Terraform Labs CEO and co-founder Do Kwon [has been arrested in Montenegro](/news/article/do-kwon-hiding-in-serbia). He oversaw the multi-billion dollar collapse of the TerraUSD-LUNA ecosystem and has been [charged with fraud](/news/article/terraform-labs-accused-of-fraud-by-sec) by US prosecutors.

## Do Kwon arrested: Series of events

In early 2023, Do Kwon and Terraform Labs [were accused of](/news/article/do-kwon-red-notice) "orchestrating a multi-billion dollar crypto asset securities fraud", with eight charges announced against him by US prosecutors.

He was arrested on 23 March in Montenegro, travelling under a false name and in possession of fake documents. South Korean authorities released a separate arrest warrant for him in September 2022. They were at the scene to confirm his identity through official fingerprint records.

## Do Kwon arrested: Why did the TerraUSD-LUNA ecosystem collapse?

The Terra ecosystem was created in 2018 by Terraform Labs and is largely known for its decentralised algorithmic stablecoin, TerraUSD (USD), and reserve asset cryptocurrency, Luna (LUNA). The (now defunct) algorithmic stablecoin system is simple to understand:

•	1 UST = $1 LUNA.

•	If UST<$1, burn UST and mint LUNA. Burning will raise UST's price.

•	If UST>$1, burn LUNA and mint UST. Minting will decrease UST's price.

What [made this system a Ponzi scheme](/news/article/terra-luna-collapse) was the unsustainable interest rate of nearly 20% offered upon staking UST on the Anchor Protocol.

## The system was built to fail.

Upon shifting from a fixed interest model to a dynamic one, UST began its downfall on 7 May, 2022, when a UST whale sold an enormous amount of the stablecoin.

To compensate for the de-pegging of UST, mass burning of the stablecoin began, leading to a surplus of LUNA on the open market. Both cryptocurrencies collapsed and more than $40B in UST-LUNA market value was wiped out. Even a $3.5B Bitcoin reserve fund failed to control the downslide of the value of both crypto tokens.

In a nutshell, the model was based on minting an endless supply of LUNA to maintain UST at $1 and keep investors happy with an unsustainable interest rate model.

It should be noted that Do Kwon and the algorithmic stablecoin system were called out by a renowned economist Frances Coppola well before all this unravelled. Do Kwon mocked her publicly.

![dokwon.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/dokwon_f0af2d76e8.png)
 
Source: [Twitter (@stablekwon)](https://twitter.com/stablekwon/status/1410491186196795398?s=20)

I hope that [Do Kwon’s arrest is one step](/news/article/do-kwon-terra) towards a safer and better crypto space for all.


do kwon beind bars in montenegro with red filter

Terraform Labs CEO Do Kwon Arrested

On Wednesday, the US DOJ (Department of Justice) and the Securities and Exchange Commission (SEC) reported that Guo Wengui, a Chinese billionaire living in exile, was detained in New York for supposedly planning a fraud scheme worth more than $1 billion which involved cryptocurrency.

Guo, also known as Miles Guo and Ho Wan Kwok, or "Brother Seven," has been accused of committing 12 counts of wire fraud, securities [fraud](/news/article/terraform-labs-accused-of-fraud-by-sec), bank fraud, and money laundering. The DOJ stated that he allegedly used false statements and representations to persuade hundreds of thousands of his online followers to invest in various entities, resulting in more than $262 million in victim funds being obtained through the Himalaya Exchange, a supposed [cryptocurrency](/news/article/what-is-future-of-cryptocurrency) ecosystem.

The DOJ disclosed that it had seized around $634 million from 21 bank accounts linked to the alleged fraud.

The DOJ also [stated](https://www.justice.gov/usao-sdny/pr/ho-wan-kwok-aka-miles-guo-arrested-orchestrating-over-1-billion-dollar-fraud-conspiracy) that Guo Wengui is accused of making false statements and offering his investors inflated returns in exchange for supporting various ventures, including GTV Media Group Inc. In addition, Guo has been charged by the SEC for participating in unregistered and deceitful offerings that garnered more than $850 million.

## Bail Denied for Guo Wengui

According to the SEC, an investment scheme that employed cryptocurrency security called "H-Coin" or "Himalaya Coin" deceptively collected hundreds of millions of dollars from investors.

The project falsely stated that 20% of the coin's value was supported by gold and that the issuer would compensate investors in the event of any losses. According to Gurbir S. Grewal, the director of the SEC's enforcement division, the issuer, Guo, capitalized on the hype and appeal of cryptocurrency and other investments to victimize thousands and fund his and his family's luxurious lifestyle.

On Wednesday, the SEC made this statement, and CNN reported that Guo was denied bail at a hearing held the same day.

US Attorney Damian Williams claimed that Guo had committed the crime of profiting from embezzled money. Williams specifically mentioned that Guo had used the [stolen funds](https://twitter.com/SDNYnews/status/1636013342962712577?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1636013342962712577%7Ctwgr%5E5aa49442bd1adc0405714d5fc3a9c0868d934968%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fforkast.news%2Fheadlines%2Fus-accuses-exiled-chinese-tycoon-guo-wengui-of-1-billion-crypto-linked-fraud%2F) to buy a 50,000 square-foot mansion in New Jersey for himself and his close relatives, as well as a Ferrari valued at $3.5 million, two mattresses worth $36,000 each, and a lavish yacht that cost a whopping $37 million.


red backgound of money with guo wengui and a white dog

Guo Wengui Accused of $1 Billion Crypto Fraud 

The founder of the Bitzlato crypto exchange, Anatoly Legkodymov, has denied money laundering charges against him in a US court.
He is accused of processing more than $700 million through his firm. Relating to these charges, he was arrested on 17 January in Miami.  

## First court appearance for Bitzlato crypto firm founder

The proceedings of a money laundering case against Legkodymov are ongoing in the federal court of New York. He appeared before the court for the first time on 14 March, 2023, when he denied all the fraud charges.

The court has ordered the detention of Legkodymov without bail for the charges of illegally processing money. The Federal Bureau of Investigation ([FBI](https://www.fbi.gov/investigate)) was involved in arresting the crypto exchange founder. 

## Allegations involve $700 million

Allegedly, the founder of Bitzlato is a Russian national and a resident of China. The FBI detained him for his alleged involvement in illegal money transfers through the exchange.

He is accused of managing a Hong Kong-based cryptocurrency firm and did not ensure [anti-money laundering](/news/article/crypto-aml) measures were followed.

According to reports, the business [allegedly processed](/news/article/bitzlato-co-founder-charged-with-money-laundering) around $700 million of illegal funds. The illicit funds are related to numerous crimes like drug trafficking and ransomware. 

Bitzlato may also have ties with the darknet market called Hydra, according to further reports. Moreover, another member of [a crypto pyramid scheme related to Russia](https://news.bitcoin.com/another-member-of-russian-crypto-pyramid-finiko-arrested-in-uae/) was arrested in the UAE.  

## Accusations against other members of Bitzlato

More crypto exchange members were also detained in late January. Three members of the executive body were arrested in Europe.

The firm's co-founder, Anton Shkurenko, was also involved in the investigations. In February, he was interrogated by the Russian authorities, but later released. He has also given an interview recently where he mentioned that he would be restoring operations of the firm from Russia.


Anatoly Legkodymov founder of bitzlato with red image of court

Bitzlato Crypto Exchange Founder Denies Charges 

PeckShield, a security company based in China, alerted British crypto lender Euler on [Twitter](https://twitter.com/peckshield/status/1635203838939652097?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1635218198042918918%7Ctwgr%5E2f837db4eb37d5b619c2b3b4b80aab66b93c455d%7Ctwcon%5Es3_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Feuler-finance-hacked-for-over-195m-in-a-flash-loan-attack) about a possible hack. It posted transaction details indicating that the hack resulted in a loss of $197 million.

PeckShield suggested that the hackers took advantage of a vulnerability in Euler's system. Euler acknowledged the situation and stated it was working with security experts and law enforcement. The lender also promised to provide more information as soon as it becomes available.

Crypto critic Molly White, who documents [hacks](/news/article/north-korea-hackers-stole-1.7b-crypto) and scams on her blog ‘[Web3 is Going Just Great’](https://web3isgoinggreat.com/), stated that the hack on Euler was the most significant this year. 

White ranked it as the eighth largest theft on the all-time list, although it pales compared to some of the crypto industry's most massive scams, reaching billions of dollars.

At the beginning of last year, the [crypto](/news/article/oxen-crypto-price-prediction) sector was on an upward trajectory, with the market for digital tokens and cryptocurrencies valued at hundreds of millions of dollars.

Crypto companies were aggressively marketing themselves through TV commercials, sports team sponsorships, and promoting their technology as revolutionary, as they aimed to attract new investors from the general public.

## Euler crypto falls victim to malicious hackers leveraging flash loans

According to a detailed analysis conducted by the blockchain security firm [Slowmist](https://twitter.com/SlowMist_Team/status/1635288972103667714?t=zUb040PYVunVm0p3pV1eGg&s=19), the recent attack on Euler crypto lender involved the use of flash loans by the attacker. The funds were deposited and leveraged twice to trigger [liquidation](/news/article/bitcoin-liquidations-spark-price-spike), after which the attacker sent the funds to the reserved address as well conducting a self-liquidation to collect any remaining assets.

The attack's success was attributed to two factors:

•	Funds were sent to the reserved address without undergoing a liquidity check, resulting in soft liquidation.

•	The soft liquidation logic was activated by the high leverage, which allowed the liquidator to transfer only a fraction of the liabilities to themselves while obtaining most of the collateral funds from the liquidated user's account.

Gustavo Gonzalez, a solutions developer at the blockchain security firm OpenZeppelin, informed [Cointelegraph](https://cointelegraph.com/news/euler-finance-hacked-for-over-195m-in-a-flash-loan-attack) that the entire incident occurred in a single transaction per pool, utilizing flash loans from AAVE.


Euler Crypto Lender Suffers $200m Hack 

A crypto firm backed by US rapper Jayceon Terrell Taylor, also known as "The Game", had its licence revoked by the US Securities and Exchange Commission [for violating securities laws](/news/article/sec-probe-paxos-over-busd) after falling short of submitting the necessary periodic reports.

The crypto startup, called ParagonCoin Limited, leverages blockchain technology for the legal cannabis sector and was founded in 2017 by Jessica VerSteeg.

## Why was ParagonCoin Limited’s registration revoked?

According to a class-action suit against ParagonCoin Limited in January 2018, the cryptocurrency startup [allegedly violated securities laws](/news/article/crypto-exchange-kraken-faces-sec-probe) in the initial coin offering (ICO) it held back in 2017, raising $70M.

The cannabis crypto firm promoted its native token 'PRG' as a currency for the legal cannabis industry and hired American rapper The Game to promote its offering. 

However, it failed to register its token sale with the SEC.
As such, a civil penalty was imposed on the cryptocurrency startup, requiring it to pay a fine of $250,000, register its token PRG as a security, and file periodic reports with the SEC.

The SEC was prompted to commence legal proceedings against the firm in February 2022, as it violated the [terms of its settlement with the SEC](/news/article/paul-pierce-settles-with-sec). ParagonCoin Limited failed to file a report since March 2019, in which the company stated that it lost more than $10M in 2018.

According to the SEC, the cannabis cryptocurrency startup ignored a delinquency letter sent to it by the SEC.
Additionally, [the SEC pointed out](/news/article/sec-crypto-enforcement-warning) that ParagonCoin Limited did not reply to its order commencing proceedings in February 2022, nor did it respond five months later to offer reasons why it should not be found guilty as things stand.

This is not the first mess The Game and the startup have found themselves in. However, this could be the last for ParagonCoin Limited. Back in 2021, both the rapper and the cryptocurrency startup's executives were found to be liable for more than $12M in a class-action lawsuit. You can read more here.

It is yet to be seen what steps ParagonCoin Limited will take to salvage the situation. Rapper The Game, meanwhile, continues to thrive in the Web3 space, with numerous partnerships in place, including as co-founder of the popular Web3 live-streaming platform, Shiller.


red image of rapper "the Game" and Paragon coin logo

Rapper The Game's Crypto Firm Licence Revoked

Police in Massachusetts have charged a civic employee for setting up a scheme for illegal crypto mining in a small crawl space under a local school. Police alleged that 39-year-old Nadeam Nahas unlawfully attached his bank of computers to the electrical system at Cohasset Middle High School, which is at least 10 miles out of Boston.

According to [court documents](https://www.bostonglobe.com/2023/02/24/metro/man-accused-running-crypto-mine-out-cohasset-school-appears-quincy-court-arrest-warrant-canceled/), the criminal [crypto-mining](/news/article/mining-company) scheme comprised 11 computers and a multifaceted cooling system that added $17,500 to the school’s electricity bills. Authorities believe Nahas ran his crawl space mine from April to December 2021, when he worked as HVAC coordinator and assistant facilities director beginning January 2021 before resigning in early 2022.

## Items used in crypto-mining operation

In a press statement to the [BBC](https://www.bbc.co.uk/news/world-us-canada-64767178), Cohasset Police boss William Quigley stated that investigations began in December 2021 after the facilities director of the town discovered electrical wires, ductwork, and several computers that looked misplaced during a routine inspection. During the initial investigation, Nahas and his boss, the town's facilities director, reported they had shut off the computers due to the high heat they generated.

However, a subsequent investigation involving the US Coast Guard and the Department of Homeland Security placed Nahas, initially denying any involvement, at the center of the operation of illegal crypto mining. Police found credit card receipts in Nahas's name that were used to buy Coleman 48qt coolers, extreme weather foil, insulated flex ducts, a water-based sealant tub, and insulation sleeves. All the items were located in the crawl space and used in the illegal crypto-mining operation.

## On high alert about cryptojacking

Crypto mining is a process used to validate cryptocurrency transactions and create new cryptocurrency coins. However, the process consumes [massive amounts of electricity](/news/article/crypto-mining-farms). As cryptocurrency becomes more popular and grows in value, crypto mining also becomes a magnet for crypto thieves. 

Last December, authorities in Thailand seized [3,500 illegal crypto-mining units](https://www.bangkokpost.com/thailand/general/2455120/thousands-of-illegal-cryptocurrency-mining-units-seized) from 41 commercial buildings and apartments in Bangkok connected directly to power lines. They unlawfully drained more than $14 million worth of electricity.

Big tech firms like Amazon, Microsoft, and Google have always been on high alert about[ cryptojacking,](https://www.kaspersky.com/resource-center/definitions/what-is-cryptojacking) a different kind of illegitimate crypto mining where hackers hijack a computer's resources without the owners' knowledge to mine cryptocurrencies. Privacy coin [Monero](/news/article/how-to-buy-monero) (XMR), which is famous with Dark Web users, is the most popular coin mined this way.

Illegal Crypto Mining Syndicate Busted

[Becca Balint](https://vtdigger.org/2023/02/28/becca-balints-1-million-crypto-benefactor-pleads-guilty-to-campaign-finance-fraud/), a member of the US House of Representatives from the state of Vermont, has been thrown into the spotlight again after Nishad Singh, an ex-executive of insolvent cryptocurrency exchange FTX who contributed $1 million in advertising money to her congressional push, pleaded guilty to campaign finance fraud on 28 February.

Singh said he is sorry for his role in the bankrupt crypto firm. He reiterated that he only knew by mid-2022 that Alameda Research, the hedge fund run by founder [Sam Bankman-Fried](/news/article/sam-bankman-fried-bail-co-signers-revealed) (SBF), was borrowing customer funds at [FTX](/news/article/ftx-funds-political-donations-to-be-recovered) without informing depositors.

The association of the politician with FTX has added more fuel to the fire as allies of SBF, which included Singh, contributed a minimum of $26,000 directly to support her campaign. Aside from that, the Democratic Party in Vermont was also a beneficiary of FTX contributions. 

SBF's inner circle continues to crumble. Singh is the third member of the once-thriving crypto firm to collaborate with US prosecutors with the hope of working out a deal. 
  
The latest link to Bankman-Fried's ally comes a few days after a superseding [indictment](https://vtdigger.org/2023/02/23/becca-balint-cooperating-with-federal-prosecutors-as-new-allegations-against-sam-bankman-fried-emerge/) filed on 23 February laid out an alleged scheme by the founder and former CEO to illegally move investor money to political campaigns to help improve his standing with representatives in Washington, DC.

Prosecutors believe his consistent donations were a way of pushing decision-makers to consider his preferred regulatory agenda for the entire decentralized finance economy.  

## Becca Balint is cooperating with authorities 

According to her campaign manager, Natalie Silver, Vermont's leader in the House of Representatives is fully cooperating with federal authorities in the investigation into SBF's scheme to pour a minimum of $1 million into a super PAC (political action committee) to support a candidate who favoured LGBTQ issues.   

After serving as a member of the Vermont Senate, Balint made history by becoming the first person from the LGBTQ+ community to be elected to Congress.


red image of becca balint and sam bankman-fried in front of sign saying guilty

Becca Balint Contributor Admits Fraud 

A network of crypto investment scammers operating in Israel is targeting Australians, investigations have revealed. It is an organised network that works as a call centre. The scammers used social media ads, showing lucrative profits to target potential victims.
 
## Authorities uncovered Israel crypto scammers

Authorities from four countries were involved in an investigation to uncover a global network of [cryptocurrency scammers](/news/article/crypto-scams-failing). The countries involved include Germany, Serbia, Bulgaria, and Cyprus. 
 
![Screenshot 2023-02-24 at 09.32.58.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Screenshot_2023_02_24_at_09_32_58_0494957298.png)

[Source](https://twitter.com/australian/status/1628877400556834816)

According to a The Australian report, the authorities raided four call centres in [Serbia](/news/article/do-kwon-hiding-in-serbia). In addition, they searched around 11 residential addresses, arrested 15 suspects, and officers recovered around $1.46 million worth of digital assets. The country is trying to strengthen its [crypto regulations](/news/article/australia-crypto-regulation). 

Further investigation revealed that the network was operating through Israel and the main targets for this network were Australians.
Inadequate investigations allowed scammers to target Aussies
The Australian report also disclosed that inadequate investigative measures for online fraud in the country have allowed scammers to target their citizens.

Australia is a wealthy country with no federal authority to prevent such scams, which gives an open chance of fraud and those intent on scamming victims.

IFW Global’s Senior Investigator, Mark Solomon, explained that, in general, Australians are "open-minded" and "friendly" people. That's why they are more open to online relationships. Hence, if bad actors use the right strategy, they can easily be persuaded.

Solomons also said Israeli crypto fraudsters spend the stolen money on their lavish lifestyles. He mentioned that these individuals are flying private jets, own fancy cars, and have investments in real estate.
Meanwhile, they maintain their lifestyle by "sucking" savings out of the Australian economy.

## Investment scams in Australia

In 2021, ACCC reported that citizens lost more than $2 billion through investment scams. According to [Scamwatch](https://www.scamwatch.gov.au/scam-statistics?scamid=all&date=2023), the country lost over $568.6 million through such scams. 


Israel Crypto Scamming Network Targets Aussies 

On 22 February, New York Attorney General Letitia James filed a lawsuit against CoinEx. The allegations state that the cryptocurrency exchange conducted business unlawfully as it failed to register with the state.

## New York sues CoinEx exchange

James charged CoinEx exchange with failing to register as a commodities and securities broker-dealer in the state. The 38-page [petition](https://ag.ny.gov/sites/default/files/memorandum_of_law_in_support_of_petition._nyoag_v._vinogloballtd_dba_coinex.pdf) filed in the New York Supreme Court alleged that CoinEx violated the state's Martin Act, which is known as one of the most rigorous anti-fraud and securities regulation laws in the US.

According to the petition, [CoinEx](/news/article/coinex-smart-chain) was "engaged in repeated and persistent fraudulent practices". The lawsuit also accused the exchange of listing tokens such as Amp, LBRY Credits (LBC), Rally (RLY), and [Terra](/news/article/terra-luna-second-airdrop) LUNA, which qualified as "both commodities and securities".

James [stated](https://ag.ny.gov/press-release/2023/attorney-general-james-sues-cryptocurrency-platform-failing-register-new-york) that the crypto exchange was not registered with the Commodity Futures Trading Commission or the Securities and Exchange Commission, as required under New York law to sell these tokens.

The petition further alleges that the company failed to comply with a 22 December subpoena sent by the Attorney General's Office to "provide testimony concerning the virtual asset trading activities of its platform".

As per the petition, James seeks a court order to prevent CoinEx from marketing itself as an exchange and stop it from operating in the state by ordering it to geoblock internet addresses and GPS location data from New York.

## Cryptocurrency exchanges must comply with legal standards

James made it clear that cryptocurrency companies cannot ignore regulatory requirements. In a statement, she said the days of cryptocurrency companies behaving as if rules do not apply to them "are over".

With this lawsuit, the New York Attorney General's office is taking a stance on upholding securities regulation laws and ensuring that companies operating in the state comply with them.


CoinEx Exchange Sued by NY Attorney General

Crypto entrepreneur Do Kwon and the company he co-founded, Terraform Labs, have been [accused](https://www.sec.gov/news/press-release/2023-32) of fraudulent activities by the US Securities and Exchange Commission (SEC).

According to the SEC, Kwon and Terraform Labs offered and sold unregistered securities, including the TerraUSD stablecoin, and conducted a scheme that resulted in the loss of at least $40 billion worth of market value. The case is a significant step in the SEC's ongoing efforts to regulate the crypto industry.

The SEC's allegations include the assertion that Kwon and Terraform Labs misled investors by making false statements about their relationship with the South Korean mobile payment app "Chai" and the stability of the stablecoin TerraUSD, which was marketed as maintaining a 1-to-1 peg to the US dollar. The agency has also accused the company and Kwon of offering misleading investment opportunities to investors.

## SEC files complaint against Terraform for securities violations

The SEC has filed a [complaint](https://www.sec.gov/litigation/complaints/2023/comp-pr2023-32.pdf) in the US District Court for New York's Southern District against Terraform and its founder, Do Kwon, for alleged violations of the Securities Act and the Exchange Act.

The complaint, which spans 55 pages, claims that Terraform and Kwon were engaged in deceptive marketing practices concerning its Anchor Protocol, which advertised a 20% interest rate on deposits of USTC.

The SEC also alleges that the defendants misled investors about the stability of Terra's stablecoin, which lost its US dollar peg in May 2021, resulting in a collapse of the digital asset market that wiped out an estimated $40 billion in value.

South Korean authorities are searching for Kwon, whose current location remains unknown. He is [suspected to be in Serbia](/news/article/do-kwon-hiding-in-serbia) after departing from his residence in Singapore in September. This search is in relation to an arrest warrant issued in September on allegations including breaches of capital-markets law. Noticing the hide-and-run game, Interpol issued a [red notice](/news/article/do-kwon-red-notice) against him to locate his whereabouts.


Terraform Labs Accused of Fraud by SEC 

According to a report by blockchain analysis firm Chainalysis, North Korea hackers stole $1.7 billion worth of crypto to fund the country's nuclear programme.

The [cryptocurrency](/news/article/what-is-future-of-cryptocurrency) industry faced a challenging year in 2022 because of harsh market conditions and a surge in crypto hacks. The Chainalysis reports says that two significant spikes in hacking activities were recorded in March and October, with losses of $732.4 million and $775.7 million, respectively. The latter became the biggest single month in history for crypto hacking, with 32 separate attacks.

## Record-breaking year for North Korean hackers

[Chainalysis](https://blog.chainalysis.com/reports/2022-biggest-year-ever-for-crypto-hacking/) reported that [North Korea](/news/article/north-korea-crypto-hacks-worth-1.2bn)-linked hackers stole an estimated $1.7 billion worth of cryptocurrency in 2022. Of this total, $1.1 billion was taken from DeFi protocols, marking a significant increase from the previous record of $429 million in 2021. The report reveals that North Korea, facing heavy sanctions, relies on crypto theft to fund its nuclear plans. The illicit funds represent a "sizeable chunk" of North Korea's economy, which generated $142 million in total exports in 2020.

Use of decentralized finance protocols and coin mixers
The Chainalysis report also highlighted that North Korea hackers often send stolen funds to other DeFi protocols, usually decentralized exchanges (DEXs), to swap for more liquid assets. These hacks often result in the theft of illiquid tokens not listed on centralized exchanges.

The firm has also noted that these hackers use coin mixers to launder stolen funds at a higher rate than other individuals or groups. [Tornado Cash](/news/article/tornado-cash-developer-detention) was a frequently used mixer, but following OFAC sanctions, the hackers have diversified their mixer usage, particularly in Q4 2022.

According to other experts, North Korea also launders stolen crypto via brokers in China and NFTs.

A new Bitcoin mixer, Sindbad, has recently emerged as a tool to launder stolen funds. North Korea-linked hackers were detected on the platform in December 2022, and from that period to January 2023, they sent 1,429.6 Bitcoin worth almost $24.2 million to the mixer.


red image of north korea with hands on laptop

North Korea Hackers Stole $1.7B of Crypto

A former Oxford University student has admitted crypto theft charges after stealing more than £2 million in cryptocurrency.

Wybo Wiersma, a 40-year-old computer genius who dropped out of a Ph.D. class at Oxford University, will serve [four and a half years in jail](https://serocu.police.uk/man-jailed-for-2m-cryptocurrency-theft/) after admitting he stole more than £2.1 million in cryptocurrency in a scam that affected over 100 people. The Dutchman created a bogus website – iotaseed.io – that would generate an 81-character 'seed' password for people interested in an online currency called Iota.

## Inserted a malicious code

A ‘seed’ refers to a private key consisting of 81 random characters that allow only the user to access their [crypto wallet](/news/article/best-crypto-wallet-uk-top-picks). However, Wiersma inserted a malicious code so that instead of random seeds, the system delivered predetermined ones that enabled him to access his victims' Iota crypto and unlawfully transfer them to his web of personal trading accounts. Wiersma programmed the site to appear on top of Google searches when victims searched for the phrase 'Iota seed generator'.

Prosecutor Julian Christopher KC revealed that the accused created the [scam](/news/article/crypto-scams-failing) iotaseed.io website between 2017 and 2018 and started transferring his victims’ cryptocurrency in early 2018. He would later set up four accounts with Bitfinex cryptocurrency exchange, where he would keep the stolen crypto funds. Bitfinex would become suspicious of the account’s activities and froze them, despite Wiersma working hard to convince them otherwise.

## Crypto theft due to greed and deception

Judge Michael Gledhill KC of Oxford Crown Court sent Wiersma to jail, noting that he abused his skills to steal, terming it dishonesty at the highest level and adding that he committed the offense of crypto theft due to greed and deception. The accused was due to stand trial in early March but pleaded guilty on the day the jury was supposed to be sworn in. Wiersma was first arrested in January 2019 but fled to his native Netherlands after being released on bail. He was extradited to England in April 2021 to face the law at Oxford Crown Court.

Noting that the investigation covering the crypto theft was complex as it involved more than 100 victims from different parts of the world, Detective Inspector Rob Bryant of the South East Regional Organized Crime Unit (SEROCU) stated that as Wiersma cools his heels in jail, SEROCU would try and ensure as much of the money they seized from his wallets is returned to the owners.


red image of Wybo Wiersma oxford student hacker

Oxford Ph.D. student jailed in £2M crypto theft scam

Ruja Ignatova, the infamous name placed on the FBI's Ten Most Wanted Fugitives List, has reappeared due to the listing of a luxury London penthouse flat bought by the crypto scammer, a [BBC](https://www.bbc.com/news/uk-england-london-64407723) report disclosed. 

Details of the £12.5 million listing were revealed as part of new transparency rules in the UK, which require owners of properties to be publicly displayed.

The "Crypto Queen" and her associates made off with around £3.2 billion (around $4 billion) from her [cryptocurrency](/news/article/what-is-future-of-cryptocurrency), OneCoin. The BBC estimates that investors from the UK alone lost more than £100 million.

UK authorities believe she is trying to facilitate the sale of her property from the shadows. The reappearance of the name Ruja Ignativa - who did so much harm to stakeholders in her fake cryptocurrency - has reignited hope that some lost funds could be recouped.

A former investor in OneCoin, Layla Begum, said her family lost more than £54,000 after she was persuaded by a friend to risk money on the emerging crypto project. She said that UK authorities could help British investors who lost money in OneCoin since the purchase of the London flat undoubtedly came from proceeds in the crypto scam.

## Reward for information on Ruja Ignatova

While UK prosecutors are trying to avoid proceeds of the sale going back to the coffers of the scammers, the FBI has placed an £80,600 ($100,000) bounty on the head of Ruja Ingatova. 

In 2019, a federal jury in New York found [Mark Scott](https://www.bbc.com/news/technology-50509299), a former lawyer with links to OneCoin, guilty of conspiracy to commit bank fraud and money laundering after helping route more than £300 million out of the US.

The brother of the Crypto Queen, Konstantin Ignatova, also pled guilty to the same charges.

The latest guilty plea came from [Sebastian Greenwood](/news/article/onecoin-scam-co-founder-admits-fraud), co-founder of the worthless cryptocurrency, in December when he admitted engaging in fraud and money laundering.


red image of ruja ignatova in front of onecoin logos

Has Ruja Ignatova, Crypto Queen, Reappeared? 

On 18 January, 2023, US authorities confirmed the arrest of a co-founder and major shareholder of Hong Kong-registered crypto exchange platform Bitzlato for facilitating and harboring money laundering criminals.

A Russian native currently living in China, Anatoly Legkodymov, was arrested in Miami on 17 January, 2022. 

He was booked under a section of the US Patriot Act aimed at preventing money laundering and terrorist financing. His charges included operating an unlicensed money exchange business.

Bitzlato is a crypto exchange platform [based out of Hong Kong](/news/article/is-crypto-legal-in-hong-kong) with global operations. The platform allegedly exchanged more than £500 million in cryptocurrency on the Hydra Market. The Hydra Market was the largest darknet marketplace in the world before it was shut down in April 2022. The crypto exchange co-founder also allegedly received £12 million in ransomware proceeds.

## Bitzlato labeled primary money-laundering concern 

The US FinCEN (Treasury's Financial Crimes Enforcement Network) previously named the crypto giant a "primary money-laundering concern".

This is among the most serious sanctions from the US anti-crime team as it usually works by cutting the target off financially around the globe.

The platform allowed users to sign up and operate by providing little to no personal information, making it a haven for criminals. It also allegedly posted ads on Russian-language sites telling users that they can sign up and start using the site by only providing their email address and nothing else. The company made it exceptionally easy for users to buy crypto for cash for a negligible fee and practically no personal information.

The seizure of Bitzlato does not come as a surprise. US law enforcement has been hard at work because the crypto community has been under a microscope since last year following [scandals in the industry](/news/article/how-to-avoid-crypto-scams). US authorities charged [FTX CEO Sam Bankman Fried in 2022 with eight counts of fraud](https://www.bbc.com/news/business-64036615) after the exchange filed for bankruptcy.

The operations of the Hong Kong-based exchange platform Bitzlato have been seized until the trial.


red image of bitzlato logo on red background

Bitzlato co-founder charged with laundering over £500m

On 15 September, 2022, South Korean prosecutors announced they had requested the international crime agency Interpol to issue Terra Labs co-founder Do Kwon a [red notice](https://www.coindesk.com/business/2022/09/26/interpol-issues-red-notice-for-do-kwon-report/).

The red notice is an international call to arms for all law enforcement agencies to locate and apprehend a person for extradition or similar legal actions.

Putting Do Kwon on the list makes him a man of interest to all law enforcement agencies anywhere in the world, making it difficult for him to hide.

On 19 September, South Korean prosecutors put out an arrest warrant for Kwon. This comes after they launched an investigation into Kwon and some associates at TerraLab after the fall of Terra Luna, which caused investors to lose $60 billion.

## Why was the red notice issued?

According to South Korean prosecutors, reaching out to Interpol for help was a reaction to the TerraLab co-founder's lack of cooperation with the investigation launched after the disastrous collapse of Luna.

## Do Kwon red notice 'hoax'?

Through all of this, Kwon has maintained that the red notice is an elaborate hoax. According to Kwon, the red notice is disputed since he hasn't received any official message.

It isn't only him who thinks this way. Some people also believe the Do Kwon red notice might just be South Korea's way of putting a target on Kwon's back.

## Where is Do Kwon now?

In the months since South Korean prosecutors asked Interpol to put Do Kwon on the infamous red list, the wanted co-founder has been nowhere to be found. Ironically, Do Kwon has made several tweets debunking the allegations that he is on the run and in hiding.

South Korean prosecutors have, however, maintained that Do Kwon has refused to make himself available to face the charges levelled against him in his home country.

Although Do Kwon was said to be in Dubai in October, no one has been able to confirm his whereabouts despite him being a guest on several podcasts. That was until 11 December, when it came to light that [Do Kwon had moved to Serbia](/news/article/do-kwon-hiding-in-serbia) from Dubai. The South Korean authorities are now in talks with Serbia's law enforcement agencies to gain cooperation in apprehending Kwon.



red notice mark on image of Do Kwon, Terraform labs founder. 

Do Kwon Red Notice Explained

Koda Apex, aka KAPEX crypto, is a utility token designed to reward those who stake its sister token, $KODA. However, this coin can also be used for payments for both products and services. The main difference is the lower fees associated with [KAPEX crypto](https://koda.finance/kapex/).

Koda describes itself as 'a long-term deflationary store of value for SummitBC Ecosystem investors'. Due to its inflationary tokenomics, the project is an excellent choice for long-term investment, it claims.

Let's look at some of the main features and benefits of the project.

## Rewards

As mentioned above, KAPEX crypto is essentially the reward token for those staking on the parent network. In addition, every transaction across the ecosystem increases the token's liquidity.

So other than rewards for passive staking, what other benefits are there to holding the coin? The benefits are wide-ranging and include:

•	Paying of exchange fees.

•	Paying service and product fees.

•	Purchasing of NFTs.

•	Paying staff or contractors.

•	Motivating team members as a bonus.

•	All business-to-consumer transactions.

•	Peer-to-peer transactions.

In addition to the above, the project has very low network fees, resulting in ultra-low transaction costs. Its supply is controlled by algorithmic tokenomics and backed by its sister coin. Furthermore, anyone looking to unstake their KODA will need to pay for this with KAPEX.

It sounds like an excellent crypto to get involved in, and, with prices currently at historic lows, now is a good time to buy. But are there any drawbacks?

## Compromise

Sadly, the program was compromised via both PancakeSwap and SummitSwap on 17 October, 2022, with the loss of some 78 BNB coins equalling £21,561 of user funds. As a consequence, the management team has advised not to buy the coin going forward. The exact details are unclear, but it appears to be the result of a [vanity address exploit](https://koda.finance/kapex-exploit-on-17th-october-2022/).

This hack and the subsequent price drop are obviously alarming and not a great look for the team behind the project.

Both tokens are managed by 'Summit Better Crypto Limited', which describes itself as a "PR and marketing firm specialising in the promotions of projects within the Cryptocurrency world".

As the company was only set up in May 2021, no filings of accounts are available for analysis. Furthermore, the company website states, "SummitBC employs third-party developers to support the projects we are promoting". Make of this what you will.

Something we can take away from this project is the urgent need for comprehensive [regulation in the crypto space](/news/article/crypto-regulation-uk). While there is nothing to suggest that there has been any wrongdoing in this example, the collapse of KAPEX value shows that consumers desperately need better protection.

Furthermore, this example shows that it is important for consumers to carry out stringent due diligence to ensure any investments they make are based on realistic future projections rather than promotional shilling through social media or so-called 'crypto influencers'.


green image of  cryptocurrency with triangle kapex logo

Kapex Crypto: Signal for Tougher Regulation?

In Binance news, a US Drug Enforcement Administration (DEA) investigation has found that a drug cartel operating in several countries used Binance to move millions of dollars in illegal profits.

## DEA tracks Cartel using exchange in latest Binance news

According to a [Forbes](https://www.forbes.com/sites/thomasbrewster/2022/12/19/mexican-drug-gang-money-laundering-over-binance-crypto-exchange/) report, popular crypto exchange Binance is the subject of a DEA investigation alleging that a Mexican-based international drug cartel used the exchange to funnel millions of dollars in profits.

The report said that the DEA, with help from Binance to identify the suspects, was able to track the gang, which dealt in methamphetamine and cocaine. The gang had operations in the US, Mexico, Europe, and Australia.

The report noted, "Between $15 and $40 million in illicit proceeds may have been funnelled through Binance".

The investigation began in 2020 following a search warrant. Several DEA informants using the crypto exchange localbitcoins.com communicated with users who offered crypto for cash.

The method used by the gang was as follows: a user sends [BTC](/coins/btc) or USDC to the seller's account and then meets in person to take the cash. The DEA identified the Mexican national as Carlos Fong Echavarria.

The report mentioned that the suspect misrepresented the source of the funds, claiming they were coming from family eateries and cattle farms. The arrest was made in 2021 after DEA agents confirmed that the account was used to launder funds.

Matthew Price, Binance's senior director of investigations, told Forbes that the blockchain was key.

He said this was an example of where blockchain transaction transparency "works against criminal actors", adding, "The bad guys are leaving a permanent record of what they're doing."

## Binance under the spotlight

The exchange has been under the spotlight lately. However, its CEO, Changpeng Zhao, reaffirmed in a recent [tweet](https://twitter.com/cz_binance/status/1605828931105435648?s=20&t=V_WM8ww3-B-TTZrIrpbaOA) that "crypto is not a good tool for illicit activities, unlike cash".

In a May blog post, Binance [said](https://www.binance.com/en/blog/ecosystem/crypto-and-money-laundering-an-inconvenient-truth-421499824684903925) that the exchange had helped the US Drug Enforcement Agency seize over 100 accounts connected to illegal drug dealers.

A recent [Reuters report](https://www.reuters.com/markets/us/us-justice-dept-is-split-over-charging-binance-crypto-world-falters-sources-2022-12-12/) also noted that Binance might be the subject of a probe by the US Department of Justice. However, a company spokesperson said any DOJ investigation is fueled by false insinuations.



red image of money laundering with binance logo

Binance News: DEA Uses Exchange to Track Cartel

According to a South Korean intelligence agency statement, state-backed North Korea hackers have stolen an estimated $1.2 billion in crypto assets over the last five years.

Analysts and experts have confirmed that North Korea is supporting a number of fraudulent activities and cybercrimes in order to gain access to foreign currency to help its failing economy, which has been harmed by [UN sanctions](https://www.armscontrol.org/factsheets/UN-Security-Council-Resolutions-on-North-Korea) and the aftereffects of COVID-19.

South Korea's National Intelligence Service confirmed that North Korean hackers are among the best at stealing crypto assets, owing to the country's focus on cybercrime as an alternative way to aid its failing economy since the height of United Nations economic sanctions in 2017.

In 2017, the United Nations imposed harsh sanctions on North Korean exports such as textiles and coal. The UN, along with its member states, repatriates North Korean workers abroad. The country's economy was unable to withstand harsh sanctions and the aftermath of the COVID pandemic.

According to South Korea's National Intelligence Service, North Korea crypto hackers are responsible for hacking $1.2 billion in crypto assets in the last five years, with more than $626 million in 2022 alone. It was also confirmed that approximately $78 million of the stolen funds originated in [South Korea](/news/article/south-korea-crypto).

## More attacks expected

According to intelligence obtained by the South Korean Government, North Korean hackers will most likely undertake additional cyberattacks this year to gain access to South Korean technologies and private information on national security and weaponry.

Official state diplomats from South Korea, the United States, and Japan joined forces earlier this month to intensify efforts to combat the cybercrime carried out by North Korea. 

According to UN experts, the country will step up its efforts to steal hundreds of millions of dollars from crypto platforms and other financial institutions.

Despite the fact that North Korea's economic situation remains dire, the government conducted a record number of missile tests in 2022. Experts and analysts believe it has a way to gain leverage and improve its weaponry to negotiate with world powers.


red image of hacker with cryptocurrency and North Korean statues falling

North Korea Crypto Hacks Worth $1.2 Billion 

#CRIME

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