At least $2.8 billion worth of bitcoin from illicit transactions was laundered through cryptocurrency exchanges in 2019, according to a well-known cryptocurrency analytics firm. According to the report, two of the world's largest exchanges processed more than 50% of the illicit transactions. The analytics firm notes that such activity is likely facilitated by certain over-the-counter brokers it labels the "Rogue 100," which have been identified by the firm as having received large amounts of illicit cryptocurrency funds. In the most recent example of money laundering through cryptocurrencies, this week in California, a 28-year-old man pleaded guilty in relation to his use of cryptocurrency to import illicit substances through a now-defunct dark market, the Silk Road.
The Securities and Exchange Commission (SEC) issued an alert this week, suggesting investors exercise caution before investing in Initial Exchange Offerings (IEOs), a so-called innovation on Initial Coin Offerings (ICOs), both of which offer digital assets in exchange for capital. According to the alert, IEOs are usually unregistered offerings that are conducted and promoted by entities improperly characterized as "exchanges" without proper vetting, making them risky consumer investments.
Digital asset startup incubator ICOBox stands accused of violating U.S. securities laws, with the SEC asking a federal judge this week to enter a default judgment against the company after it failed to respond to the allegations in court. Alleged violations include raising $14.6 million during an unlawful ICO and assisting more than 30 companies in raising a total of $650 million in unregistered securities.
Federal lawmakers last week wrote a letter to the Chairman of the Federal Communications Commission (FCC), Ajit Pai, urging the FCC to take swift action to protect consumers against subscriber identification module (SIM) swapping by requiring wireless carriers to implement protocols that protect consumers. SIM swapping occurs when a hacker gains access to a victim's mobile account, which often allows the hacker to steal account login credentials and steal funds. According to the letter, 728 SIM-swap complaints were filed in 2019, up from just 25 in 2016. Recent reports note that millions of dollars in cryptocurrency funds have been stolen in SIM-swapping attacks.
For more information, please refer to the following links:
- SEC Seeks $16M From No-Show Crypto Startup Incubator
- Initial Exchange Offerings (IEOs) – Investor Alert
- US Lawmakers Call on Communications Regulator to Tackle SIM-Swapping Crime
- Congress Letter to FCC re: SIM Swapping
- El Dorado County Man Pleads Guilty to Distributing a Designer Drug from the Dark Web that Caused the Death of a Minor
- How shadowy brokers allegedly launder billions for crypto criminals
- Money Laundering in Cryptocurrency: How Criminals Moved Billions in 2019
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