Last week, operators of a Romanian criminal enterprise named the "Bayrob Group" were convicted of cybertheft crimes resulting in $4 million in losses to victims. The unlawful operation began in 2007 and involved viral distribution of malicious software via phishing emails. The malware harvested personal data and diverted processing power for cryptocurrency mining.
This week, U.S. law enforcement arrested four men for wire fraud and conspiracy to offer and sell unregistered securities in a purported cryptocurrency mining pool operation. Victims were lured into the investment scheme through promises of high returns from participation and investment in the scheme. No returns materialized, and the fraudsters swindled would-be investors out of more than $722 million.
Also this week, the Securities and Exchange Commission (SEC) charged a digital-asset entrepreneur and his company with defrauding investors through an initial coin offering (ICO) that solicited more than $42 million from investors in violation of the securities laws. The company, Shopin, allegedly failed to create the retail blockchain platform it hocked to investors. According to the SEC's complaint, Shopin fraudulently claimed partnerships with major retailers and a prominent cryptocurrency entrepreneur to make its business model more attractive to the public while the company's founder misappropriated at least $500,000 for his own use.
Overseas, Ugandan Police cracked down on cryptocurrency-related Ponzi schemes this week, with the arrest of one of the directors of a sham cryptocurrency company. The Ugandan government believes the company has defrauded victims out of at least $2.7 million. Meanwhile, Denmark's tax agency has reportedly begun sending letters to cryptocurrency investors requiring them to reply to a detailed questionnaire that seeks to understand profits and losses from cryptocurrency investments for fiscal years 2016 to 2018. This follows authorization by the country's Tax Council earlier this year to investigate trades across the nation's domestic cryptocurrency exchanges.
And finally, some good news for victims of the Cryptopia hack – the New Zealand exchange that in January 2019 was "hacked to death" – who received a breakdown of retrieved assets from the accounting firm in charge of liquidating the assets of the bankrupt exchange. However, distribution of assets to victim investors may be a long time coming, because the exchange pooled all investments on the platform into general wallets, making it difficult to find out how much of which assets customers held on Cryptopia.
For more information, please refer to the following links:
- SEC Charges Founder, Digital-Asset Issuer With Fraudulent ICO
- Three Men Arrested in $722 Million Cryptocurrency Fraud Scheme
- TWO MEMBERS OF THE ROMANIAN CYBERCRIMINAL ENTERPRISE BAYROB GROUP SENTENCED ON 21 COUNTS RELATING TO INFECTING OVER 400,000 VICTIM COMPUTERS WITH MALWARE AND STEALING AT LEAST $4 MILLION
- Ugandan Police Hold Director of Alleged $2.7M Crypto Ponzi Scheme
- Cryptopia's Liquidator Claws Back $7.2M, But Identifying Crypto Ownership a 'Mammoth Task'
- Report: Denmark's Tax Agency Is Sending Tax Compliance Letters to Crypto Users
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