Late last week, a Nevada federal court entered a default judgment against David Saffron, an Australian citizen residing in the U.S., and Circle Society, his Nevada corporation, for running a cryptocurrency Ponzi scheme. The case was brought by the Commodity Futures Trading Commission, which alleged that Saffron fraudulently solicited and accepted over $15 million of bitcoin and U.S. dollars from at least 179 individuals by falsely promising to invest the funds and generate guaranteed returns of up to 300 percent. Rather than using the funds as promised, the defendants allegedly misappropriated the funds, including by holding them in Saffron's personal wallet and using some to pay out redeeming investors.
A former CIA director published an analysis last week of bitcoin's use in illegal activities. The paper concludes that generalizations on the use of bitcoin in illicit finance are "significantly overstated" and cites a recent study by blockchain analytics firm Chainalysis stating that illicit activity among all cryptocurrencies was less than 1 percent of total cryptocurrency activity between 2017 and 2020. According to the paper, most of this activity consisted of "simple" scams and purchases on the dark web. For bitcoin specifically, the paper notes that illicit activity makes up less than 0.5 percent of total transaction volume. The paper also notes that blockchain ledger technology is underutilized by law enforcement and can become a highly effective crime-fighting and intelligence-gathering tool.
According to reports this week, long-dormant bitcoin stolen in the 2016 hack of cryptocurrency exchange Bitfinex were seen on the move. There were 63 transactions in all, totaling over $620 million, with the largest transaction worth over $78 million. Some of the transfers were between wallets associated with the hack, although many were to newly created wallets. Efforts to identify the hacker are ongoing.
For more information, please refer to the following links:
- Federal Court Orders Nevada Company and its Owner to Pay More Than $32 Million for Cryptocurrency Fraud and Misappropriation Scheme
- An Analysis of Bitcoin's Use in Illicit Finance
- Over 10,000 blacklisted BTC from 2016 Bitfinex hack on the move
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