If it sounds like a pyramid scheme, you are right. If it sounds like artificial inflation, you are right. Pump and dump schemes made headlines before [Bitcoin](/coins/btc) was created. Recently, several news stories have pointed to many scams attempting to manipulate cryptocurrency prices through this scheme.

While digital currencies are relatively new, they are prone to old scams. The novel blockchain technology that backs cryptocurrencies can be used to create an artificial financial mania. Like the popular [Tulip mania](https://en.wikipedia.org/wiki/Tulip_mania) that occurred in the Dutch Republic between 1634 and 1637, what this scheme banks on is the ability to create an illusory surge of public interest in a particular asset such that easy and massive wealth seems to be within reach of the average investor. The cryptocurrency's price soars past its fundamental value, and everyone is buying to avoid missing out.

Eventually, an inflection point is reached once the price is fully "pumped." The people behind the scam begin to sell the cryptocurrency for a higher price. Dumping the coin and pocketing the profit while innocent investors watch the price plummet. 

## What are pump and dump schemes?

Pump and dump schemes, which fraudulently manipulate prices by disseminating false information, have existed in economic contexts since at least the 1700s. With the advent of new technology related to cryptocurrency trading, the issue has a wider scope.

This scam takes advantage of individual investors while earning huge profits for con artists. They may include social media influencers who are compensated for encouraging people to purchase a particular digital coin in order to increase its value.

![pd.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/pd_3be9ce84f2.png)
 
### *The three phases of a pump and dump operation*

This type of scam targets new and small-cap coins. These types of coins do not require a lot of money to manipulate, so they are easy picks. Rarely will you hear of a Bitcoin pump because it will require a lot of money. Many small-cap coins do not have any real use cases. The scammers simply create the illusion of importance by roping in celebrities and industry thought leaders to make the cryptocurrency look more interesting.

The number of pump and dump scams has steadily increased. In a 2018 [report](https://www.wsj.com/graphics/cryptocurrency-schemes-generate-big-coin/?mod=article_inline?) by the Wall Street Journal, crypto pump and dump schemes accounted for $825 million in trading activity in six months, causing hundreds of millions of dollars in losses. In that year, from January to July, there were 125 pump-and-dump scams that manipulated the price of 121 different coins.

According to [Chainalysis data](https://www.coindesk.com/markets/2021/12/17/defi-rug-pull-scams-pulled-in-28b-this-year-chainalysis/), they made up 1% of total illicit revenue in 2020. In 2021, they accounted for a whopping 37%.

## How does this scam operate? 

A pump and dump scheme operates on two levels:

1.	Insiders of the token promote and stir the price while they sell slowly.

2.	Scammers target a particular token and rally the token community to buy, triggering a soar in price. Whoever buys last is left with an empty bag.

Whichever one operates, there's a team of tech-enabled, motivated, and organized players at the centre. This team often includes internal investors who provide funding to buy the token and raise demand.

While the investors fund the artificial demand for the token, another team fuels the disinformation campaign, trumpeting non-existent use cases or completely false details about the token. With social media and instant messaging apps, marketing the good word about the token is easier. Platforms like Telegram, Twitter, Facebook, and YouTube have become breeding grounds for these marketers.

These marketers use famous people to help sell the tokens because they want to get people interested. Fear of missing out (FOMO) is what makes this scam work, so outside investors and traders rush to buy the token. The price crashes as investors realize too late that they invested in a scam.

## How to spot crypto pump and dump 

Generally, the first step to spot a bad investment is to do your own research. Look up the token, read the white paper, check the exchanges on which it is listed, the order book, and the token timeline. If it's too good to be true and has no clear purpose or utility, it's most likely a scam.

Second, an investor should understand that scams are modelled by psychological tricks. It's important to understand if FOMO is contributing to your decision on whether to invest or not. Always be self-aware. Are you investing because you don't want to miss out? Well, you may end up holding an empty bag.

Last year, some anonymous developers launched the SQUID token, riding on the success of the Netflix hit show Squid Game. Before the pump, SQUID was worth about two cents. Soon after the marketing ploy hit, the coin went from $0.01 to $38 within a week. The perpetrators rode on the FOMO and [made off with $12 million](https://www.yahoo.com/video/biggest-pump-dump-scheme-ever-123048530.html). Invest in various tokens. Only invest your money after you have carefully evaluated a project. If it crashes, take your money out while there's still time.

Another psychological trick these fraudsters use to ensnare you is the idea that everyone in a pump group is an insider. The truth is, as [Coffeezilla puts it](https://www.newyorker.com/news/letter-from-the-southwest/coffeezilla-the-youtuber-exposing-crypto-scams), “there is an insider within an insider club in all of these pump and dumps."
"Only true insiders are aware of the pump and dump signals before others."

If you're not a founding member of the token community, your investment will only amount to zero.
Why is a fashion influencer suddenly talking about some cryptocurrency? Your answer: it's most likely a scam. Influencers and celebrities are a major part of legitimizing a scam token. Their reputation (though paid for) is staked as a reason to buy.

A sudden spike in the price of a relatively unknown coin points to the "pump phase" of the coin. You can see on the price chart a sharp price hike. This is a red flag.

## Bottom line

The unregulated crypto industry opens the door for fraudulent players in the market. The high and fast profits from these pump and dump schemes entice scammers to take advantage of unsuspecting investors.

A vigilant investor knows to always be on the lookout for these scam schemes. You don't invest more than you're willing to lose while spreading your investment across different tokens. Only invest your money after you have carefully evaluated a project. If it crashes, take your money out while there's still time.


How to Spot a Pump and Dump

Sam Bankman-Fried, the detained founder of the bankrupt crypto exchange FTX, reportedly signed documents on 20 December that will see SBF handed over to Federal Bureau of Investigation (FBI) agents and taken to the United States, where he will face criminal charges.

Bankman-Fried was [reported](https://cointelegraph.com/news/sbf-signs-extradition-papers-set-to-return-to-face-charges-in-the-us) to have agreed to be [extradited](/news/article/former-ftx-ceo-sbf-arrested) to the US just hours after his lawyer told a judge in the Bahamas that he was not ready to consent.

## SBF is to be taken to the US to face criminal charges

According to Bahamas Acting Commissioner of Corrections Doan Cleare, Bankman-Fried signed his surrender documents on Tuesday. Today, SBF will sign separate papers finalising his waiver of rights to fight extradition at the Magistrate's Court in Nassau.
[Bankman-Fried](/news/article/sam-bankman-fried-lost-billions) is expected to be accompanied by FBI agents on a private flight back to the US, where he faces eight counts in an accusation by the US Attorney for the Southern District of New York. 

According to the [New York Times](https://www.nytimes.com/2022/12/20/technology/sam-bankman-fried-bail.html), Bankman-Fried's legal team is negotiating with federal prosecutors to allow him to be released on bail if he is extradited to the US.

According to sources, the agreement, which requires the approval of the federal judge overseeing the SBF case, could include highly restrictive conditions such as home custody and electronic monitoring.

## Allegations on SBF 

The Department of Justice has accused SBF of campaign finance violations, commodities and securities fraud, conspiracy to commit wire and money laundering, and wire fraud.

If found guilty of all charges, he could face up to 115 years in prison.

[The Commodity Futures Trading Commission and SEC (Securities and Exchange Commission) have filed additional charges](/news/article/ftx-boss-denied-bail-in-bahamas) against the founder of FTX for allegedly breaking commodity laws and defrauding investors.

After three years of rapid growth, FTX and numerous related companies filed for bankruptcy last month. The exchange was worth US$32 billion at its peak.

Authorities in the Bahamas and the US continue to investigate the involvement of SBF in FTX's collapse last month. The exchange was headquartered in the Bahamas.



SBF Agrees to Return to US to Face Fraud Charges

Karl Sebastian Greenwood, the co-founder of the fraudulent cryptocurrency OneCoin scam, has pleaded guilty to charges brought by the United States Department of Justice (DoJ).

[He faces a maximum of 60 years in prison](https://cointelegraph.com/news/4b-onecoin-scam-co-founder-pleads-guilty-faces-60-years-jail) if convicted of all charges. The DoJ said on 16 December that Greenwood had entered a guilty plea in a federal court in Manhattan to charges of money laundering conspiracy, money laundering conspiracy, and wire fraud conspiracy. Each charge carries a maximum potential sentence of 20 years in prison.

With the OneCoin scam, Greenwood is alleged to have operated "one of the greatest worldwide fraud schemes ever committed", according to US Attorney Damian Williams. 

## OneCoin Scam Promoted as a 'Bitcoin Killer'

Williams further asserts that Greenwood promoted the OneCoin sam as a "Bitcoin killer" despite the tokens being "totally worthless". Greenwood and "Cryptoqueen" Ruja Ignatova were the founders of OneCoin. It was a Bulgarian company that sold a cryptocurrency with the same name, and Greenwood was the CEO of the OneCoin scam.

According to emails that the DoJ collected between the two parties before the company's establishment in 2014, the individuals referred to it as a "trashy currency". Outwardly, it appeared to be a multi-level marketing company, with members earning commissions for allegedly selling cryptocurrency bundles containing OneCoin and the capacity to mine more cryptocurrency. This was the company's stated intention.

OneCoin could only be converted into fiat currency through the Xcoinx exchange, a private platform. It was a [combination of a pyramid and a Ponzi scheme](/news/article/bitcoin-motion-trading-bot-scam) since investors could bring in new members without a tangible product on offer. Later investors were compensated with the money from the initial investors. 

According to the DoJ, Greenwood's position as the "global master distributor" of the fake cryptocurrency enterprise resulted in him collecting around $21.2 million (€20 million) monthly. On 5 April, 2023, Greenwood is scheduled to appear in front of District Judge Edgardo Ramos to receive his punishment.


red onecoin store boarded up with karl sebastian greenwood in foreground

OneCoin Scam Co-Founder Admits Fraud

According to recent reports, authorities were alerted of the FTX's fraud before it made headlines. [Co-CEO Ryan Salame alerted Bahamian authorities](https://cointelegraph.com/news/ftx-bahamas-co-ceo-ryan-salame-blew-the-whistle-on-ftx-and-sam-bankman-fried) a few days before FTX filed for [bankruptcy](/news/article/ftx-bankrupt-who-to-blame) in November.

He alleged that founder Sam Bankman-Fried might have defrauded investors by [transferring money](https://cointelegraph.com/news/alameda-had-unfair-trading-advantage-special-access-to-ftx-funds-cftc-filing) to his sister company, Alameda Research.

## Ryan Salame takes on FTX and Sam Bankman-Fried

Contrary to the vast majority of market rumours, one of the company's top executives, not Changpeng Zhao (CZ) of Binance, was the one who brought down SBF and FTX. The declaration made on Wednesday is the first time an insider's turn against Bankman-Fried has been acknowledged publicly.

According to Bahamian court documents filed on 14 December, Ryan Salame, the former co-CEO of FTX Digital Markets (FDM), informed the SCB (Securities Commission of the Bahamas) on 9 November that the company was sending client funds to its sister trading company Alameda Research.

Salame claimed that the transfer was neither authorised nor approved by clients and that the money was intended to compensate for Alameda's financial losses. Furthermore, he disclosed to the SCB that only three people had the authority to transfer client assets to Alameda: the engineer Nishad Singh, the former CEO Sam Bankman-Fried, and Zixiao “Gary” Wang, the other co-founder of the company.

Salame claimed that he informed Bankman-Fried and Alameda executives that it was against "normal corporate governance" for client funds to have been mixed with Alameda's.

Following that, Christina Rolle, executive director of the SCB, requested an [investigation](/news/article/ftx-exchange-under-investigation) from the commissioner of the Royal Bahamas Police Force because the information “may have held misappropriation, theft, fraud, or some other crime".

The following day, 10 November, the [SCB froze FDM's assets](https://cointelegraph.com/news/bahamas-securities-regulator-freezes-ftx-assets) and suspended its registration in the country. A provisional liquidator was appointed by the Bahamian Supreme Court to try to save the company's assets.
According to the filings, Salame is believed to be in Washington, DC, and has not spoken publicly since the exchange's downfall.

His most recent public tweet was on 7 November, when he responded "lol" to Binance co-founder Yi He after He explained why the exchange [sold its FTX Token FTT holdings](/news/article/ftx-vs-binance-liquidate-funds).

## The collapse of FTX has had an absurd impact on the industry

Mixing SBF's companies' funds was a significant issue in the FTX scandal. In recent weeks, another former executive from FTX's affiliated companies is thought to have been assisting authorities.

On 4 December, images purportedly showing Alameda CEO Caroline Ellison in a coffee shop near the US Attorney's Office fueled rumours. Following the company crash, the cryptocurrency community believes she may have made a deal with authorities. 

Bankman-Fried is, to date, the only person charged in connection with FTX and Alameda so far. He is [accused](/news/article/ftx-boss-denied-bail-in-bahamas) of money laundering, political campaign finance violations, and wire and securities fraud.

Bankman-Fried, Wang, Singh, and Ellison are said to have run a "wirefraud" group chat on Signal, the encrypted messaging app, to send sensitive information about FTX and Alameda's operations. Bankman-Fried denied any knowledge of or participation in the group.


red image of ftx logo on mobile phone. Ryan Salame sitting in foreground. 

Co-CEO Ryan Salame Exposes FTX Truth

A [judge in the Bahamas has refused bail for Sam Bankman-Fried](https://www.bbc.com/news/technology-63967010.amp), the founder and former boss of the bankrupt crypto exchange FTX. According to the most recent sources, he will be detained by Bahamian authorities following his [arrest](/news/article/former-ftx-ceo-sbf-arrested) on 12 December, 2022.

Joyann Ferguson-Pratt, the judge in the case, has scheduled an extradition hearing for 8 February, 2023. The hearing was arranged in response to the decision to deny the former FTX boss bail.

## Ex-FTX boss in court

During the hearing, the attorney for the former FTX boss asked the judge whether SBF might be released on a $250,000 bond. The lawyer argued that his release is required since he requires daily medication.

Prosecutors in the Bahamas resisted the proposal, claiming it violated a treaty with the United States. The attorneys also stated that defendants should be imprisoned while extradition procedures were underway under the treaty provisions.

Bankman-Fried notified the judge that he would not forgo his right to contest the extradition. He then hinted that he could desire to stay in the Bahamas on purpose.

Bankman-Friend, wearing a blue suit without a tie, dropped his head and hugged his parents when the judge ruled that his danger of flight was "very severe". The judge ordered him to be detained in the Bahamas until 8 February.

## Allegations on FTX boss

After the Royal Bahamas Police was informed of a secret indictment by US prosecutors, they arrested SBF on Monday. The arrest was sparked by an unsealed indictment which included eight charges against SBF. These included conspiracy and wire fraud, for allegedly abusing billions of dollars in client payments before his cryptocurrency empire's stunning collapse last month.

Furthermore, the [SEC](/news/article/sec-crypto-enforcement-warning), CFTC, and the US Department of Justice filed complaints against Bankman-Fried on Tuesday for suspected securities and commodities fraud. Bahamas government officials are conducting civil and criminal investigations against him and FTX.

The day's events concluded a remarkable fall from grace for SBF, who created a fortune worth more than $20 billion as he rode a cryptocurrency boom to grow FTX into one of the world's largest exchanges.


red image of bankman fried in front of image of man in handcuffs. 

Former FTX Boss Denied Bail in the Bahamas

The founder and disgraced CEO of the failed crypto exchange FTX, Sam Bankman-Fried, was arrested on Monday after the US Government filed a criminal indictment.

These charges follow weeks of speculation that the FTX CEO misused customer funds.

## FTX CEO arrested

Sam Bankman-Fried, popularly known as SBF, was arrested by the Royal Bahamas Police Force. The police said that the arrest was initiated following receipt of formal notification from the US Government that it filed criminal charges and is likely to request that SBF be extradited.

In a statement, the Bahamas Police confirmed that Bankman-Fried was taken into custody without a hitch at his Albany apartment complex at 6pm.

SBF's arrest resulted from financial offences alleged in the US which would also be offenses in the Bahamas, the statement said.

A sealed indictment filed by the Southern District of New York was the basis for the arrest. US Attorney Damian Williams confirmed this in a [tweet](https://twitter.com/SDNYnews/status/1602451395910803457). 

Last month, the exchange filed for bankruptcy in the US after it imploded [almost overnight](/news/article/sam-bankman-fried-lost-billions), leaving customers unable to access their funds. According to court filings, FTX owed its largest creditors around $3.1 billion.

The dramatic fall from grace has been the talk of the market. The exchange's CEO was expected to testify about the [company's collapse](https://www.nytimes.com/2022/12/09/technology/ftx-text-messages.html) in Congress on Tuesday.

## Bankman-Fried future looks clouded

According to the [New York Times](https://www.nytimes.com/2022/12/12/business/ftx-sam-bankman-fried-bahamas.html), the charges filed against Bankman-Fried include wire fraud, wire fraud conspiracy, securities fraud, security fraud conspiracy, and money laundering.

However, it's still unclear whether customers will be able to recover some, if not all, of their funds. A 2 November report on ties between FTX and Alameda, a trading company also controlled by the FTX CEO, exposed that Alameda's balance sheet was overexposed to FTT currency (FTX's token).

According to the extradition treaty between the US and the Bahamas, defendants may be returned to the US provided their offenses carry a minimum one-year sentence in both countries.

The 30-year-old has recently disregarded legal counsel and increased his public appearances, providing his version of his company's abrupt failure and typically portraying himself as an inept CEO.

"I didn't knowingly commit fraud," he said during a BBC at the weekend. SBF told the interviewer he didn't want any of this to happen and added that he was "not nearly as competent" as he believed himself to be.



red image of crime scene with pictures of Sam Bankman-Fried and a sign that says "bahamas"

Former FTX CEO Sam Bankman-Fried Arrested

South Korean prosecutors claim that the founder and CEO of [Terraform Labs](https://www.terra.money/), Do Kwon, is hiding in Serbia. They believe he left Singapore a couple of months earlier and moved to Serbia. 

[Do Kwon](/news/article/do-kwon-terra) is hiding as he was charged with a breach of financial laws. He is involved in the controversial collapse of the Terra ecosystem that startled the market. However, the global manhunt for the crypto fugitive is still going on. 

A report by [Chosun Media](https://www.chosun.com/economy/stock-finance/2022/12/12/VXFAUH7R7BFSVCYDEM7RNPRCXI/) says that the investigation authorities have stated that they received intelligence about his whereabouts in Serbia. They investigated further and “found it to be true".

## Do Kwon hiding: South Korean authorities seek cooperation

The South Korean investigation authority is already seeking to cooperate with the Serbian government. The Chosun Media report also suggests that the Financial and Securities Criminal Unit of Seoul Southern District Prosecutor will request assistance from Serbian officials. 

The authorities have yet to discover why Do Kwon left for Serbia. They believe it is only to avoid investigation and prosecution.

The notorious figure in the crypto industry earlier moved to Singapore just before [Terra-Luna collapsed](/news/article/terra-luna-collapse). In September, Seoul’s prosecutors issued red warrants for his arrest. The charges included breaching capital market regulations and also giving false information to investors. 

Since then, his whereabouts have not been known. The Korean authorities are yet to track down the fugitive's exact location. In October, they found out that he had left Singapore. He is believed to fly to Dubai and then to an unknown country. Singaporean officials also confirmed this news. 

![do kwon.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/do_kwon_810aeec14a.png)
  
In October, South Korea's Ministry of Foreign Affairs issued a warrant to surrender his passport. However, they have yet to get a response. Meanwhile, on Twitter, he maintained that he was not trying to hide.


red image of serbia with do kwon on foreground

Do Kwon hiding in Serbia, claim Prosecutors

A [report](https://www.wsj.com/amp/articles/ftx-hires-forensic-team-to-probe-money-trail-11670446435?mod=lead_feature_below_a_pos1) from the Wall Street Journal (7 December) claims that FTX has formed a team of financial experts to trace billions of dollars in “missing” customer funds from the company.

The new management at FTX is looking to get to the bottom of the entire crisis, and they’re not aiming for a slow process. The team has outsourced the matter to a group of financial forensic experts to find out how and where the funds could have gone missing.

To be specific, [AlixPartners](https://www.alixpartners.com/), a firm that specialises in financial matters, has been trusted with this mountain of a task. This advisory committee will be led by Matt Jacques, formerly with the US Securities and Exchange Commission (SEC) as a chief accountant.

FTX will try to recover as many of the missing assets as possible with the help of this newly formed committee. Furthermore, the crypto company will need further assistance to rebuild its financial infrastructure from the ground up.

## Summary of the FTX crash

If you're even the slightest bit involved in the crypto industry, you've probably heard the name FTX pop up a few times over the last couple of months - and not in a good light. The crypto company has been under fire for letting almost $450 million of customer funds disappear.

The whole debacle and the story of "[who’s to blame](/news/article/ftx-bankrupt-who-to-blame)" is a mystery, even after months of speculation.

It's not the first time the company's CEO, Sam Bankman-Fried, has been alleged to have mismanaged customer funds. In an interview with [Vox](https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy), Bankman-Fried claimed to have passed customer funds through Alameda Research, FTX’s sister company. He did admit his lack of control over his company’s operations, as he [tweeted](https://twitter.com/sbf_ftx/status/1590709166515310593?s=46&t=Br1_HGNzUBwspKZ7pF6myA), "I'm sorry. I f--d up" after the fiasco broke.

The company filed for bankruptcy in November. It's difficult to see them making a comeback, largely due to two major factors:

•	The global negative PR that the company has been a victim of over the period of several months.

•	A low probability of recovering the lost funds.

FTX’s new management will need a miracle to even get crumbs from this entire mess.



red image of money with sam bankman-fried in the foreground

FTX Brings in Financial Experts

Tornado Cash developer Alexey Pertsev could be in custody until February after being detained in the Netherlands.

Before Advocate WK Cheng gave his first defence argument on [22 November](https://uk.news.yahoo.com/tornado-cash-developer-alexey-pertsev-132129612.html), the prosecution provided a detailed summary of its research. It depicts Pertsev as a pivotal actor in the operation.

## Defence view

Cheng outlined numerous use cases for Tornado Cash and common misunderstandings about its capabilities.
"I am upset with the [court's](/news/article/pgi-global-closed) ruling. We've attempted to convey the defence's positions as plainly as possible," Cheng said after the preliminary hearing. 

The attorney acknowledged that the first session had been rescheduled for 20 February, 2023, and reaffirmed his conviction that the state had provided a biased interpretation of Pertsev's connection with [Tornado Cash](/news/article/tornado-cash).

Despite a slew of pledges from his defence team, including home surveillance and check-ins at the local police station each week, the prosecution expressed anxiety that Pertsev might flee if released before the first session. The attorney added that they would make some requests and investigations, and there are certain things they need to work out to be ready for the next court session.

## Positive support for Pertsev 

In a Tweet, crypto investor Ryan Adams [stated](https://twitter.com/RyanSAdams/status/1562475044126699521) that the Tornado Cash creator did something positive for the public by writing the code. The forum member said that "a few evil folks" opted to utilise Pertsev's code, and now the developer is paying the price. 

Aside from Adams, crypto expert Jill Gunter [said](https://twitter.com/jillrgunter/status/1562549817535959040) they hadn't released enough information on Pertsev's arrest. Gunter called the accusations' current position "confusing", describing the scenario as a "scary problem".

Protesters gathered in Amsterdam to demand the developer's release. Protesters chanted, "open source is not a crime", urging the authorities to apprehend the criminals rather than the creators.

On 12 August, the court [detained](https://www.theblock.co/post/163297/arrested-tornado-cash-developer-is-alexey-pertsev-his-wife-confirms) the developer on allegations of money laundering using the Tornado mixer. Authorities in the Netherlands stated that the mixer was used to conceal large amounts of money from criminals and can link to crypto frauds and hacks.


Tornado Cash Developer Stays in Detention

The FTX exchange is being investigated for mishandling consumer funds and violating securities regulations. Regulatory investigations were among the primary reasons Binance decided not to acquire the firm.

## FTX exchange agreed to sell to Binance

After undergoing the cryptocurrency equivalent of a bank run, the [crypto business](https://fortune.com/crypto/2022/11/10/ftx-sam-bankman-fried-doj-sec-examining-source-says/) decided earlier this week to sell itself to a larger rival, Binance. Customers abandoned the exchange after getting worried about their capital.

## Why is SEC investigating the FTX exchange?

The [cryptocurrency market](https://www.reuters.com/technology/us-probes-ftx-over-handling-client-funds-bloomberg-news-2022-11-09/) has been volatile, with worries over the company's financial stability leading to $6 billion in withdrawals in the 72 hours following Tuesday morning. Binance later announced a [non-binding deal](https://www.reuters.com/markets/currencies/cryptocurrencies-slide-concerns-over-ftx-exchange-rattle-markets-2022-11-08/) to purchase FTX's non-US business to address a "liquidity constraint" at the rival exchange.

According to the source, the SEC is also looking into the business's ties with its US equivalent FTX US and Chief Executive Officer Sam Bankman-Fried's trading firm. The SEC does not want to speak on the existence or nonexistence of a prospective probe, said an SEC representative. A CFTC spokeswoman declined to comment as well.

The crypto community's and securities authorities' inquiry into [Bankman-Fried](/news/article/sam-bankman-fried-lost-billions) and his crypto company are centred on the potential that the firm utilised client deposits to support bets at Bankman-hedge Fried's fund, Alameda Research. Brokers in conventional markets are supposed to keep customer cash apart from other firm assets. Regulators can punish violations. 

An individual acquainted with the [FTX and Binance](/news/article/ftx-vs-binance-liquidate-funds) transactions described them as a "black hole" in which it was hard to distinguish between assets and liabilities. This individual said Bankman-Fried committed the "ultimate sin" by using custodial assets to support Alameda Research.

## Gensler's view on FTX exchange

Under Democratic leadership, the SEC has increased its examination of the cryptocurrency industry. Chair Gary Gensler has already expressed concerns about whether crypto platforms effectively separate funds and if their market-making operations are trading against their clients.

Earlier this year, a cryptocurrency start-up BlockFi Inc subsidiary [agreed to pay](https://cointelegraph.com/news/blockfi-limits-platform-activity-including-a-halt-on-client-withdrawals) a record penalty to resolve allegations connected to its retail lending product. Other organisations, like FTX, enable users to "stake" certain cryptocurrency tokens in exchange for a return.



FTX Exchange Under Investigation

The [US Feds](/news/article/us-fed-crypto-rates-hike) announced Monday that it had [seized approximately $3.36 billion worth of Bitcoin stolen](https://www.nbcnews.com/now/video/feds-announce-seizure-of-3-36-billion-in-stolen-bitcoin-152877125774) during an unannounced 2021 raid on James Zhong's home.

Zhong pled guilty on Friday to one count of wire fraud, with a maximum prison sentence of 20 years.

According to the Feds, on November 9, 2021, US authorities seized approximately 50,676 Bitcoin, valued at more than $3.36 billion, from Zhong during a search of his house in Gainesville, Georgia. It is the Feds' second-largest financial seizure to date, following its February announcement of $3.6 billion in allegedly stolen [cryptocurrency](/news/article/impact-of-cryptocurrency-on-society) linked to the 2016 hack of the [crypto](/news/article/crypto-hacks-peak-hacktober) exchange Bitfinex.

The raid was part of an investigation led by the United States Attorney's Office in Manhattan into the whereabouts of thousands of missing coins linked to Silk Road founder Ross Ulbricht. 

[Bitcoin](/news/article/bitcoin-prime-review) was trading more than $60,000 at the time of seizure, boosting the worth of the loot for investigators by billions of dollars. The digital currency is currently worth around $21,000. As per current data, the seizure is worth just 1 billion dollars. 

## How much Bitcoin, other crypto and cash was stolen? 

Zhong began his criminal behaviour in 2012 when he defrauded Silk Road, a website known for trading drugs and cryptocurrencies, out of more than 53,000 Bitcoin. According to court documents, he set up a series of Silk Road accounts to mask his identity. He carried out 140 transactions quickly to trick the platform into releasing Bitcoin into those accounts. Zhong then transferred the [digital currency](/news/article/cbdc-uk) into other accounts under his control.

Prosecutors claim that 50,000 Bitcoin were found in an underground safe and a single-board computer in a popcorn tin beneath a pile of blankets in Zhong's bathroom cabinet. He has since surrendered over 1,000 more coins and agreed to assist prosecutors in accessing the remaining coins and providing technical assistance.

Zhong agreed to sign over his 80% business ownership to the government as part of his plea deal for the Silk Road fraud. According to the forfeiture order, prosecutors also seized 25 Casascius coins worth 174 Bitcoin and $661,900 in cash. On Friday, Zhong was set free after posting a $310,000 bond.





Feds seize $3.36B Bitcoin stolen in crypto scam

According to the most recent statistics, October has broken all records for crypto exploits and the number of digital assets stolen, living up to its new name of "Hacktober."

PeckShield, a blockchain security company, [tweeted](https://twitter.com/PeckShieldAlert/status/1587112410082512897) some alarming data on October 31. The company stated that $2.98 billion in digital assets had been stolen, almost twice the $1.55 billion lost in 2021.

According to the report, October 2022 saw 44 exploits affecting 53 protocols. In just one-month, malicious actors stole $760M. However, $100M was refunded. 

March has been the second-highest month for hacked funds after October, with $710M stolen. Most of this came from the Ronin bridge exploit, which resulted in the theft of $625M in crypto assets.

According to PeckShield, the top October exploit was the [BNB Chain](/news/article/bnb-chain-security-system), which lost $586M. The second major exploit of the month was the Mango Markets DeFi protocol, despite an agreement with the exploiter to return some funds and [fix the crypto hack](/news/article/bankman-fried-crypto-hack-fix).

## DeFiYield's Rekt crypto hack data

According to [DeFiYield's Rekt Database](https://defiyield.app/rekt-database), there were several other notable exploits in October. These include the $60 million rug pull of the [Freeway crypto](/news/article/freeway-crypto-halts) yield platform, [Transit Swap](/news/article/crypto-hacker-transit-swap), which lost $29 million, Team Finance, which lost $13 million; and Moola Market, which lost $9 million.
 
On November 1, DeFiYield published its [report](https://blog.defiyield.app/report-over-1b-lost-in-october-in-crypto-scams-d27d03c15efd) outlining the dire circumstances surrounding the hackfest that took place the previous month.
 
The report states that over $1 billion was lost to crypto scams, including rug pulls, Ponzi schemes, and direct protocol exploits. DeFiYield reported 35 incidents, 15 of which were rug pulls.
 
On a more upbeat note, the report noted that in 2022, nearly $890 million in cryptocurrency funds had been recovered.

Chainalysis declared Hacktober "the biggest month" for crypto hacks.

Chainalysis, a leading blockchain analytics firm, has previously declared [October "the biggest month" for cryptocurrency hacks](/news/article/crypto-hacks-peaking-october). According to the data released by the firm, the total value hacked reached $718 million by the middle of the month.
 
 
 



Crypto hacks peak in "Hacktober"

Ruja Ignatova, aka Cryptoqueen, the founder of OneCoin, has been on the run since 2017. She is allegedly involved in a multibillion-dollar [Ponzi scheme](/news/article/crypto-hacks-peaking-october).

Now, three of her associates have been presented to the German court. The charges against them include money laundering, fraud, and embezzlement.

On 18 October, a lawyer from Munich and a couple who allegedly worked for Cryptoqueen appeared in court. [Reportedly](https://www.bloomberg.com/news/articles/2022-10-18/onecoin-s-cryptoqueen-associates-face-german-fraud-trial#xj4y7vzkg), the lawyer helped Ignatova in purchasing two apartments in London. For this, it is claimed, he transferred $19.7 million (€20 million) from the Cayman Islands.

The couple was allegedly involved in payment handling for [OneCoin](https://www.investopedia.com/terms/o/onecoin.asp). Within a year, they are said to have dealt with $315.4 million (€320 million).

## Charges of $4 billion against Cryptoqueen’s OneCoin

Ruja Ignatova founded the OneCoin platform in 2014. She falsely claimed that it is a cryptocurrency and trade platform. However, after the US’s Federal Bureau of Investigation ([FBI](https://www.fbi.gov/)) investigated, it turned out to be a multi-level marketing [Ponzi scheme](/news/tag/scam). 

The platform allured investors through false claims. It claimed to run a token mining program, but in truth, there was not any. As per the investigation by the FBI, Cryptoqueen's company scammed more than three million investors. The total amount fraudulently obtained is roughly $4 billion.

Ruja Ignatova disappeared in 2017. Reportedly, she was last seen in Athens, Greece. The FBI also added her to the top ten most wanted criminals list. The bureau also announced a $100,000 reward for anyone who could share information about her whereabouts.

The OneCoin company also allegedly bribed the presidents of Bulgaria and Serbia. An economist, Angelina Lazar, claimed this in an [interview](https://cointelegraph.com/news/angelina-lazar-presidents-of-serbia-bulgaria-took-bribes-from-onecoin-my-war-against-onecoin-part-2). 

Previously, some other actors who were part of the company also faced charges. Christopher Hamilton was one of them. He faced [money laundering](/news/article/crypto-aml) charges involving around $105 million in embezzlement. 

Ruja’s brother, Konstantin Ignatov, was also accused of money laundering and pleaded guilty in 2019.



cryptoqueen ruja ignatova and crypto fraud

Cryptoqueen Associates Face Fraud Trial

Token hash values are random strings generated every time a password is saved on your computer, smartphone, or anywhere on the internet. [Token](/news/article/crypto-coin-vs-token) hash values are usually encrypted, but sometimes they can be easily decoded, and all the sensitive information is sent to any hacker who cares to listen. With token sniffing, all you need to hack into accounts is a sniffer, a database of stolen tokens, and a [database of leaked passwords](/news/article/celsius-data-breach), along with their corresponding token hashes.

## Dangers of Public WiFi

A token sniffer steals user data by monitoring and collecting the encrypted data that passes between your computer and a network. This information can include usernames, passwords, and other sensitive information.

This attack can happen when surfing the web on public WiFi networks, like at your local coffee shop or airport lounge. Hackers can use special tools to monitor the traffic passing through their device's WiFi card and steal any data transmitted over the network.

The dangers of public WiFi include the fact that anyone can use it within range to access your data. [A VPN will also protect your](/news/article/reddit-using-vpn-for-crypto) login details from hackers while on public networks such as airports or coffee shops where lots of people gather together in one place.

## How Can You Safeguard Your Information?

Token sniffer attacks are a common way to compromise an organization's network. In addition to collecting information about a user's account, this attack allows someone to access their network connection and remotely log into their system as if they were using it themselves.

There are ways for you to safeguard your information from token sniffers.

First, you should ensure that you're using [two-factor authentication](https://www.investopedia.com/terms/t/twofactor-authentication-2fa.asp) whenever possible. You'll need more than just your password when you log into a site. You'll also need a code sent to your phone or email address to verify that it's you trying to get into the account.

Second, if you don't already have a strong password for each account, consider creating one now. A strong password comprises letters and numbers (no symbols), and it should be at least 12 characters long - more if possible!

Third, don't use public computers or public WiFi networks when signing into sensitive sites like banking accounts or social media platforms because these connections can leave your information vulnerable to sniffing attacks.
 


Token Sniffer Threats and You

[Chainalysis](https://www.chainalysis.com/), a leading name in blockchain analytics, has declared October as 'the biggest month' for crypto hacks. Although we have yet to reach the month's midpoint, the firm has predicted that hacking activities will be peaking this month. The total value hacked in October 2022 has already reached [$718 million](https://twitter.com/chainalysis/status/1580312145451180032). 

Besides, 2022 will also be the biggest year so far for crypto [hacks](/news/article/binance-hack), according to Chainalysis. Previously, 2021 saw the highest rate of [cyber-attacking activities](/news/article/crypto-youtube-pennywise) on blockchains. However, at the rate these incidents are happening currently, they will likely surpass the total number of hacked amounts in 2021. 

## Crypto hacks in October, so far

The month has already seen some major hacking incidents. In total, there have been 11 instances where cryptocurrencies have been exploited. Meanwhile, on October 11 alone, there were four cyberattacks on blockchains and DeFi platforms. 

These incidents have drained more than $122 million worth of cryptocurrencies. The platforms affected by these cyberattacks include [Rabby Wallet](https://rabby.io/), Ethereum bridge of [QANplatform](https://www.qanplatform.com/), [TempleDAO](https://templedao.link/), and Solana Mango Markets. 

## 2022 is to be a record year for crypto hackers

This year is also going to be a record 12 months for hackers. Last year, cybercriminals exploited around $3 billion. The ongoing year has already seen over 125 blockchain hacking incidents. As per Chainalysis, the last 12-month amount will likely be surpassed if this trend persists.
 
Though the market is going through a [severe downturn](/news/article/bitcoin-price-crash-celsius), cybercriminals continually make more hacking attempts. Meanwhile, there has been a shift in projects they are targeting in the market. 

Previously, centralised exchanges were the main target of hackers. However, later they started focussing more on the DeFi protocols. This year, 90% of the hacking incidents were also on the DeFi protocols. On the other hand, these incidents are affecting the investors' confidence in DeFi projects. 

Besides, multichain bridging has also gained the attention of blockchain cyber attackers. In October, three cross-chain bridges were breached, making up around 82% of the amount exhausted this month.
 
 
 
 
 
 



Crypto Hacks Peaking in October - Chainalysis

Globex is a crypto exchange that also introduces its cryptocurrency, [GEX](https://crypto.com/price/globex). This broker allows you to make trades with cryptocurrencies. Though the GEX token's value is not quite impressive, the project has gained popularity among investors. However, there are concerns about a Globex crypto scam.

However, many users have also raised concerns that the exchange is running a scam. Besides, its website (globexcrypto.com) is not currently accessible. Moreover, other resources like its whitepaper and Medium account are also unavailable.     

This article considers some of the major questionable indicators and uncover the Globex crypto scam.

## What is Globex crypto?

It is a cryptocurrency exchange that deals with only digital asset trading. However, some sources suggest that it may include fiat currencies in its offerings in the future. The exchange also introduced its native token, GEX, through an initial coin offering. At the time of writing, the token's worth is $0.00001365, and its market cap is $512,933.

[CoinMarketCap](https://coinmarketcap.com/currencies/globex/) suggests that the GEX reached its highest value of $0.00008286 two years ago, in August 2020. Since then, its price has been down by more than 83%. Currently, it is not listed on many exchanges; only [Mercatox](https://mercatox.com/) offers the trading pair of GEX/ETH. 

## Globex crypto scam: The indicators

Various indicators suggest that Globex crypto could be a [scam](/news/tag/scam). Let's take a look at them.

1.	One of the primary reasons is its website's inaccessibility. Since the project does not give any verifiable information, it concerns the users.

2.	It is unavailable on most of the top-ranked and trusted exchanges. 

3.	The exchange is not licensed by any country’s financial regulatory body.

4.	There is no whitepaper or other documentation available for the users.

5.	There is a lack of information about the founding members of this project.

6.	Most scam-detecting sites give it a low trust rating.

7.	The platform is not present on any social platform, so there is no way users can get updates about it. 

There are many red flags that validate the view of GEX being a scam.     

## Is Globex crypto a scam? 

It is not possible to rule out it being a scam when so many indicators exist. The platform has almost no online presence currently. Therefore, it seems like a serious rug-pull scheme, where scammers disappear after getting their clients' funds.  

Moreover, user reviews also hint toward its deceptive scheme. Reviews on Trustpilot point out that the platform claims to give free [Ethereum](/coins/eth). Yet, later it asks about depositing an initial amount. Also, some reviews say that scammers contact you and offer free Ethereum. But, it is only to get information about you, and later they might use it against you. 

Besides, no regulatory authority like the [FCA](/news/tag/fca), [SEC](/news/tag/sec), or others has registered this platform. Plus, the token is not listed on any of the trusted exchanges.    

## Final thoughts

Cryptocurrency scams vary and Globex seems to be one of them. After gaining popularity, the platform has disappeared from the internet, which seems to be a potential rug pull. 

That’s why it’s advisable to avoid dubious projects like these. Therefore, always ensure to carry out comprehensive research and read the reviews online before investment to reduce the chances of falling prey to such


The Globex Crypto Scam Uncovered

[Celsius network](https://celsius.network/) was recently accused of withdrawing large sums of money before the bankruptcy filing. There is a development in the Celsius data breach, as the document containing its client information has been publicised. It confirms that the company’s executives cashed out around $17 million just before [filing for bankruptcy](/news/article/celsius-bankruptcy-protection). 

The [document](https://drive.google.com/drive/folders/1M2QNrghkgBg3T2ZkRVVD47QpjgR8r6HB) on the internet contains information about the crypto lender’s clients. There are details about the names, emails, and crypto assets that the clients own. Through this, anyone can verify how many assets their customers have with them.

## Crypto lender withdrew $17m before bankruptcy

The executive body of the [crypto asset](/news/article/celsius-crypto-news) lending company withdrew large sums before filing bankruptcy protection. Among them, former CSO Daniel Leon and former CEO Alex Mashinsky are the top names. They allegedly cashed out BTC, ETH, CEL, and USDC tokens from their accounts. 

This was before the company announced bankruptcy and suspended its customers’ withdrawal. Other than that, the document does not show other notable withdrawals. 

## Customer.io accused of Celsius data breach

Earlier, the crypto lending firm admitted to the [Celsius](/news/article/celsius-network) data breach. The bankrupt firm warned its clients that the breach occurred through a third-party platform. Allegedly, an individual from the email delivery service provider, [Customer.io](https://customer.io/), was responsible for the violation. However, initially, the company downplayed the risks of the breach and later warned its customers through email. 

In [response](https://customer.io/blog/update-to-compromised-email-addresses-incident/) to the incident, the third-party platform blamed an engineer in management who had authorised access. He compromised the client details by providing them to cybercriminals. 

The firm further maintained that it was an individual’s actions and that the firm itself is not responsible. Meanwhile, the same platform was also behind the compromised emails of the NFT marketplace, [OpenSea](https://opensea.io/).



Celsius data breach reveals exec’s withdrawing $17m

The "temporary" suspension is due to "irregular behaviour" and a "possible exploit," according to BNB Chain on [Twitter](https://twitter.com/BNBCHAIN/status/1578148078636650496). The team stated that all systems are now isolated, and they are examining the possible vulnerability promptly. It also asserted that all monies are secure. They had also halted all BNB deposits and withdrawals on the exchange due to "maintenance" on the Chain. 

However, Twitter user and DeFi creator "foobar" had a [different take](https://twitter.com/0xfoobar/status/1578140914283065344) on the matter. He said an attacker took 2 million BNB from "someone" on the network, which is worth around $600 million.

## Evidence of Binance hack

Foobar continued by saying that the attacker is dumping money into liquidity pools and using any bridge to go to safer chains. A snapshot from a block explorer showed the suspect had $532 million in crypto scattered over several EVM-compatible chains and L2s, according to the user. These include $421,000,000 on the BNB (79%) and another $53 million on Ethereum (10%).

The address's total assets are $421 million, matching the foobar snapshot. Which is supported by BNB data, which shows precisely 1,020,094 BNB parked at the same spot, valued at $288 million. 

According to the explorer, the address was previously detected as part of the "BSC bridge attack," as [revealed](https://twitter.com/AnciliaInc/status/1578155138857914368) by the Web 3 cybersecurity organisation Ancilia. Tether, the creator of the world's largest stablecoin, has already [blocked](https://twitter.com/0xfoobar/status/1578144109206073344) the account.

## Can funds be recovered from the Binance hack? 

[BNB](/news/article/bnb-chain-security-system) had recently [verified](https://twitter.com/BNBCHAIN/status/1578163230790520832) that about $70 to $80 million in assets vanished from the platform before being suspended. Another $7 million of the escaped monies became blocked due to "the community" and [Binance's](/news/article/binance-bridge) "internal and external security partners." 

The business also acknowledged several organisations for their assistance, including CertiK, Ankr, and Coinbase Cloud.



$600mil Binance hack leads to BSC pause

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