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US prosecutors have charged a man with wire fraud and money laundering related to a significant illegal ‘cryptojacking’ operation.

United States prosecutors have filed charges against a Nebraska man accused of a cryptojacking scheme that allegedly defrauded two cloud providers – one headquartered in Seattle and the other in Redmond, Washington – of $3.5 million.

Prosecutors allege that the cryptojacking scheme yielded cryptocurrency mining valued at almost $1 million.

Cryptojacker Charged in $3.5 Million Scheme

Charles O. Parks III, also known as “CP3O,” was charged with wire fraud and money laundering offenses for allegedly orchestrating a large-scale illegal “cryptojacking” operation.

According to the Brooklyn U.S. Attorney’s Office, Parks defrauded two cloud computing providers of $3.5 million to mine approximately $970,000 worth of cryptocurrencies, including Ether, Litecoin, and Monero, using the companies’ resources without authorization.

Prosecutors claim that Parks used the ill-gotten gains for extravagant purchases, including a luxury Mercedes Benz, jewelry, and first-class hotel and travel expenses. Notably, Parks was arrested on Friday, April 13, and faces a combined maximum sentence of 50 years.

The indictment alleges that Parks created multiple accounts with a subsidiary of “Company 1,” a cloud computing and consumer electronic device company based in Seattle, Washington, and “Company 2,” a firm specializing in personal computers and related services headquartered in Redmond, Washington.

Brooklyn U.S. Attorney Breon Peace said in a statement that the office is committed to prosecuting criminal actors who use sophisticated technology for fraudulent activities.

Park’s Calculated Fraud Moves

From January to August 2021, Parks employed various aliases, corporate affiliations, and email addresses, including those associated with companies he registered – MultiMillionaire LLC and CP3O LLC – to establish accounts at the cloud computing providers. This allowed him access to heightened services and benefits, such as high cloud computing services and deferred billing accommodations.

The indictment suggests he laundered some of the illegally mined cryptocurrency through “Cryptocurrency Exchange 1,” a decentralized company with no headquarters. The other funds were laundered through a payments provider, bank accounts, and a New York City-based nonfungible token (NFT) marketplace.

Parks evaded federal law’s $10,000 minimum transaction reporting requirements by structuring payments in amounts just below the threshold. Prosecutors claim multiple instances where Parks made transactions of $9,999 and smaller sums from crypto exchanges to a bank account.

Despite having one account suspended for nonpayment and fraudulent activity, Parks allegedly created a new account with the provider within a day. He reportedly consumed over $2.5 million of services from the Seattle-based provider.

Prosecutors further alleged that Parks employed similar tactics to defraud the Redmond-based provider of more than $969,000 in cloud computing and related services.

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The upcoming token sale of Solana (SOL) by FTX will be held through an auction, possibly due to increased demand.

Instead of offering at a fixed price as in the initial round, the FTX exchange will organize an auction for the next batch of locked Solana (SOL) tokens, with details yet to be disclosed.

As of April 5th, FTX’s bankruptcy trustees successfully sold 25 – 30 million SOL (2/3 of the 41 million locked tokens) to prominent names in the industry such as Galaxy Digital and Pantera. This deal generated $2.6 billion for FTX, with a selling price of around $60 per token.

Last September, the court allowed FTX to liquidate the remaining crypto assets to raise additional cash, repay debts to investors affected by the previous collapse. At that time, the rogue character Sam Bankman-Fried’s exchange chose Galaxy Asset Management as the custodian to serve the asset sale plan, aiming to save costs and enhance deal efficiency.

Since then, the bankruptcy trustee of FTX has attracted significant attention from large institutions, especially for the locked SOL tokens as they constitute the largest portion of the remaining assets of the exchange.

Neptune Digital was the first organization to purchase 26,964 SOL at $64 per token – equivalent to $1.7 million. At that time, billionaire Mike Novogratz’s investment fund also established a new $620 million fund solely for the purpose of acquiring SOL from FTX. Additionally, Pantera Capital announced its intention to raise $250 million to participate in this deal.

SOL’s price has increased by 600% in the past year, hence the increased demand for locked tokens from FTX is understandable.

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In response to market volatility, Binance has announced the conversion of 100% of assets in the user protection fund SAFU to the stablecoin USDC.

On April 18th, Binance exchange stated it would convert all BTC, BNB, USDT, and TUSD within SAFU to USDC. The exchange explained that storing assets under a transparent stablecoin like USDC would ensure the stability and reliability of the user protection fund.

According to transaction evidence provided by Binance, the exchange moved nearly $1 billion worth of Bitcoin and $722 million worth of BNB out of storage addresses, subsequently depositing only $800 million USDC back into the insurance fund address.

Therefore, it appears that Binance has gained over $900 million USD by holding BTC and BNB in the SAFU fund since February 2022. The exchange did not specify the purpose for this amount but stated it would continue to maintain the value of the SAFU fund at $1 billion USD.

SAFU (Secure Asset Fund for Users) is a user protection insurance fund established by Binance in 2018 to safeguard users in emergency situations such as technical failures impacting user assets. Since its establishment, Binance has allocated 10% of its trading fees to increase funds for SAFU in various cryptocurrencies like BTC, ETH, BNB, and several stablecoins.

Due to being held in different cryptocurrencies, the value of SAFU fluctuates with the volatility of these currencies. In February 2022, Binance announced that the fund had reached $1 billion USD and has maintained this threshold until now.

Binance’s move is understandable given the market’s sensitivity ahead of the upcoming halving event, scheduled for the evening of April 20th (Vietnam time). Numerous predictions about Bitcoin’s price during this period have been made, such as Arthur Hayes believing that the cryptocurrency will experience significant volatility around the halving, or JPMorgan predicting that BTC could even drop to $42,000 USD post-halving.

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Avalon, a burgeoning crypto gaming studio, has successfully secured a $10 million funding round, with Bitkraft Ventures and Hashed as the primary investors. This substantial investment is earmarked for the advancement of their flagship project, the massively multiplayer online game (MMO) “Avalon.”

The development team behind Avalon comprises seasoned professionals from leading web2 gaming enterprises, harnessing their collective expertise to create an immersive gaming venture. Collaborations with industry trailblazers such as Didimo and Inworld AI further enrich the gaming experience.

Sean Pinnock, the CEO and founder of Avalon, emphasized the studio’s commitment to delivering an unparalleled gameplay experience. Pinnock highlighted the integration of cutting-edge technologies like Unreal Engine 5 and AI-driven user-generated content systems. He also mentioned the forthcoming NFT collection featuring revolutionary AI-powered avatar NFTs.

Pinnock’s extensive background includes stints at industry giants Electronic Arts and Microsoft, as detailed in his LinkedIn profile.

Carlos Pereira, a Partner at Bitkraft Ventures, expressed optimism about Avalon’s potential contribution to the Synthetic Reality (SR) landscape. Synthetic Reality encompasses the creation and simulation of digital worlds and systems, offering immersive gaming experiences with robust in-game economies.

Avalon has announced plans for a closed, early-access version of the game slated for release later in 2024. Players will have the opportunity to engage with the game firsthand and provide feedback.

In addition to Bitkraft Ventures and Hashed, other notable participants in the funding round include Coinbase Ventures, Spartan Capital, Foresight Ventures, LiquidX, and Momentum6. This diverse investor support underscores the strong confidence in Avalon’s vision and potential.

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itcoin mining stocks are witnessing a significant downturn in anticipation of the impending halving event. Marathon Digital Holdings, Riot Platforms, and CleanSpark have all seen consecutive declines in their stock values over the past three days. Marathon Digital Holdings, the leading public Bitcoin miner, has experienced a notable 25% decrease in stock value over the last month, while Riot Platforms has seen a nearly 30% drop. Moreover, the Valkyrie Bitcoin Miners exchange-traded fund has registered a decline of approximately 28% in its value this month.

This downward trend in stock prices persists amidst growing short interest in cryptocurrency mining stocks and geopolitical tensions arising from recent conflicts between Iran and Israel. These factors have prompted investors to seek refuge in safer assets. However, despite these challenges, CEOs of leading mining companies express optimism, as reported by Bloomberg. They point to the cost-efficient nature of their operations, utilization of advanced mining technology, and the escalating demand for cryptocurrencies as potential mitigating factors against the anticipated $10 billion annual revenue loss due to the upcoming Bitcoin halving.

Furthermore, these companies are banking on the surge in demand fueled by the introduction of new spot ETFs to buoy Bitcoin’s price and counteract the negative impacts of the halving. Traditional asset management firms introduced these ETFs in January, and they have since attracted a cumulative net inflow of $12.4 billion. With these factors in mind, despite the current challenges, Bitcoin mining companies remain cautiously optimistic about their future prospects.

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Early afternoon on April 15, 2024, Wu Blockchain cited announcements from relevant parties stating that Hong Kong authorities had preliminarily approved applications to launch spot Bitcoin and Ethereum ETFs.

Announcements from the official WeChat accounts of China Asset Management, Bosera Capital, HashKey Capital, and Harvest Global Investments all confirmed that their ETFs had been approved.

According to preliminary calculations, there are currently four approved entities. This information aligns with the “rumors” from the previous week, indicating that Hong Kong might approve a Bitcoin spot ETF the following week.

Thanks to this positive information, the prices of Bitcoin and Ethereum are showing strong recovery after two days of steep decline over the weekend.

1h chart of ETH/USDT pair on Binance on April 15, 2024

BTC is currently fluctuating around $66,300, slightly up after a flash crash to as low as $60,600 on April 14.

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KPMG’s recent study reveals a surge in cryptocurrency investments among German investors as the Bitcoin halving event approaches.

Amidst a challenging year for the crypto sector, the report highlights a newfound enthusiasm just ahead of the anticipated mid-April 2024 halving event. Surveying approximately 2,400 private crypto investors in Germany, Austria, and Switzerland, the study unveils shifting investment patterns in the DACH region.

With 54% of respondents allocating more than 20% of their investments to digital assets, the study underscores a notable uptick in crypto investment. A dedicated segment of investors, committing over half of their assets to cryptocurrencies, signals a long-term commitment to the industry.

Moreover, there’s a discernible shift towards cautious investment strategies, with newcomers conducting thorough evaluations before investing. This trend emphasizes the need for crypto service providers to streamline efforts in converting interest into active investments.

Security remains paramount, with 82% of investors prioritizing it when selecting crypto exchanges. Factors such as deposit and withdrawal options and transaction costs also influence investment decisions.

While 34% perceive their crypto investments as relatively safe, concerns persist regarding market manipulation, regulatory changes, and financial crime.

Bitcoin remains the preferred choice for 91% of respondents, closely followed by Ethereum at 78%. Solana has witnessed a 9% increase in investor interest, solidifying its position among the top digital assets in the region.

In the broader market, the approval of Bitcoin spot ETFs by the U.S. Securities and Exchange Commission has attracted significant capital inflows, totaling $56.2 billion since inception. However, spot Bitcoin ETFs experienced a net outflow of $55 million on April 12, signaling profit-taking ahead of the halving event.

Analysts anticipate a reinvestment post-halving, as the event historically precedes a bull market, fueling expectations of heightened demand amid the sector’s continued expansion.

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Bitcoin Miners Face Potential $10 Billion Loss Ahead of Halving Event, Amidst Rising Competition from AI Companies.

Reports from U.Today indicate that Bitcoin miners may be on the verge of encountering losses surpassing $10 billion with the looming halving event, set to unfold in less than five days. The immediate fallout entails a reduction in mining rewards from 6.25 BTC to a mere 3.125 BTC per block. This impending halving is poised to inflict severe blows, particularly on mining entities burdened with higher-than-average operational expenses.

Traditionally, miners have weathered the storm of diminished block rewards, buoyed by subsequent bullish market surges post-halving. Historical data analyzed by Chainalysis reveals a pattern of miners bolstering their cash reserves leading up to the first two halvings in 2012 and 2016. However, this trend did not manifest preceding the third halving in 2020. Drawing from past mining cycles, miners opted to delay liquidating their reserves, foreseeing an uptick in Bitcoin’s valuation.

In the current landscape, although the aggregate balance of mining pools has dipped by over 20%, the contraction is notably less pronounced compared to preceding halvings. The recent attainment of a new all-time high in Bitcoin’s price on the cusp of the halving has somewhat alleviated concerns, enabling miners to cautiously offload certain holdings in preparation for the halving’s substantial impact.

Beyond the specter of the Bitcoin halving, miners find themselves grappling with escalating competition from artificial intelligence (AI) enterprises. Adam Sullivan, CEO of Core Scientific, underscores the tightening grip on power resources in the United States, characterizing it as “extraordinarily constrained.” Notably, tech behemoths such as Amazon are poised to inject hefty investments into data center infrastructure, intensifying the struggle for miners to secure lucrative, low-cost power contracts.

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Bitrace’s technical experts have carried out a training on cryptocurrencies for Hong Kong’s Cyber Security and Technology Crime Bureau (CSTCB) and Commercial Crime Bureau (CCB).

With increasing cryptocurrency-related crimes in Hong Kong, Bitrace has ramped up its efforts to tackle the problem.

The prominent data analysis company has reportedly conducted training sessions on on-chain fund tracking for members of the Hong Kong Police Force.

The latest initiative is part of the company’s Corporate Social Responsibility efforts that aim to improve law enforcement’s understanding of blockchain technology, particularly in light of Hong Kong’s growing prominence in the cryptocurrency hub.

According to the blog post, these training sessions were specifically organized for the Cyber Security and Technology Crime Bureau (CSTCB) and Commercial Crime Bureau (CCB) which involved sharing of insights and methods for investigating cryptocurrency-related crimes.

Bitrace’s technical experts also demonstrated the usage and circulation methods of digital asset funds in activities such as online gambling, illicit trades, money laundering, and fraud.

Commenting on the development, Bitrace CEO, Isabel SHI said,

“It’s a real honor to talk with the police officers from Hong Kong. Improved legislation and enhanced prevention of crypto crimes will better promote the development of Web3.”

Crypto Crimes in Hong Kong

In the last three years, Hong Kong has witnessed a significant rise in cryptocurrency-related crimes. In fact, reported cases have surged from 1,397 to 3,415, with corresponding amounts of HKD 824 million to HKD 4.398 billion. This figure almost tripled during the period in question.

Since last September, Hong Kong’s Securities and Futures Commission (SFC) has heightened its efforts in information disclosure, according to a recent report.

These efforts entail extensive publication of information with regard to virtual asset trading platforms, such as a list of suspicious virtual asset trading platforms. The move aligns with the broader objective of offering transparent and timely information to the public.

Meanwhile, Hong Kong is currently on the verge of approving spot Bitcoin ETFs in the region. The SFC updated its virtual asset management fund company list on April 10 which features the addition of Harvest International Asset Management Company and China Asset Management (Hong Kong) Co., Ltd., two major mainland public fund companies.

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According to Uwakwe, the head of Nigeria’s crypto intercommunity working group, investors worry about potential repercussions similar to Binance’s fate when investing in local Web3 companies.

Nigeria Crypto

Nigeria is feeling the consequences of actions against Binance executives, with investors withdrawing from deals and partnerships, particularly in the web3 sector. They mention Nigeria’s perceived lack of safety for business and government hostility, citing the Binance case as evidence, according to Lucky Uwakwe, the chairman of Nigeria’s Blockchain Industry Coordinating Committee (BICCoN).

In an interview with Cointelegraph, Uwakwe, head of Nigeria’s intercommunity working group involving Blockchain Nigeria User Group (BNUG), Cryptography Development Initiative of Nigeria (CDIN), and Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), expressed investors’ concerns.

According to Uwakwe, investors worry about potential repercussions similar to Binance’s fate when investing in local Web3 companies. He pointed out that already invested parties are gradually divesting.

Binance executives Tigran Gambaryan and Nadeem Anjarwalla came to Nigeria in February following claims that the exchange manipulated the country’s fiat currency, the naira. The executives were detained and slammed with five counts bordering on money laundering after a meeting with the Nigerian government over Binance’s regulatory woes.

Uwakwe stated that the government’s approach to the Binance issue is adversely impacting the entire nation. By pursuing fines against Binance, the government is essentially undermining the entire industry, sacrificing potential growth for short-term measures.

When asked about the possibility of the current trial resulting in an acquittal for the Binance executives, Uwakwe expressed skepticism. He believes the executives face slim chances of acquittal unless certain conditions are met internally by the company, according to the government’s perspective. He said,

The chances are probably 90-10, 90 for the government,10 for the Binance executives in question…

Uwakwe emphasized that even in the event of the Binance executive’s acquittal by the judge, there’s a strong possibility that the Nigerian government may disregard the court ruling. This pattern has been observed before, especially in cases perceived to threaten the country’s stability.

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