image derived from a photo of the Twin Towers engulfed in flames and smoke shortly after the 9/11 terrorist attacks.
The team wrote in an announcement that they had no choice but to sell the treasury wallet to drain the liquidity pool, which is locked to... well, stop the project team from draining the project and rug-pulling. At the time of announcement, the project team had around 950 ETH (~$1.5 million) in the treasury wallet.
Some pointed out that they could simply set the tax to 0% and carry on without the hefty sales tax, but that didn't seem to appeal to the project's creators. Some also speculated that the team might just take the money and run after draining the LP.
On September 7, Fortress Trust disclosed that several customers had been "impacted by a third-party vendor" compromise. On September 8, Fortress Trust announced they had been acquired by Ripple. On September 11, The Block reported that Ripple had covered undisclosed losses to customers as a part of the acquisition deal. The losses were later disclosed to be around $15 million, and the third-party vendor was said to be a company called Retool, who blamed the compromise on a social engineering attack against one of their employees.
- Tweet thread by Fortress Trust
- "Ripple Acquires Crypto-Focused Chartered Trust Company Fortress Trust", CoinDesk
- "Ripple made Fortress customers hit by security incident whole as part of acquisition", The Block
- "Episode 125 – How to Steal Almost $100 Million: Prime Trust goes Bust", Crypto Critics' Corner
Bitcoiner Jameson Lopp speculated that the transaction "looks like an exchange or payment processor with buggy software" based on its transaction history. "The address in question that made the fee calculation error has the characteristics of a withdraw-only hot wallet from an enterprise," he wrote.
His observations were well-founded, as it later came out that the wallet belonged to the Paxos blockchain company, who attributed the overpayment to a bug. Luckily for Paxos, the miner who snapped up the outsized fee agreed to refund it.
However, the link was a scam, and anyone who connected their wallet risked having their wallet drained of its cryptocurrency and NFTs. Some blue-chip NFTs were stolen, including two CryptoPunks (a collection with a floor price of around 47 ETH, or $76,800). Altogether, stolen assets surpassed $650,000 in value within a few hours of the theft according to zachxbt, though this counts notoriously difficult-to-value NFTs.
The tweet was taken down within twenty minutes of being posted. All in all, posting a link to a wallet drainer was probably among the least effective things the attacker could do with the Twitter account of a person whose word can dramatically move markets.
It did seem to be something of a stark warning to some in the crypto world, however, who expressed sentiments along the lines of "if Vitalik can get hacked, anyone can."
In September 2022, the startup managed to raise $5 million from investors including TCG Crypto and 1kx. Either that money's run out, or they're cutting their losses early.
He was arrested in August 2022 after a year on the run. Now, he and his brother and sister have all been sentenced to 11,196 years in prison – sentences so over the top that one has to wonder if perhaps Turkish prosecutors are worried the Özers are some kind of crypto-focused vampire crime family. They will also pay a 135 million lira fine (~$5 million).
The CTFC stated: "Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not."
As part of the deal, Salame has agreed to forfeit $1.5 billion. He will also pay $5.6 million restitution to FTX debtors and $6 million to the U.S. government, and will forfeit two homes in the Berkshires and a 2021 Porsche 911. According to the New York Times, he is not cooperating with the investigation.
Salame's sentencing is scheduled for March 2024.
The wallet address used by the phisher has been associated with multiple crypto phishing websites which attempt to convince users to authorize transactions, often by impersonating known crypto projects or promising token airdrops.
High-profile streamers bail on MrBeast-promoted Creator League after learning there are blockchains involved
YouTuber CDawgVA publicly withdrew from the project on September 3, writing, "I was not told or made aware at any point that there was Blockchain technology and was only made aware of that information when the event went live. I was given assurances that it had nothing to do with NFT's. Given my vocal hatred of such tech, I would never agree to join had I known that."
The creator of the OTK Network, which had agreed to participate in the League, wrote: "We were told there was no NFT/crypto component but looks like that may not be the case."
Creator League issued a statement attempting to downplay its blockchain usage, emphasizing that people who purchased "Creator Passes" were not buying cryptocurrency or NFTs. "The Creator League is not an NFT project and we have never sold tokens," they insisted. "Those buyers who remain uncomfortable with the blockchain technology can request a refund," they continued.
Now, Creator League has been postponed. eFuse, the company behind it, has also just announced a 30% layoff amid company restructuring.
A report by cybersecurity expert Brian Krebs outlines how various experts have come to this conclusion after analyzing a long string of crypto thefts perpetrated against people with otherwise strong security practices. Altogether, the thefts suspected to have been enabled by the LastPass breach amount to more than $35 million.
- "Experts Fear Crooks are Cracking Keys Stolen in LastPass Breach", Krebs on Security
GMBL offered a "bug bounty" to the attacker, inviting them to return 90% of the stolen funds in exchange for a promise not to pursue legal action. The exploiter later returned 235 ETH (~$382,000), or half what they had stolen.
GMBL promised that "we are going to thoroughly test everything again before re launching".
Once victims visit the fake site, they're prompted to connect their MetaMask wallets to access various services, which would allow the scammers to steal any assets in the wallets.
"The decision was made voluntarily and for business reasons," the email claimed.
Genesis is a subsidiary of the Digital Currency Group (DCG) conglomerate, which has since the beginning of the year seen its Genesis platform enter bankruptcy, shuttered its TradeBlock subsidiary, and is reportedly approaching a deal to sell its CoinDesk crypto media outlet.
Synapse posted on Twitter that they were "investigating unusual activity" on the wallets of one of their liquidity providers, and were "working to get in touch with them".
The $SYN token plummeted almost 25% after the sell-off, later recovering somewhat.
Stake acknowledged the attack on their Twitter account, writing that "We are investigating and will get the wallets up as soon as they're completely re-secured."
Stake is an Australia-based cryptocurrency casino and sports betting platform that has enjoyed endorsements from various celebrities, and which shelled out $100 million in 2022 for an endorsement deal with Drake.
On September 6, the FBI announced that they believed the Lazarus Group was behind the theft. Lazarus is a group of North Korean state-sponsored hackers allegedly responsible for crypto hacks totaling hundreds of millions of dollars.
In a competing lawsuit, Wright Thurston alleges that Schiermeyer unilaterally misused over $600 million in company funds in wasteful actions that were "often for his own personal benefit", including to buy a private jet and hire architects and designers for personal real estate projects.
The $GALA token dropped 5% on the news of the lawsuits.
After user backlash over a cumulative $550,000 in funds that were inaccessible to people who hadn't heard about the breaking change, Starkware re-enabled the ability for people to upgrade their wallets – leading some to question why it was ever disabled in the first place if it could be trivially re-enabled to prevent the loss of half a million in assets.
Apparently realizing his mistake, Fraternidade Crypto ended the stream, and says he tried to relocate the crypto to a new wallet. It was too late, however, and someone watching had already taken the around 86,000 MATIC (~$50,000) and various NFTs in the wallet.
Fraternidade Crypto posted an emotional video after the fact, explaining that the stolen funds were his life savings. He said he planned to file a police report, and also offered a reward for the return of the funds.
Fortunately, he was able to recover the stolen MATIC, though he says he has not been able to recover the NFTs, which have "incalculable value as they are NFTs, estimated value of approximately 15k dollars still lost".
As a part of the agreement, Impact will destroy all remaining Founder's Keys NFTs, forgo royalties from future secondary sales, and publish a notice of the order on its websites and social media.
Founder's Keys in the rarest tier have recently sold for $1,500 apiece, and promised to give their holders access to Impact Theory's self-help content, which supposedly taught viewers how to "unlock their potential and pursue greatness". According to the SEC, the company encouraged holders to view the tokens as an investment into the business.
A user asked what would happen to remaining seed money, if any, in a Twitter reply. Garfield answered that they "still have a meaningful portion of our seed funding" but that he hadn't decided what to do with it.
Balancer acknowledged the hack, writing on Twitter that "Balancer is aware of an exploit related to the vulnerability [disclosed on August 22]. Mitigation procedures have drastically reduced risks, but [we] are unable to pause affected pools." They reiterated that users needed to withdraw funds from affected liquidity pools to prevent further thefts.
The blockchain researcher known on Twitter as MevRefund questioned why Balancer didn't execute a whitehat attack on their own protocol to try to safeguard the vulnerable funds.
"Today is a bad day," wrote SOL Big Brain on Twitter.
Sure enough, within an hour of zachxbt's tweet, the project drained $5.2 million from the protocol and deleted its website and Telegram group.
According to zachxbt, the project also shared on-chain links to the March 2023 Kokomo Finance rug pull, which saw its perpetrators profit around $4.5 million.
The transfers and change to the multisig sparked fears that the project was rug pulling, or had been hacked. This led to a massive $PEPE sell-off, with the token plunging around 17%.
A day after the transfers, a PEPE team member posted on the project's Twitter account, alleging that the transfers were indeed theft by three of the project's other team members.
Someone observed the DEA wallet send a small test transaction before transferring the remaining seized funds, and quickly used a crypto wallet address with identical characters at the beginning and end to send an airdrop to the DEA source wallet. When the DEA agent went to send the remaining funds, they copied-and-pasted the address, believing it was the same one they'd sent the test transaction to. This is a common scam in the crypto world known as "address poisoning", and is successful primarily because crypto wallet addresses are very long strings of characters that people usually copy-and-paste, and only identify by the characters at the start and end.
Upon discovering that they'd been duped, the DEA contacted Tether to ask them to freeze the funds. However, by that time, the scammer had already converted the money into ETH, which couldn't be frozen. The DEA is now working with the FBI to try to trace the theft.
Rather than "100x-ing", the token immediately plummeted when DeSalvo sold his ~41 billion Blazar tokens. DeSalvo is accused of using his profits from the scheme to speculate on other crypto tokens, pay for personal expenses, and reimburse one investor who threatened legal action.
DeSalvo is also being charged over a separate investment scheme he operated, where he solicited investments on Facebook, promising to use his claimed trading expertise to earn massive returns. The SEC alleges he lost most of the money in bad investments, and stole the rest for himself, blaming the losses on market movements.
The Feds claim that the two founders knew Tornado Cash was widely being used to launder hundreds of millions of dollars by North Korea, but "turned a blind eye" and claimed to be complaint with sanctions laws. They also state that they refused to implement anti-money laundering and KYC programs, as is required of money transmitting services.
These charges are likely to be controversial — as has been the sanctioning of Tornado Cash — among crypto advocates and others, as they run up against thorny First Amendment questions and conflicting ideas about who, if anyone, is liable for running decentralized services.
Users pull $150 million in funds from Balancer protocol within hours after reports of a critical vulnerability
Balancer had around $850 million TVL prior to the announcement. Since revealing the issue, users have removed more than $150 million in assets from the project. Balancer has stated that "only 1.4% of the total TVL is at risk", though 1.4% of $850 million would still be a sizeable $12 million windfall for any potential exploiter.
On August 21, an individual searched for "celer bridge" to find the website for the Celer blockchain bridge. The first result appeared legitimate, even displaying the correct URL for the actual Celer bridge. However, once they clicked the result, they were redirected to a phishing website.
Once the victim connected their crypto wallet, it was immediately drained of $900,000 in the USDC stablecoin. They wrote on Twitter that it was "most of [their] net worth".
Titan advertised "annualized" performance results of up to 2,700% on its Titan Crypto trading strategy, which the SEC says was misleading because it failed to include material information about how the performance was calculated. Titan had based the calculation on three weeks of performance, assuming it would continue for a full year.
Titan has agreed to a cease-and-desist order, censure, and over a million in disgorgement and penalties.
According to data on DefiLlama, TVL on the project dropped from around $370,000 to only $81,000. The TVL was already significantly down from the project's peak of almost $1.5 million.
Lawrence is now suing Crypto.com, although this may be challenging given they apparently weren't behind the scam. Lawrence has also said that he has sold his house to pay for legal costs.
In December 2021, the company offered $300 "Recur Passes", which promised holders early access to NFT drops and other perks. One of them resold for $88,888 in February 2022.
Now, Recur has announced they will be closing up shop, and warned users to migrate their assets away from the platform in advance of a November shutdown. The company cited "unforeseen challenges and shifts in the business landscape".
As for the Recur Passes, they're currently selling for somewhere between $7 and $11.
Despite a tweet on August 19 that "sites are coming back online", and a developer stating that they were "mostly back in control", the website apparently remained compromised for several days. The project reiterated via tweet on August 20 that the website was still not safe to use.
It's unclear how much was stolen as a result of the hijacking.
An attacker has siphoned more than 7,160 ETH (~$12 million) from the project, which they've bridged back to the Ethereum main chain. The Exactly Protocol's TVL plunged from $37 million to under $12 million following the attack.
Exactly writes on their website that they had been audited by four different firms: Chainsafe, Coinspect, ABDK, and Cryptecon.
Now, the Federal Reserve Board has issued a cease and desist to Farmington State/Moonstone, claiming they have violated the commitments they made while going through the approval process. Despite promises not to do so, the bank engaged in digital asset activity, reportedly working with stablecoin issuers.
- "Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions", New York Times
- "Alameda-funded bank Farmington State gets cease and desist from Fed", Protos
- Cease and desist from the Board of Governors of the Federal Reserve System
The attackers also tried to steal around 80 BTC and 6,500 ETH (currently worth over $12.6 million) from a cold wallet belonging to Stephens, but were thwarted by an email alert sent to Blockchain Capital employee.
A bridge between Ethereum and the Shibarium network was released as the network went live, and eager users quickly transferred a combined 954 ETH (~$1.7 million) to the bridge contract so they could access it on the new chain. However, users started reporting that transactions were stalled, and they weren't able to access their tokens on the Shibarium side.
The team quickly shut down conversation on Discord as more issues were raised, and claimed in a blog post that the issues were caused by nothing more than the network being overwhelmed with traffic. The team denied the authenticity of screenshots of a Telegram chat appearing to show the lead developer writing that the funds were unrecoverable, insisting they were safe.
Finally, weeks after the botched launch, Shibarium re-enabled the bridge and told users they could once again access their funds. Though there have been some delays in transactions, the "stuck" funds appear to be retrievable.
SwirlLend was a lending protocol operating on both Base and the similarly newborn Linea chain. Shortly after its launch, the project drained a combined $460,000 from the two chains, then deleted its social media accounts.
Prime Trust is a crypto custodian that previously served companies including Binance US, Swan Bitcoin, and BitGo. Just a year ago, the company announced they had raised $100 million in a Series B funding round, and planned to add crypto retirement accounts to its list of products. It's probably a good thing that didn't pan out.
According to bankruptcy documents, Prime Trust has between $50 million and $100 million in assets, but between $100 million and $500 million in liabilities. They report having between 25,000 and 50,000 creditors.
- "Crypto custodian Prime Trust files for Chapter 11 bankruptcy", CoinTelegraph
- Form 201 in Prime Core Technologies Inc. bankruptcy
- Tweet thread by Cryptadamist
RocketSwap later announced a plan to airdrop tokens to "compensate" users for the theft. They also tried to reassure projects that were migrating away from RocketSwap that there was "no need to run away, your funds are safe".
The attack was a "classic price manipulation" exploit, according to the Ironblocks security firm. The attacker was able to steal 1,152 ETH ($2.13 million) from the protocol. They then tumbled the stolen funds through Tornado Cash.
Lin had created a project called "FrensTech", which aimed to capitalize on the popularity of a product called "friends.tech", and which ultimately accumulated the 14 ETH in fees before he decided to drain liquidity. Lin had not tried to conceal his identity. After the rug pull, Uniswap founder Hayden Adams wrote on Twitter: "Wanted to let people know this person is no longer with the company. Not behavior we support or condone."
Lin was unapologetic, tweeting: "got fired from uniswap, but gained 600 new followers and [crypto Twitter] villain status. net neutral tbh".
SpiritSwap was previously one of the most popular DEXes on Fantom, boasting an all-time-high of $374 million in January. It now has less than $3 million TVL, thanks in part to the Multichain collapse and to the broader cryptocurrency bear market.
SpiritSwap is only the most recent project to announce its closure as a result of the Multichain fiasco. In July, Geist Finance and Hector Network also announced they would be shutting down due to Multichain contagion.