On Friday, Zack Guzmán, founder of Coinage Media, announced that Terraform Labs’ co-founder Do Kwon and his startup were deemed responsible for fraudulent activities in its legal battle against the U.S. Securities and Exchange Commission (SEC). The lawsuit spanned approximately two weeks. The trial culminated in the jury’s decision in a federal courtroom subsequent to […]
Bitcoin News
SEC Chair Gary Gensler Insists Crypto Field Is ‘Rife With Abuses and Fraud’
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has reiterated that the crypto industry is filled with instances of abuse and fraud, citing a significant number of bankruptcies in recent years. He also cautioned investors in spot bitcoin exchange-traded funds (ETFs) that these products are based on a “highly speculative volatile underlying asset: bitcoin.” […]
Bitcoin News
Terraform Labs Founder Do Kwon Faces Extradition Delay in Montenegro Amid SEC Fraud Allegations
Do Kwon, the embattled former CEO of Terraform Labs, is currently stranded in Montenegro due to extradition delays, following accusations by the U.S. Securities and Exchange Commission (SEC) of conducting a massive fraudulent crypto scheme. Last year, the SEC charged that from April 2018 to May 2022, Terraform and Kwon’s operations resulted in at least […]
Bitcoin News
Nexo Partners With Sift for Enhanced Digital Asset Fraud Protection
The digital asset firm Nexo has announced its partnership with Sift, aiming to upgrade its fraud prevention mechanisms. The collaboration between the duo is expected to streamline and secure the user experience for Nexo’s customer base, which exceeds six million globally. Nexo to Leverage Sift’s Fraud Protection Services By integrating Sift‘s payment protection and account […]
Bitcoin News
SEC Charges American Bitcoin Academy Founder With Fraud That Cost Students $1.2 Million
The U.S. Securities and Exchange Commission (SEC) has charged the founder of American Bitcoin Academy, accusing him of running an online fraudulent crypto scheme that cost students .2 million. The defendant “falsely claimed that his investment strategies would be guided by his own ‘artificial intelligence’ and ‘machine learning’ technology which, like the fund itself, never existed.”
SEC Charges Founder of Online Crypto Fraud
The U.S. Securities and Exchange Commission (SEC) announced Friday that it has charged the founder of American Bitcoin Academy “with fraud targeting students.” Brian Sewell and his company, Rockwell Capital Management, agreed to settle fraud charges in connection with a scheme, the regulator said, adding:
The SEC alleges that the fraudulent scheme cost 15 students .2 million.
The SEC alleges that, between early 2018 and mid-2019, Sewell encouraged hundreds of his online students to invest in the Rockwell Fund, a hedge fund he promised to launch. He claimed the fund would use advanced technologies like AI and crypto-asset trading strategies to generate returns for investors.
The securities watchdog further alleges that Sewell, who formerly resided in Utah before moving to Puerto Rico, received .2 million from 15 students for the Rockwell Fund. However, he never launched the fund or implemented the promised trading strategies. Instead, he held onto the invested money in bitcoin, which he claimed was stolen when his digital wallet was hacked.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, commented: “We allege that Sewell defrauded students in his online American Bitcoin Academy of over a million dollars through a series of lies about investment opportunities in his purported crypto hedge fund.” The SEC official stressed:
Among other things, he falsely claimed that his investment strategies would be guided by his own ‘artificial intelligence’ and ‘machine learning’ technology which, like the fund itself, never existed.
The SEC’s complaint charges the defendants with violating antifraud provisions of the federal securities laws. The defendants have agreed to settle the charges and have consented to injunctive relief without admitting or denying the allegations in the complaint. “Defendant Rockwell Capital Management also agreed to pay disgorgement and prejudgment interest totaling ,602,089 and Defendant Sewell agreed to a civil penalty of 3,229. The settlement is subject to court approval,” the SEC detailed.
What do you think about the SEC charging the founder of American Bitcoin Academy? Let us know in the comments section below.
UK Police Seize 61,000 Bitcoins From Huge Chinese Investment Fraud
The U.K. Metropolitan Police have reportedly seized more than 61,000 bitcoins from a massive Chinese investment fraud. A British citizen is accused of laundering bitcoin for a Chinese fugitive who allegedly stole roughly .4 billion from more than 128,000 investors.
British Police Seize Over 61,000 Bitcoins
The U.K. Metropolitan Police have seized more than 61,000 bitcoins from a massive investment fraud in China, marking one of the largest cryptocurrency seizures globally, the Financial Times reported Tuesday.
The bitcoin seizure information was disclosed during a trial of 42-year-old Jian Wen, who is accused of laundering bitcoin for her former employer, Zhimin Qian (also known as Yadi Zhang), an alleged fugitive from China. Wen moved to the U.K. in 2007 from China and became a British citizen in 2018.
At the start of the trial at Southwark Crown Court on Monday, the prosecution informed the jury that the seized BTC originated from an investment fraud conducted by Zhang in China between 2014 and 2017. The U.K. police seized four separate devices containing more than 61,000 bitcoins from a safety deposit box and a residence shared by Wen and Zhang in 2018. The seized bitcoin was valued at nearly .8 billion in July 2021 when the police recovered the coins. It has appreciated to .6 billion, based on today’s price of ,049 per BTC.
Zhang allegedly stole .4 billion from over 128,000 investors and converted the money into BTC. Prosecutors say she entered London in 2017 using a false identity, but has since fled the U.K. and remains at large.
While pleading not guilty to involvement in the underlying fraud, Wen is accused of knowingly aiding the conversion of Zhang’s bitcoin into cash, jewelry, luxury items, and property. Gillian Jones KC, counsel for the Crown Prosecution Service, was quoted by the Financial Times as saying:
Ms. Wen had been trusted not only with copies of the passwords and passphrases to access the laptops [containing the bitcoin] but with access to where the laptops were being stored.
This week, the Saxony state police in Germany also revealed that around 50,000 bitcoins have been seized in a case they described as “the most extensive seizure of bitcoins by law enforcement authorities in the Federal Republic of Germany to date.”
What do you think about the U.K. police seizing 61,000 bitcoins from a massive fraud in China? Let us know in the comments section below.
SEC, DOJ Charge Individuals in $1.9 Billion Hyperfund Cryptocurrency Fraud
The SEC alongside the DOJ, has levied serious charges against key figures in a .9 billion cryptocurrency fraud scheme involving Hyperfund.
SEC and DOJ Crack Down on .9 Billion Hyperfund Crypto Fraud
The U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have taken major legal action against individuals involved in a massive .9 billion cryptocurrency fraud, encompassing a wide-reaching scheme known as Hyperfund, also referred to as Hyperverse, Hypertech, and Hypercapital.
The DOJ announced criminal charges against two key figures and the guilty plea of a third in what is being described as a global Ponzi scheme. Australian citizen Sam Lee, residing in Dubai, and promoters Rodney Burton of Miami and Brenda Chunga of Severna Park, Maryland, face charges related to the scheme.
Lee, 35, known as Xue Lee, is charged with conspiracy to commit securities fraud and wire fraud. Burton, 54, also known as “Bitcoin Rodney,” faces charges for operating an unlicensed money-transmitting business. Chunga, also known as Bitcoin Beautee, has pleaded guilty to conspiracy charges and has agreed to settle civil charges by the SEC.
The SEC’s civil action mirrors these allegations, focusing on the fraudulent nature of the Hyperfund scheme, which collapsed in 2022. Investors were promised substantial returns from nonexistent cryptocurrency mining operations.
The scheme, operational from June 2020 through November 2022, enticed investors with daily returns of 0.5% to 1%, purportedly through large-scale crypto mining. However, by July 2021, Hyperfund began blocking investor withdrawals.
Hyperfund reportedly had a fake CEO and amassed nearly billion fraudulently. The SEC alleges that the operation had no legitimate revenue source, using new investor deposits to pay earlier investors, a classic hallmark of a Ponzi scheme.
Lee and Chunga are accused of using investor funds for lavish personal expenses. Chunga’s alleged expenditures include designer clothing, luxury cars, and properties in Maryland and Dubai. Lee is said to have transferred 0,000 in digital funds to a wallet under his control.
Are you satisfied with the government’s response to crypto-based frauds like Hyperverse? Share your thoughts and opinions about this subject in the comments section below.
Report: Taiwan Police Arrest Crypto Exchange Bosses Accused of Fraud
The police in Taiwan recently arrested two individuals who are accused of deceiving 100 investors into buying fake virtual currencies. The police also apprehended 14 other participants in the fraud scheme and recovered more than million in both cash and virtual currencies.
Worthless Virtual Currencies
Taiwanese police recently arrested two executives of what has been described as one of the region’s largest cryptocurrency exchanges, ACE Exchange. The arrests followed an investigation which concluded that the duo had helped trick 100 individuals into buying “worthless virtual currencies.”
According to a Liberty Times Net report, Lin Nan, one of the executives, used the promise of quick riches to lure unsuspecting people into investing. Lin Nan’s alleged accomplice, Pan Nan, reportedly listed the fake virtual currencies on ACE to boost their credibility. The duo was able to perpetrate the scam for three years before law enforcement agencies caught up.
In addition to arresting the duo, police also apprehended 14 individuals at 15 locations spread across Taipei, New Taipei, and Taichung. A raid on Lin Nan’s residence saw the police recover more than .6 million (111.52 million yuan) in cash and virtual currency worth just over .4 million. The Taiwanese police estimate the total value losses associated with Lin Nan and Pan Nan’s fraud scheme at over million.
After their interrogations, Lin Nan, Pan Nan, and the 14 other individuals were taken into custody. They are set to be charged under the region’s Criminal Code, the Money Laundering Prevention Act, and the Banking Act.
What are your thoughts on this story? Let us know what you think in the comments section below.
Crypto Fraud Unveiled: $1.3B Loss As Chuck Norris-Endorsed CEO Turns Out To Be Illusion
In a recent investigation by The Guardian, alarming details have emerged regarding a crypto project, HyperVerse, that allegedly lost .3 billion of investors’ funds.
The report reveals that the chief executive officer promoted by the project, supposedly backed by celebrity endorsements including Chuck Norris, appears to be absent.
Investigation Exposes HyperVerse Crypto Scam
HyperVerse, promoted by Australian entrepreneur Sam Lee and his business partner Ryan Xu, founders of the now-collapsed Australian Bitcoin (BTC) company Blockchain Global, has been scrutinized for its deceptive practices. The project attracted thousands of investors, who ultimately lost millions of dollars.
The investigation raises concerns about the legitimacy of HyperVerse’s CEO, as the qualifications and credentials attributed to the supposed chief executive, Steven Reece Lewis, have no basis.
Promotional material released for HyperVerse claimed that Lewis graduated from the University of Leeds and held a master’s degree from the University of Cambridge. However, neither institution has any record of his existence.
Furthermore, there are no records of Lewis on the UK companies register, Companies House, or the US Securities and Exchange Commission (SEC). Interestingly, Adobe, a publicly listed company, also has no record of any acquisition involving a company owned by “Steven Reece Lewis.”
The report indicates that HyperVerse managed to secure celebrity endorsements, including video messages of support from Steve Wozniak, co-founder of Apple, and actor Chuck Norris.
However, it is unclear how these messages were obtained, as all four celebrities mentioned in the report are available for hire through Cameo, where individuals can pay to have high-profile individuals read scripted messages.
Australian Authorities Under Fire
The investigation also highlights regulatory concerns, as HyperVerse operated without significant scrutiny in Australia despite being flagged by regulators overseas as a possible scam or suspected pyramid scheme.
The Australian Securities and Investments Commission (ASIC) has been referred to the case but has not yet taken action.
Investors in HyperVerse were lured with promises of substantial returns and the opportunity to explore a new digital metaverse similar to Facebook. However, the scheme ultimately resulted in significant losses for investors, estimated at .3 billion in 2022, according to blockchain analysts Chainalysis.
The Guardian’s findings shed light on the deceptive practices employed by HyperVerse and raise questions about the responsibilities of regulators in overseeing such projects.
As the aftermath of this cryptocurrency scandal unfolds, investors and authorities alike are left grappling with the consequences of a scheme that capitalized on false claims and celebrity endorsements to defraud unsuspecting individuals.
Featured image from Shutterstock, chart from TradingView.com
Man Fingered in the July 2022 Hack on 2 Decentralized Exchanges Pleads Guilty to Computer Fraud
U.S. Attorney for the Southern District of New York announced on Dec. 14 that Shakeeb Ahmed, a man accused of hacking two decentralized crypto exchanges, had pleaded guilty to the charge of computer fraud. Ahmed is said to have attempted to cover his tracks by using overseas crypto exchanges and swapping the stolen assets with the privacy coin monero.
Hacker Demands Larger ‘Bounty’
Shakeeb Ahmed, the man publicly charged with the hack of an unnamed decentralized crypto exchange, recently pleaded guilty to computer fraud and has agreed to forfeit over .3 million. Damian Williams, the U.S. Attorney for the Southern District of New York, has said that Ahmed also admitted to being the individual behind the July 2022 hacking of the decentralized finance (defi) protocol Nirvana Finance.
In a statement released on Dec. 14, 2023, Williams said Ahmed, a senior security engineer, has agreed to return the stolen crypto to his victims. Chronicling Ahmed’s July 2-3 attack on the decentralized platform, the U.S. Attorney said the security engineer exploited a vulnerability in one of the platform’s smart contracts. This step enabled Ahmed to insert fake pricing data and this ultimately helped to generate approximately million worth of inflated fees.
According to the statement, Ahmed later reached out to the platform and an agreement was reached in which he would return all but .5 million worth of digital assets. The agreement was, however, conditioned on the matter not being referred to law enforcement.
On July 28, Ahmed also perpetrated an attack on Nirvana Finance which saw him earn a profit of .6 million. To resolve the matter, Nirvana Finance offered Ahmed a reward or “bug bounty” of 0,000 if he returned the stolen assets. However, according to the statement, Ahmed demanded .4 million instead.
Crypto Mixers Not Effective Anymore
After the attacks, Ahmed attempted to cover his tracks by using overseas crypto exchanges and swapping the stolen assets with the privacy coin monero. However, Williams is quoted in the statement suggesting that such efforts had been proven to be ineffective.
“In total, Ahmed used his technical know-how to steal over million and tried to cover his tracks by swapping stolen crypto for monero, using cryptocurrency mixers, hopping across blockchains, and utilizing overseas crypto exchanges. Today’s conviction shows that no matter how sophisticated the methods used, fraud is fraud, and we will swiftly catch and convict you,” Williams said.
In addition to attempting to cover his tracks, Ahmed’s web search history just days after the hack suggested that he was planning to flee the United States. Meanwhile, according to the statement, Ahmed is set to be sentenced by U.S. Judge Victor Marrero on March 13, 2024.
What are your thoughts on this story? Let us know what you think in the comments section below.