U.S. House Financial Services Committee Chairman Patrick McHenry has slammed both the U.S. Securities and Exchange Commission (SEC) and Chair Gary Gensler regarding the SEC’s investigation into ethereum, suggesting that ether might be classified as a security. Additionally, the lawmaker emphasized that Gensler intentionally misled Congress on the issue. ‘Chair Gensler Himself Misled Congress’ The […]
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SEC Launched Formal Investigation Into Ethereum’s Security Status Over a Year Ago, New Court Filing Shows
A new court filing claims that the U.S. Securities and Exchange Commission (SEC), led by Chair Gary Gensler, initiated a formal investigation into ethereum’s potential classification as a security more than a year ago. SEC Enforcement Division Director Gurbir Grewal approved a formal investigative order in March last year to scrutinize potential securities transactions involving […]
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South Korea Launches Investigation Into Worldcoin’s Data Collection Practices
The government of South Korea has opened an investigation into Worldcoin, the iris scanning cryptocurrency and digital wallet project. According to a press release, the Personal Information Protection Commission, the data privacy watchdog in the country, will investigate the actions taken by Worldcoin regarding the treatment of the data collected from users and will take […]
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Legal Action Forces US Energy Department to Suspend Crypto Mining Investigation
Following legal action initiated by Riot Platforms and the Texas Blockchain Council against the U.S. Department of Energy (DOE), the department’s statistical branch, the Energy Information Administration (EIA), has put a temporary hold on its bitcoin mining survey and quarantined the data gathered to date. DOE Puts Bitcoin Mining Inquiry on Hold Amid Legal Challenges […]
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Binance Freezes $4.2 Million in Stolen XRP; Ripple Investigation Aided by XRP Ledger Foundation
After the unauthorized access of Ripple co-founder Chris Larsen’s personal holdings, Binance CEO Richard Teng revealed that the platform had successfully “managed to freeze .2 million” of the compromised assets. Teng elaborated that Binance is committed to “support[ing] Ripple in their investigations,” indicating ongoing collaboration.
New Binance CEO Discusses Freezing .2 Million Worth of Larsen’s Crypto
Last Wednesday, Ripple’s co-founder and executive chairman, Chris Larsen, reported “unauthorized access” to several of his personal XRP accounts. Larsen disclosed this in response to a post from onchain analyst Zachxbt, who noticed the token movement.
It’s estimated that 213 million XRP, worth 2 million, were transferred out of Larsen’s personal holdings. In the wake of this security breach, Binance’s newly appointed CEO, Richard Teng, announced that his platform succeeded in freezing a portion of the stolen funds.
“After finding out early on about the exploit that occurred at Ripple, we’re happy to say that the Binance team has managed to freeze .2 Million worth of XRP stolen by the exploiter,” Teng detailed. “We appreciate both the [community] efforts in flagging it to exchanges – as always [Zachxbt] did a great job – and the Ripple team’s work in collaborating with us.”
The Binance chief executive added:
We will continue to support Ripple in their investigations and their efforts to retrieve back the funds, including closely monitoring the majority of funds still in the exploiter’s external wallets in case they deposit to Binance.
Thomas Silkjær, the head of analytics and compliance at the XRP Ledger Foundation, swiftly acknowledged Teng’s X post and expressed his gratitude for Teng’s prompt and responsible actions. “This tweet is a bit ambiguous,” Silkjær added. “The compromised accounts are personal accounts of [Chris Larsen] – not an exploit at [Ripple]. The initial investigation was done by [XRP Ledger Foundation] and initiated as it was happening – not carelessly published on social media the day after like [Zachxbt].”
The XRP Ledger Foundation member continued:
Ripple is now leading the investigation (for Chris), after we did a complete handover of data.
Following this, Silkjær proceeded to share a post authored by Larsen, in which Larsen categorized the situation as “an isolated incident.” In Larsen’s post, the Ripple executive extended his gratitude to Silkjær and the XRP Ledger Foundation. When a concerned individual suggested that Larsen should have made the announcement 12 hours earlier, Silkjær, the lead for analytics and compliance at the foundation, emphasized the importance of caution in such matters.
“It is reckless to publish information during an attack as it might influence the methodology of the attackers,” Silkjær responded. “There are good reasons to not go public with anything right away.”
What do you think about the Ripple exec’s xrp stash being pilfered and the mystery behind this case? Let us know what you think about this subject in the comments section below.
Hong Kong Worldcoin Offices Visited Amid Privacy Investigation
The offices of the Worldcoin project, a biometric scanning and wallet initiative, have been visited by authorities in Hong Kong amidst a broad privacy investigation. The authorities, complying with a court warrant, advised the general audience to protect their sensitive data carefully and avoid casually providing their biometric information to third parties.
Worldcoin Under Investigation by Hong Kong Authorities
Worldcoin is facing increased scrutiny on its operations in Hong Kong. Local sources reported that on January 31, privacy authorities visited six Worldcoin offices in the city, located in Yau Ma Tei, Kwun Tong, Wan Chai, Cyberport, Central, and Causeway Bay, to conduct investigations on the project operations.
The authorities, part of the Office of the Privacy Commissioner, had a court warrant to enter these premises and seize documents related to the usage of the data collected by Worldcoin. To receive a bonus of 25 WLD, Worldcoin’s token, users have to scan their eyes using an optical device called the Orb, which collects the data and proves the “personhood” of each verified user.
The collection of sensitive and personal data prompted this investigation, as the Office of the Privacy Commissioner believes it might violate some provisions of the city’s privacy ordinance.
In its FAQ page, Worldcoin stresses that, by default, the Orb “promptly deletes iris images after the creation of the iris code,” which is a digital representation of the iris of each user. Nonetheless, users can opt-in to store their biometric data in Worldcoin’s distributed servers.
Chung Liling, Hong Kong’s privacy commissioner for personal data, stated that the general public should be more vigilant about its biometric data and should also avoid giving it casually to third parties.
This is not the first nation where Worldcoin has faced opposition due to its intrusive data collection practices, as it has also been investigated in Argentina, France, and Kenya, where authorities attempted to detain its representatives.
Worldcoin has over 3.2 million signups, with over 180,000 accounts created in the last seven days.
What do you think about Hong Kong’s investigation of Worldcoin? Tell us in the comments section below.
FTX Under New Scrutiny: Appellate Court Orders Independent Investigation
An independent examiner was initially barred from delving into the FTX bankruptcy case. However, the Third Circuit Court of Appeals in Philadelphia has recently overturned this decision, mandating that the defunct crypto exchange undergo an investigation by an external party. This ruling points out that such an inquiry may intensify oversight and inform prospective investors about the inner workings of these types of operations.
Court Mandates External Probe into FTX, Highlighting Potential Crypto Market Risks
The U.S. government has expressed a strong desire for an independent examination of the FTX debacle. When U.S. trustee Andrew Vara, overseeing the case, requested a third-party investigation, Judge John Dorsey rejected the plea. Consequently, the government escalated the matter to the Appellate Court, seeking to reverse this decision. Ultimately, the trustee’s efforts proved successful, achieving the sought-after objective.
The Third Circuit Court of Appeals in Philadelphia, in a verdict announced on Friday, now requires a court-appointed independent examiner to scrutinize the business and bankruptcy issues, ensuring that this party holds no ties with the debtors. The ruling raises concerns about FTX Group’s development of FTT and the manner in which FTX, along with its quantitative trading desk, Alameda Research, escalated the value of the exchange token.
This situation might signal “potential investors to undisclosed credit risks in other cryptocurrency companies,” as detailed in the decision of the Philadelphia Appellate Court.
Vara initially suggested the court-appointed independent examiner a month following FTX’s bankruptcy filing. Yet, John Ray III, the current CEO and restructuring leader of FTX, resisted this proposal. In February 2023, Judge Dorsey aligned with the debtors, rejecting the idea of a third-party examination.
The decision from the Philadelphia court indicates that an investigation conducted solely by the estate and its attorneys falls short of adequacy. This latest directive might hinder the estate’s current reorganization strategy, which intended to compensate customers based on the value of their crypto assets as of Nov. 11, 2022.
What do you think about the judge deciding that an independant examiner is needed for the FTX bankruptcy case? Share your thoughts and opinions about this subject in the comments section below.
Tether Freezes $225 Million in USDT After DOJ Investigation, Calling It ‘Largest-Ever Freeze of USDT’
Tether has announced the “largest-ever freeze of USDT in history.” In collaboration with crypto exchange Okx, Tether froze 5 million in USDT following an investigation by the U.S. Department of Justice (DOJ). The tokens were allegedly linked to an international human trafficking syndicate in Southeast Asia responsible for a global “pig butchering” crypto scam.
5M in USDT Frozen by Tether
Leading stablecoin issuer Tether and crypto exchange Okx announced Monday that they have collaborated with the U.S. Department of Justice (DOJ) “in an investigation that led to Tether proactively and voluntarily freezing approximately 225 million in USDT tokens in external self-custodied wallets.” The wallets are “linked to an international human trafficking syndicate in Southeast Asia responsible for a global ‘pig butchering’ romance scam,” the crypto companies detailed, adding:
The joint investigation was conducted using tools from blockchain analysis firm Chainalysis, and the action by Tether represents the largest-ever freeze of USDT in history.
After months of investigation, Tether, Okx, and law enforcement agencies, including the U.S. DOJ, identified the locations of the illicit funds, the announcement explains, noting: “These actions prompted the initiation of a freeze request by the United States Secret Service and a voluntary freeze by Tether.”
According to an analysis by Lookonchain, Tether froze 37 wallets linked to a human trafficking group on Monday. These wallets had been moving USDT to crypto exchange Okx.
Tether froze ~225M $USDT (37 wallets) linked to a human trafficking group 1 hour ago.
These wallets had been moving $USDT before being frozen, with most of the $USDT being transferred to #OKX.
Check frozen TX here.https://t.co/TlfFJvpgiW pic.twitter.com/vEMTd3YzBq
— Lookonchain (@lookonchain) November 20, 2023
Tether claimed: “The frozen wallets are on the secondary market and are not associated with Tether’s customers.” The crypto firm emphasized: “To the extent lawful wallets were captured by this operation, Tether will work quickly with law enforcement and the owners of those wallets to unfreeze them, as appropriate.” In October, Tether froze 32 addresses linked to suspicious operations in Israel and Ukraine.
Pig butchering crypto scams have been on the rise globally. The Federal Bureau of Investigation (FBI) has repeatedly warned about these scams. In August last year, U.S. authorities said that this type of scam is becoming alarmingly popular. In April this year, the U.S. Department of Justice seized cryptocurrency worth 2 million in a pig butchering scam crackdown. Last week, the Internal Revenue Service (IRS) warned that U.S. taxpayers are currently the most targeted population for pig butchering schemes.
What do you think about Tether freezing 225 million USDT allegedly involved in “pig butchering” crypto scams? Let us know in the comments section below.
OCCRP Investigation Alleges Bukele Embezzled $200 Million for Bitcoin Projects in El Salvador
An investigation led by the Organized Crime and Corruption Reporting Project (OCCRP) alleges that Nayib Bukele, President of El Salvador, deviated hundreds of millions of dollars granted by the Central American Bank for Economic Integration (CABEI) to develop the project of making bitcoin legal tender.
OCCRP States Nayib Bukele Embezzled Funds to Make Bitcoin Legal Tender in El Salvador
The Organized Crime and Corruption Reporting Project (OCCRP) recently revealed an investigation that determined Nayib Bukele, President of El Salvador, embezzled funds to complete Bitcoin-related projects in the country. The report, published on October 31, states that the government used resources provided by the Central American Bank for Economic Integration (CABEI) as a loan to fund part of the process of making bitcoin legal tender in the nation.
The loan, which was provided by CABEI back in 2021, was directed to alleviate the economic problems of the nation, strengthening financing of small and medium enterprises (SMEs) during the Covid-19 pandemic. According to the investigation, of the 0 million lent, only a fraction — million — was used for its intended purposes.
Instead, budget documents allegedly reviewed by OCCRP associates in the country show that 5 million was directed to fulfill “general state obligations.”
The Bitcoin Connection
But the investigation goes even further. The OCCRP found that out of these 5 million, more than 0 million were directed to help make bitcoin legal tender in El Salvador.
At that time, CABEI announced its public support for the Bitcoin project. In June 2021, CABEI’s president Dante Mossi explained the institution would help the country in this process.
Mossi had stated:
This is great news for the region. We are very proud to be the first to receive the request from the Government of El Salvador in this transformative process that is making history again today, by being the first country to adopt bitcoin as an official currency.
Nonetheless, the terms of the 0 million loan prohibited the country from using these resources to fund Bitcoin-related activities, given that earlier studies had estimated El Salvador would have to make extensive legal and regulatory reforms and that these would need extensive funding.
Mossi explained:
Basically, it says there’s a covenant in El Salvador, that no money from CABEI could be used to fund any Bitcoin activity. So we don’t, we don’t fund that.
The “bitcoinization” process of El Salvador is also facing several complaints made by Cristosal, a nonprofit organization. In November 2022, Cristosal filed three legal actions against the Salvadoran government related to the management of funds that Bukele used to purchase bitcoin, the construction of the Chivo national network of Bitcoin ATMs, and the alleged identity theft of more than 200 citizens using the Chivo network.
What do you think about the recently published OCCRP report? Tell us in the comments section below.
Binance And Tether Accused By Lawmakers: DOJ Investigation Requested For Illicit Finance
In a recent development, US lawmakers have urged the US Department of Justice (DOJ) to initiate a criminal investigation into cryptocurrency exchange Binance (BNB) and stablecoin issuer Tether (USDT).
The lawmakers, led by Senator Cynthia Lummis, reference a controversial Wall Street Journal (WSJ) report that alleges Hamas and its affiliate raised significant funds through cryptocurrencies.
Binance And Tether Face Calls For Criminal Charges
In a joint letter signed by Senator Lummis and Representative French Hill, the lawmakers express deep concern over reports indicating that “unregulated crypto intermediaries” outside the United States have allegedly facilitated illicit financial activities, including financing terrorism, such as Hamas’s attacks on Israel.
Lummis and Hill urged the DOJ to promptly reach a charging decision regarding Binance, considering the extent of its involvement, and to conclude the ongoing investigation into Tether’s alleged illicit activities.
The lawmakers refer to the WSJ report of October 10, 2023, which disclosed that Hamas, Palestinian Islamic Jihad, and Hezbollah had received cryptocurrency funding since August 2021. They stress the DOJ’s need to hold any entities facilitating illicit activities accountable. The letter further reads:
We believe that it’s imperative that the Department of Justice hold bad actors accountable if they are shown to facilitate illicit activity. Binance, notably, is an unregulated crypto asset exchange based in the Seychelles and Cayman Islands. Binance has historically been linked to illicit activity and is purportedly the subject of a current Department of Justice investigation.
On the other hand, Tether faced a fine by the Commodity Futures Trading Commission (CFTC) in 2021 for issues related to backing its stablecoin USDT.
The lawmakers urged the DOJ to thoroughly assess whether Binance and Tether have provided material support and resources for terrorism by violating applicable sanctions laws and the Bank Secrecy Act. Lummis and Hill emphasize the importance of swift action to cut off funding sources for terrorists targeting Israel.
Tether Counters Allegations
In response to Senator Lummis and Rep. Hill’s claims, Tether issued a statement addressing the “misinformation” surrounding the potential misuse of cryptocurrencies.
Tether references independent investigations by Chainalysis and Elliptic, which found significant errors and faulty attribution techniques in reports, including the WSJ’s article.
Tether emphasizes its commitment to regulatory compliance, due diligence, and global collaboration with law enforcement agencies. They highlight their track record of freezing assets tied to illicit activities and assert no evidence of sanctions law or Bank Secrecy Act violations.
Tether further notes the inherent transparency of blockchain technology and the proactive measures taken by virtual asset service providers to monitor and report potentially illicit activities.
They reaffirm their dedication to transparency, compliance, and collaboration with authorities, inviting constructive dialogue and cooperation.
As the call for a DOJ investigation unfolds, the cryptocurrency community awaits further developments and the potential impact on Binance and Tether’s operations.
As of this writing, BNB is trading at 1, representing a decrease of 0.9% within the last 24 hours. However, it is worth noting that the token has experienced significant gains over the past seven and thirty days, amounting to 5.3% and 4.9%, respectively.
Featured image from Shutterstock, chart from TradingView.com