ZKasino scam suspect arrested by Dutch police
- "More than 11 million euros seized and man arrested in investigation into gambling platform scam", Dutch Fiscal Information and Investigation Service [archive]
Instagram influencer Jay Mazini sentenced to seven years in prison for crypto fraud
Mazini also ran a scam targeting the Muslim community in New York, via a company called Halal Capital. In reality, this was a Ponzi scheme, and payouts to his investors were funded in part by the crypto scam he was also running.
Mazini was arrested in March 2021 on kidnapping charges, after he kidnapped and beat someone who might have witnessed his frauds. He was sentenced to five years in prison for that charge, to which he pled guilty. His new fraud sentence will be served concurrently with the kidnapping sentence.
In addition to seven years in prison, Mazini has been ordered to forfeit $10 million. Restitution has not yet been determined.
- "Instagram Influencer Known as 'Jay Mazini' Sentenced to 84 Months in Prison for Overlapping Fraud Schemes", U.S. Attorney's Office, Eastern District of New York [archive]
- "Serial Scammer and Instagram Influencer Jay Mazini Pleads Guilty", The Daily Beast [archive]
Samourai Wallet operators charged over crypto mixer operations
Rodriguez was arrested in the United States; the United States will seek extradition for Hill, who was arrested in Portugal.
Samourai Wallet advertised itself as "a bitcoin wallet made for the streets", which would "keep your transactions private, your identity masked, and your funds secure". It touted features including "remote self-destruct", and would hide itself from a phone's applications list. As charges were filed in the United States, the wallet's website began displaying a seizure notice that informed visitors of a coordinated law enforcement action by the US Attorney's Office in the Southern District of New York, FBI, IRS, Europol, and Portuguese and Icelandic police. The app was also removed from the Google Play Store.
- "Founders And CEO Of Cryptocurrency Mixing Service Arrested And Charged With Money Laundering And Unlicensed Money Transmitting Offenses", U.S. Attorney's Office, Southern District of New York [archive]
ZKasino rug pulls after raising $33 million
Instead, the project's creators transferred those more than 10,500 ETH ($33 million) to Lido, an Ethereum staking service. As for the "return" of funds, the project team indeed followed through with their promises to return the crypto... except instead of ETH, depositors received the project's native token, ZKAS, which would vest over a period of 15 months. The project announced that they had calculated the ZKAS distribution based on a discounted rate, "as a favour to our users who have bridged to participate in the ecosystem". Gee, thanks!
One investor in the project wrote, "We made a mistake investing in Zkasino early. ... [I]t sounds like a scam, but 95% of crypto consists of such crap. With memecoins pumping every day, people believe this could be the next one."
It seems that ZKasino's creators have links to other crypto scams, including a failed "ZigZagExchange", which raised around $15 million that was allegedly misallocated to work on the ZKasino project. Crypto sleuth zachxbt had also described the team as "proven bad actors" in December, listing multiple instances in which they had avoided making promised payments.
After the rug pull, the project's planned IDO on Ape Terminal and AIT Launchpad were canceled, and MEXC (which had invested in the project's seed round) canceled the token listing.
Hedgey Finance hacked for almost $45 million
The majority of assets were stolen from Hedgey on the Arbitrum layer-2 network, although around $2.1 million of them were stolen from the version deployed on the Ethereum mainnet.
Hedgey Finance confirmed the exploit, and sent an optimistic and congratulatory message on-chain: "Well done for finding it! We're assuming you executed this exploit as a white hat, so we'd like to get in touch with you to discuss next steps." No on-chain response thus far.
- Tweet by Hedgey Finance [archive]
- Hedgey Finance, Rekt [archive]
- On-chain message from Hedgey Finance to the thief
Hong Kong police arrest 72 people, freeze $29 million in connection to JPEX
According to Hong Kong police, they have received more than 2,600 complaints about JPEX, involving HK$1.6 billion (~US$204 million) in assets.
- "Hong Kong JPEX cryptocurrency scandal: 72 arrested, HK$228 million in assets frozen so far", South China Morning Post [archive]
Avi Eisenberg convicted of $110 million Mango Markets heist
Shortly after he was identified as the person behind the attack, Eisenberg tweeted that he "was involved with a team that operated a highly profitable trading strategy last week. I believe all of our actions were legal open market actions". Sadly for him, jurors didn't share this belief.
Eisenberg faces up to 20 years in prison.
Roger Stone endorses $TRUMP memecoin with misleading posts
What he failed to mention is that the tokens in Trump's wallet were airdropped to him, likely without Trump even realizing it. Several of Trump's crypto wallets are publicly known, and people send coins and NFTs to them all the time. Trump has no more endorsed Stone's "MAGA Memecoin" than he has the "HarryPotterTrumpHomerSimpson777Inu" tokens that also sit in his crypto wallet.
Elsewhere, Stone disclosed, "My promotion of MAGAMemecoin is, of course, sponsored." I haven't been able to find where he has disclosed the amount he was paid for these promotions, as he is required to do.
$2 million emptied from Grand Base real world asset platform
The team behind the project claimed that the deployer wallet had been compromised, allowing an attacker to drain the project's liquidity pool. Altogether, 615 ETH (~$2 million) was taken from the project.
Grand Base is a platform where users can trade "gAssets", which are crypto tokens that represent stocks in tech companies including Amazon, Apple, Google, Meta, and Microsoft.
tea.xyz causes open source software spam problems, again
Max Howell, the creator of tea.xyz (and creator of homebrew, though he's no longer involved), seemed apologetic, and promised to make changes to the protocol to stop this spammy behavior.
Now, deprived of that avenue, people are just creating massive waves of empty software packages, with nothing other than a "teafile" with their crypto wallet address for rewards, and submitting them to package managers like NPM and RubyGems.
This spam prompted a blog post from RubyGems, who wrote that they had to devote time to strengthening limits on package publishing and "ensuring [accounts] didn't disrupt the community further."
Security researchers at Phylum also wrote up the protocol's impact on the JavaScript world, which has seen as many as 7x as many packages published on NPM as previous daily averages. "Automated sustained spamming of this volume for months on end is rare and does nothing but cause heavy strain on the ecosystem itself, degrading the performance of the ecosystem for genuine users and straining open source security researchers," they wrote.
$26 million liquidated in surprise Pac Finance smart contract change
Pac Finance has said they are "actively developing a plan with [impacted users] to mitigate the issue."
Australian NGS Crypto mining fund collapses
NGS and its associated business is believed to have pulled in around AU$62 million (US$42 million) from around 450 Australians.
Australian DCA Fund collapses with up to $65 million owed to creditors
So far, losses are estimated to affect around 100 investors, who have up to AU$100 million (US$65 million) in claims.
Balanian had boasted of his career experience as a former NASA mission planner, and targeted his fund to wealthy investors with a minimum initial deposit of AU$50,000 (~US$33,000).
Crema Finance and Nirvana Finance hacker sentenced to three years imprisonment
US Attorney Damian Williams described this as the first ever conviction for a smart contract hack.
Ahmed forfeited around $12.3 million in stolen funds, and will pay more than $5 million in restitution.
- "Former Security Engineer Sentenced To Three Years In Prison For Hacking Two Decentralized Cryptocurrency Exchanges", press release from the U.S. Attorney's Office, Southern District of New York [archive]
MarginFi suffers huge outflows amid CEO ragequit
On April 10, CEO Edgar Pavlovsky tweeted that he had resigned from MarginFi, publicly calling that he "d[idn't] agree with the way things have been done internally or externally". Pavlovsky had been criticized for his response to the controversy around MarginFi, in which he had been argumentative and insulting, tweeting things like "take your money out, go fuck yourself" to those who accused him and MarginFi of malfeasance.
Amid the chaos, more than $210 million in TVL has exited the protocol.
SEC sends Wells notice to Uniswap
The notice was received with an adversarial posture by Uniswap, who announced its receipt with a blog post titled "Fighting for DeFi". "Taking into account the SEC's ongoing lawsuits against Coinbase and others as well as their complete unwillingness to provide clarity or a path to registration to those operating lawfully within the U.S., we can only conclude that this is the latest political effort to target even the best actors building technology on blockchains," they wrote.
The news was met with outrage in the crypto community, who generally saw the action as indicative of an overly aggressive posture by the SEC to crack down on defi and crypto more broadly.
- "Fighting for DeFi", Uniswap Labs blog [archive]
$23 million goes missing amid STFIL claims that they're being investigated
According to STFIL, while some of the core team members were detained by Chinese police, FIL tokens were moved to an unknown wallet. They also acknowledged that there had been "abnormal, unscheduled upgrades to the protocol". They asked their community members for help in tracking the wallet.
Some speculated that the story was fake, and that the project had stolen the funds. However, Chinese police have in several instances cracked down on people and companies involved in Filecoin-related projects, including an $83.3 million alleged pyramid scheme in August 2023 and a group of Filecoin Ponzi schemers in 2021. Filecoin mining became popular in China after its 2018 initial coin offering, and also became a magnet for Ponzi schemes and other scams.
MuskSwap and related projects exit scam for over $5 million
The project described itself as a DEX with a native $MUSK token, and launched in July 2021. However, the token tanked on December 25, 2021. Although the project team tried to blame the crash on "liquidity issues" and promised paths forward, they locked the project Telegram chat on March 11, 2022. On April 5, 2022, the team withdrew remaining funds and deleted the website.
Crypto analysis firm CertiK linked the MuskSwap project to several other scam tokens and projects: RocketDoge, InfinityGame, SpaceX, MUFC (themed after Manchester United), and Elona Musk. Altogether, the rug pulls have drawn in $5.1 million.
Bored Ape-themed fast food restaurant shuts down
Some more recent Yelp reviews described fairly mediocre food, which "[t]he NFTs don't make up for".
The restaurant opened in April 2022, a month after owner Andy Nguyen purchased Bored Ape #6184 for $268,000, along with three Mutant Apes for an additional combined $187,000. #6184 became the restaurant's logo, and the others were incorporated into the restaurant's branding. The NFTs haven't been resold since, although it's unlikely they could recoup close to their original purchase prices — Bored Apes have been averaging a little under $50,000 in recent sales, and Mutants around $8,500 each.
Do Kwon and Terraform Labs found liable for $40 billion fraud
Kwon and his company were behind the algorithmic stablecoin, Terra, which dramatically collapsed in May 2022, sending huge ripple effects throughout the ecosystem. He and his company had lied about the stability of the token, ultimately causing massive financial damage to the tune of around $40 billion.
Kwon is in custody in Montenegro after attempting to flee criminal cases in both the United States and South Korea. The civil case in the US proceeded without him.
- "Terraform Labs and founder Do Kwon found liable in US civil fraud trial", Reuters [archive]
- Verdict in Securities and Exchange Commission v. Terraform Labs Pte Ltd. [archive]
SushiSwap team votes to give themselves control of much of the "decentralized" project's treasury
The "yes" votes are currently in the lead with a 63% margin. The most yes votes came from sushigov.eth, the official SushiSwap team address, which also created the proposal. It is the first time that address has ever participated in a governance proposal.
The 5.5 million yes votes from the team wallet, plus another 3.1 million delegated from other community members, were enough to push the vote to majority support. A former SushiSwap contributor has also alleged that the SushiSwap team was manipulating the vote with additional wallets.
On Twitter, Sushi's "Head Chef" claimed that he had consulted with lawyers and then authorized the voting activity out of fear of an "extortative [sic] governance attack attempt".
Project promising to rug pull raises almost $29,000
Despite that, people sent the creator over 8.8 ETH (almost $29,000) for the project's "pre-sale", even as they repeated on Twitter that the project was a scam and that no one should buy it.
FixedFloat exchange hacked again
FixedFloat acknowledged the theft in a Twitter post, and blamed the same thieves. They claimed that this theft was enabled by a vulnerability in a third-party service.
Solana faces wave of drain attacks linked to trading bots including Solareum
Solareum later wrote that they would be closing the project, and deleted their website. This drew some criticism from users who accused them of doing nothing to investigate the hack, or even being responsible themselves. The project wrote on Twitter, "We at #SOLAREUM team can clarify that we DO NOT steal money." Ah, well, in that case.
Other bots may have been involved in the theft, though it's not clear at this point. Though there was some speculation that a trading bot called BonkBot was to blame, that seems to have been unfounded.
The total theft amount is not clear, but exceeds $500,000.
Prisma Finance hacked for $12 million; attacker makes detailed demands
Plasma paused the protocol after detecting the attack.
The first attacker, who stole the bulk of the assets, sent an on-chain message to Prisma claiming that they had performed a "whitehat rescue", and inquired about returning the funds. In later messages, however, they asked the project to answer questions about their security practices and projects' responsibilities to users to prevent attacks. The attacker then transferred the stolen funds to Tornado Cash — indicating their return is unlikely.
In another message, the attacker was angry that Prisma had not expressed gratitude to them or remorse to their users, and was angry they had used terms like "exploit" and "attack" in their description of the incident. They demanded that the team reveal their identities, apologize, and thank the attacker in an online press conference.
Sam Bankman-Fried sentenced to 25 years in prison
The sentence follows his conviction on all seven felony charges in November 2022 — a decision reached by the jury within hours of beginning their deliberations.
Bankman-Fried intends to appeal the conviction.
- Minute Entry for proceedings held before Judge Lewis A. Kaplan: Sentencing held on 3/28/2024 for Samuel Bankman-Fried [archive]
LENX co-founder accused of $10 million rug pull
One of the co-founders, known only as "Paul", claimed on Discord that he was "trying to investigate" the movement of funds, which have been blamed on the project's other co-founder, John Kim.
Conversations on Discord suggest that a remaining $3 million in treasury funds were protected, and that the remaining LENX team may have been able to convince Binance to freeze the account that received stolen funds. However, little has been verifiably confirmed to date.
LENX is backed by the Frax Finance lending protocol.
KuCoin and founders criminally charged
According to prosecutors, they tried to conceal that the exchange had customers from the United States in order to claim that they were exempt from US anti-money laundering laws. They also marketed KuCoin as a KYC-optional exchange where customers from the US could operate unverified accounts.
The charges against the founders carry maximum sentences of five years in prison.
- "Prominent Global Cryptocurrency Exchange KuCoin And Two Of Its Founders Criminally Charged With Bank Secrecy Act And Unlicensed Money Transmission Offenses", U.S. Attorney's Office, Southern District of New York [archive]
"Munchables" crypto game exploited for $62.5 million
Things went awry in the land of the schnibbles and snuggeries when an attacker siphoned around 17,400 ETH ($62.5 million). Various descriptions of the attack circulated, with blockchain sleuth zachxbt attributing it to a recently hired developer, and crypto developer 0xQuit claiming the theft appeared to have been "planned since deploy".
Some began discussing the possibility that the Blast layer-2 blockchain might forcibly roll back the chain to "undo" the hack. Some have argued this is contra to the crypto ethos or would set a bad precedent, while others have argued that as a blockchain focused more on gaming and experimentation and less on decentralization and other facets of crypto ideology, it would be a reasonable step.
Some hours after the attack, the exploiter was convinced to return the funds.
Curio RWA project suffers $16 million exploit
A bug in the project's Ethereum smart contract enabled an attacker to mint 1 billion of the project's CGT governance token. Although the tokens were notionally priced at around $40 million, the loss to the project was estimated at closer to $16 million.
Curio DAO announced that they intended to compensate users affected by the theft over a year-long period.
Solana memecoin frenzy sparks trend of incredibly racist meme tokens
The tokens became so popular that projects showing newly-released tokens, like DEXScreener, became full of such tokens. DEXScreener released a statement on Twitter to say that "We'll be reviewing our token profile moderation policy in the coming days. We won't be the gatekeepers of what happens on-chain, but we're definitely not here to spread hate." The replies to the tweet were, predictably, full of people accusing DEXScreener of "censorship" and "going woke".
Previously rug-pulled Lucky Star Currency project somehow rugs again
You almost have to admire the tenacity.
TICKER project developer steals $900,000
After the thief was identified by blockchain sleuth zachxbt, they posted a long message on Twitter, writing, "im not sorry for any of you, tbh. you are all morons if you believe all it needs to make it here is to send your money to a custodial address and get rich". The thief later spent some of the money on Milady NFTs and memecoins.
zachxbt stated that he had identified the developer, including his full name, location, and other details. He encouraged those who were scammed to contact him if they were interested in pursuing legal action.
Super Sushi Samurai exploited by whitehat for $4.6 million
The attacker contacted the project shortly after the theft, claiming to be a whitehat. They wrote, "Hi team, this is a whitehat rescue hack. Let's work on reimbursing the users." Super Sushi Samurai later confirmed that the funds had been returned, minus a 5% "bounty". The team also gave the whitehat an additional 2.5% in SSS tokens and land, and brought them on to the project team as a tech adviser.
AirDAO exploited via social engineering attack
AirDAO announced the theft the following day, and stated that they were working to track and freeze stolen funds. They also offered the attacker a 10% "bounty" if they chose to return the stolen assets.
Dolomite exchange exploited for $1.8 million
An attacker apparently discovered a reentrancy bug allowing them to drain user funds from those who had approved the old contract. Altogether, around $1.8 million was taken before the team disabled the contract. The attacker quickly tumbled the stolen funds through Tornado Cash.
SEC launches investigation into Ethereum Foundation
Although the SEC has agreed that bitcoin is a commodity and not a security, it has been hesitant to make similar explicit statements about ETH. Designation as a security could be devastating to the Ethereum project and to ETH, which is the second most popular cryptocurrency to bitcoin.
Bitcoin flash crashes on BitMEX
The incident underscores the thinness of the bitcoin markets on some cryptocurrency exchanges, and the ease with which a few whales can manipulate token prices.
BitMEX used to be among the largest cryptocurrency trading platforms, though its popularity diminished after its founders were hit with criminal charges in 2020 for violations of the Bank Secrecy Act.
Slerf memecoin meltdown only adds to mania
Thanks to the aforementioned frenzy, the project managed to raise $10 million in the presale. However, things went sideways when the developer accidentally burned the $10 million by sending them to an address where they would be permanently inaccessible. "oh fuck", the developer wrote ominously on Twitter, before explaining their mistake.
Some speculated that the screwup may have been a marketing ploy, in which case it was very successful, because the token went on to post more than $2.7 billion in trading volume over a 24-hour period — more than the entire ETH trading volume in that period. The monumental error by the developers seemed to have no damper on the overall frenzy around memecoins, or even produced the opposite effect.
Surely this trend won't end badly.
Wilder World game suffers $1.8 million theft, blames contractor
The project blamed the theft on a previous contractor who had the private key. They also explained that the attacker seemed to be a developer based on the fact that they had "specialized knowledge of ZERO's internal security systems".
Phisher impersonating influential crypto trader in Twitter replies scams over $2.6 million
In one of the real Ansem's tweets, Ansem wrote "i dont launch coins bros" — nevertheless, followers eager to get in early on a new memecoin clicked a link offering a presale and had their wallets drained.
Altogether, people lost $2.6 million to the scam. One individual lost $1.2 million.
Remilia Collective reports multi-million dollar hack
The attacker stole around 490 ETH (~$1.8 million) and $58,000 USDC, along with more than 130 Milady NFTs, 320 Remilio NFTs, and hundreds of derivative tokens issued on the NFTX platform. Based on floor prices, the assets are valued at north of $6 million.
The mechanism of the attack is still uncertain, though Fang has said he suspects malware that could have intercepted credentials to his Bitwarden password manager. Some have expressed skepticism around the "hack", suggesting it could have been inside job. The Remilia group had suffered a separate $1 million loss in September 2023 — blamed on a rogue developer — and failed to implement many security safeguards after that incident.
NFPrompt discloses hack
The platform announced on March 15 that it had suffered a "critical security incident" that it attributed to "a group of hackers" who were able to gain access to funds belonging both to the project's users and the project itself. They did not disclose how much was taken.
The project announced that it was working with the FBI, and had contacted centralized exchanges to ask them to freeze stolen funds.
Someone accidentally burns $1.36 million Tether
Most experienced crypto users have adopted the habit of sending small test transactions before transferring large amounts of tokens, to first check that they're using the correct address. Oddly, this person did so in this case, but then went right ahead and transferred the remaining tokens to the erroneous address.
The person may have lucked out that they were using a centralized stablecoin like Tether, whose operators hold a substantial amount of control over freezing, destroying, and creating new Tethers — and could feasibly replace the burned tokens.
Mozaic exploited for $2 million, recovers 90%
According to MozaicFi, the theft had been perpetrated by a rogue developer who was able to gain access to a private key held by a core team member. They also claimed that a simultaneous large sale of the Mozaic token resulted in cascading liquidations.
In good news for the project, the attacker moved around 90% of the stolen funds to MEXC, a centralized cryptocurrency exchange that was able to freeze the thief's access to the funds.
MOBOX lending platform exploited for $750,000
Massachusetts prosecutors seek to seize $2.3 million from crypto romance scam
- "United States Files Forfeiture Action to Recover Cryptocurrency Traceable to Pig Butchering Romance Scam", United States Attorney's Office, District of Massachusetts [archive]
Phishing attack drains $2 million from one victim
Incognito Market drug marketplace pulls multi-million dollar double scam
Making matters worse, on March 10 the website posted a message reading, "Yes, this is an extortion !!" They wrote that, although the platform promised to "auto-encrypt" messages between buyers and sellers, and auto-delete after an expiry date, messages were not encrypted or deleted. They demanded that users pay an additional $100 to $20,000 to have their information removed from the dataset, which they promised to release at the end of May. "Whether or not you and your customers' info is on that list is totally up to you."
The tactic is reminiscent of that of ransomware groups, which often demand double fees: one from victims of hacks first to regain access to their systems, and another in exchange for a promise to destroy stolen data.
- Incognito Darknet Market Mass-Extorts Buyers, Sellers, Krebs on Security [archive]
Kickstarter's bizarre "pivot to blockchain" spurred by secret $100 million Andreessen Horowitz investment
Crowdfunding website Kickstarter surprised and dismayed many of its users in December 2021 when they announced they would be moving the product to the blockchain in December 2021 for... reasons. That blockchain would just so happen to be the relatively unknown Andreessen Horowitz-backed Celo blockchain. "How this will actually work, beyond Kickstarter being able to yell 'blockchain' like a spell to summon investors ... is unclear," wrote Tom McKay at Gizmodo.
He probably didn't realize how right he was, but now it's been revealed that KickStarter was able to land a $100 million investment from Andreessen Horowitz with handwavy proclamations about the blockchain that its own COO didn't seem to quite understand.
The company seems to have since given up on its blockchain ambitions — in no small part thanks to user revolt. It seems that $100 million windfall didn't include any terms actually requiring Kickstarter to follow through.