A Los Angeles man has pleaded guilty in a new Bitcoin laundering scheme which took away $25 million in Bitcoin (BTC) by selling methamphetamine and laundering money through cryptocurrency.
According to the news outlet US News, Kunai Kaira is the man that has pleaded guilty to charges including money laundering and distributing methamphetamine. The 25 year old man is facing a life sentence in prison because of the Bitcoin laundering scheme.
As many best cryptocurrency news sites reported, from 2015 to 2017, Kaira exchanged BTC and dollars, ran a Bitcoin ATM as well as admitted to making deals with drug dealers and other criminals.
Kaira sold two pounds of meth to an undercover law enforcement agent. As the report outlined, he also faces money laundering charges in Texas – filed earlier this month. The latest cryptocurrency news have also brought a new case to attention where the United States Department of the Treasury is featured for adding multiple cryptocurrency addresses to its Specially Designed Nationals (SDN) list under the Foreign Narcotics Kingpin Designation Act – known as the Kingpin Act.
So, it is safe to say that this is not the first or last Bitcoin laundering scheme. In July this year, the Treasury Secretary Steven Mnuchin said that the authority will work to prevent Bitcoin from becoming an “equivalent of Swiss-numbered bank accounts.” As the Secretary Mnuchin noted, the government is always looking to combat “bad actors in the U.S. dollar every day to protect the U.S. financial system.”
As HG defines it, the Bitcoin laundering is basically a process where Bitcoin is being used to finance illicit activities. Because of the nature of the coin and its anonymity, it is seen as a felony.
“For over a decade, the Treasury Department has required money transmitters to register with FinCEN, enact controls to prevent Bitcoin laundering, report suspicious financial activity, and obtain state licenses. These measures are mandated by the Bank Secrecy Act, a federal law that serves as the main anti-money laundering statute. There are also a number of other federal laws that ban unlicensed money transmitters,” the source claims.
Despite the fact that proponents argue that BTC should remain unregulated, cases like these keep emerging and it is important to take all factors into consideration.
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“This is a problem that is a little too complicated to be explained in a single sentence, the time span is also large, and the two story development lines are advancing and affecting each other at the same time, leading to the final outcome.”The Chinese exchange Fcoin is now in the cryptonews. After its launch in May, the reported trading volumes became some of the biggest in the world overnight thanks to a new business model called "transaction mining." Later on, one Reddit user reported that this volume was actually fake - which is when the problems started. The exchange was later on described as a scam by many and the suspicions about its business model turned out true. There was no airdrop nor ICO at launch and the Chinese exchange Fcoin distributed 51% of its native tokens to users for reimbursing transaction fees. The CEO of Binance, Changpeng Zhao, has publicly called FCoin a Ponzi scheme since the middle of 2018, commenting on Zhang's post in a tweet which read:
“I rarely called out anyone, with exceptions. On Chinese social media, I called FCoin a pyramid scheme in mid-2018. Their founder calls his own plan a "better invention than #Bitcoin". That did it for me. Who would say such a thing? About themselves? Except scammers.”https://twitter.com/cz_binance/status/1229446449152348161 To this, Zhang replied saying that there have been some errors which the Chinese exchange FCoin detected - but did not explain why it failed to address such problems before it is too late.
‘With the deepening of the investigation, we found a large number of existing data problems of dividends and mining returns, and these problems have existed for many days. As a result, a large number of users have already been through operations such as buying and selling various currencies and withdrawing cash, causing the pollution of assets.”The platform was suspended a few days ago by its own account for risk control, which caused a lot of speculation that the project was shutting down and the operators are vanishing. In the last few sentences on his blog post, however, Zhang said that he will do everything to give back the money to users via email personally - and compensate FCoin user losses with the profits he would make from other projects.
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‘’Unfortunately, we have to notify you with the fact that our exchange was hacked during the night and almost all funds from BTC, ETH, ARRR and VRSC were stolen. A small part of the funds are safe on cold wallets.’’From the announcement, it seems that Altbits had almost all of the funds on the hot wallets despite their major vulnerability to malicious cyber intrusions. The Italian crypto exchange will provide a full report on the lost funds soon and we will be able to see exactly how big of damage the theft made. In the follow-up tweets of the exchange, however, can be seen that the hackers stole 1,066 Komodo tokens and 283,375 Verus coins. This combined the value of both stolen cryptos stands at about $27,000. At press time, Altsbit had a 24-hour trading volume of $14.8 million with 98% of its trading activity coming from the ARRR/BTC pair which is the native token of the pirate Chain. Reacting to the news of the hack, some of the supporters of decentralized exchanges noted the vulnerabilities of the platforms that are centralized. However, centralized platforms still command the grater trading volume as the DEX services have a notoriously hard way of navigating the user interfaces. As for the security situation with centralized crypto exchange platforms, the 2020 crypto crime reports by Chainlink show that the exchanges seem to be better equipped to deal with the hackers. Despite the increase in the number of hack attacks, the blockchain analysis firm explained that the total amount of stolen funds in the hacks declined dramatically from the previous year. One of the important strategies that exchanges use is to limit their hot wallet holdings and this will show any inside involvement since the hackers are less sable to drain the vast crypto sums from vulnerable hot wallets. The North Korean hack group Lazarus, is suspected of being behind most of the crypto exchanges in the Asian Pacific and now it seems that it is changing its attack vectors. The group utilizes phishing malware on popular messaging platforms such as Telegram.
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