Cryptocrime Digest (12 October 2020)
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Our Top 5 Articles From the Week
John McAfee Indicted For Tax Evasion, Accused Of Hiding Cryptocurrency, Yacht From IRS
The indictment alleges McAfee earned millions from promoting cryptocurrencies, consulting work, speaking engagements, and selling the rights to his life story for a documentary, but did not file tax returns from 2014 to 2018. Authorities also allege McAfee concealed assets from the IRS, including real estate, a yacht, a car, and cryptocurrency. He was indicted on June 15, but the document was unsealed Monday after he was arrested in Spain, where he awaits extradition to the U.S. [Forbes]
US Unveils Enforcement Framework to Combat Terrorist, Criminal Cryptocurrency Activities
US officials have outlined how criminal applications of blockchain technologies and cryptocurrency should be responded to through a new framework. While the possibilities of the blockchain are considered “breathtaking” prospects that could allow humans to “flourish,” the new “cryptocurrency enforcement framework” focuses on darker applications — such as the use of virtual assets in criminal enterprises. The US Department of Justice (DoJ), together with Attorney General William Barr, announced the public release of the framework on Thursday. [ZD Net]
Europol Says Cybercrime Involving Crypto Still Widespread
A Europol report on internet organized crime, published last week, claims that cryptocurrencies are playing an important role in cybercrime. The use of cryptocurrencies in facilitating crime has been long established. As early as 2011, the infamous Silk Road darknet web laid bare how criminals were using crypto to deal in illegal drugs, with other darknet markets specializing in weapons, identity theft, and child exploitation. Eleven years on from the birth of the crypto industry, Europol’s report suggests lessons have still to be learned. [Decrypt]
UK FCA Bans Sale of Crypto-Derivatives to Retail Investors
Britain’s financial watchdog has banned the sale of cryptocurrency derivatives, saying they have no value for ordinary investors. The Financial Conduct Authority, which first proposed a ban in July 2019, said the prohibition would prevent 53 million pounds ($69 million) a year in losses for retail investors once it comes into force on Jan. 6. Customers with existing holdings will be allowed to remain invested as long as they wish. [Bloomberg]
OFAC Warns That Firms Helping Victims With Ransomware Payouts Risk Violating Its Rules
The Office of Foreign Assets Control (OFAC) has warned that paying out to recover from ransomware attacks can be a breach of its rules. In an advisory issued last week, OFAC — a wing of the U.S. Department of the Treasury — said there’s a sanctions risk with complying with such demands, which have increased since the start of the coronavirus pandemic. The Office specifically pointed to companies that facilitate negotiations with cyber attackers regarding ransomware payouts.
Merkle Science News
Upcoming Webinar: Are Japan-based Virtual Asset Service Providers (VASPs) Ready for the FATF Travel Rule?
The latest in our webinar series focuses on the FATF Travel Rule compliance by Japanese VASPs. Join us for a panel discussion on Thursday, 15th Oct at 7:00 PM JGT (UTC+9).
Hack Track: ETERBASE Cryptocurrency Exchange
Similar to Upbit’s hack, the ETERBASE hack is another case where the stolen cryptocurrency stored in a hot wallet (where the private keys are available in a database connected to the internet) that did not require multiple signatures (multi-sig) by operators of the exchange to sign an outgoing transaction. Therefore the hackers are able to retrieve the wallet’s private keys and sign the subsequent outgoing transactions without significant challenges.
About Merkle Science
Merkle Science provides blockchain transaction monitoring and intelligence solutions for cryptoasset service providers, financial institutions and government agencies to detect, investigate and prevent the use of cryptocurrency for money laundering, terrorist financing, and other criminal activities. Merkle Science is headquartered in Singapore with offices in Bangalore, Seoul, and Tokyo and backed by Digital Currency Group, Kenetic, SGInnovate, and LuneX.
