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US Federal Bureau of Investigation Calls for QuadrigaCX Users to Provide Information

The United States Federal Bureau of Investigation called for former users of the QuadrigaCX crypto exchange to answer a survey.

The United States Federal Bureau of Investigation (FBI) called for former users of the QuadrigaCX cryptocurrency exchange to provide information in an official announcement published on June 3.

Earlier this year, QuadrigaCX had filed for creditor protection after the unexpected death of its founder left more than $145 million in funds apparently inaccessible.

The FBI announcement asks people who lost funds due to the insolvency of the exchange in question to fill in a questionnaire asking about various details concerning their experience with the company and personal data:

“If you have questions or concerns about your QuadrigaCX account, or if you believe you are a victim, please complete the below questionnaire. […] Based on the responses provided, you may be contacted by the FBI and asked to provide additional information.”

The form itself asks former QuadrigaCX users for their usernames and whether they have access to the addresses of the exchange’s hot wallets and old transaction IDs. The questionnaire also asks whether the respondents provided document scans and identifying information to the exchange, and what funds they held in their account. The FBI notes that those that respond to the survey may be asked for additional information that could be useful in the investigation.

As Cointelegeraph reported in May, a new report from Big Four audit firm EY outlined the assets and debts of major Canadian crypto exchange QuadrigaCX and its subsidiaries, revealing that Quadriga has around $20.8 million in assets and around $160 million in liabilities as of April 12, 2019.

Separately, an April 30 indictment of two individuals on multiple counts — including bank fraud and operating an unlicensed money transmitting business — showed an apparent connection to the shadow banking services that were used in two recent high-profile crypto exchanges, one of which being QuadrigaCX.

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FBI and Israeli Police Take Down Bitcoin-Enabled Darknet Listings Site

Israeli police and the United States Federal Bureau of Investigation have arrested at least two men and reported others.

Israeli police and the United States Federal Bureau of Investigation (FBI) have arrested at least two men and reported others in a takedown of a bitcoin-enabled dark web listings site, the Israeli police force announced in two official tweets on May 7.

The police revealed that a cross-border investigation successfully traced several suspects who allegedly founded and administered a darknet site — identified as Deep Dot Web in local media reports — which was reportedly a resource for finding illegal dark web marketplaces. Such listed sites hawk illicit goods, such as drugs, weapons, or stolen credit cards, the police alleged.

In a second tweet, the announcement continued to outline that:

“The owners of the site raked in millions of dollars through an ‘affiliate marketing’ method, thereby earning from every sale done through them. The payment for the transactions was carried out using bitcoin. The 2 suspects arrested in Israel will be brought before a judge for a hearing regarding their potential detention extension.”

While Israeli police confirmed the arrest of two individuals in their 30s in the local cities of Tel Aviv and Ashdod, Israeli newspaper JPost and technology media outlet Tech Crunch reported that further related arrests have also been made by cross-border investigators in France, Germany, the Netherlands and even Brazil.

As reported, darknet marketplaces are accessed using services such as the Tor browser, which uses so-called onion routing — a technology for anonymous information exchange — so that users can remain concealed and circumnavigate censorship by disguising their IP-address.

The Deep Dot Web arrests follow a joint operation by the German police and Europol last week to take down the dark web marketplace Wall Street Market. The action resulted in the seizure of millions in cash, reported six figure amounts in cryptocurrencies, and other assets, as well as the arrest of three German citizens.

While cryptocurrency and its history of usage in darknet dealings became notorious in the aftermath of the closure of the illicit marketplace Silk Road, a two-year study of the dark web ecosystem — published in February 2018 — claimed that bitcoin may be losing its cachet as the number one currency on darknet markets, reportedly due to users’ frustrations with network traffic and transaction fees.

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FBI Has 130 Ongoing Crypto Cases, a ‘Small Sliver’ of All Investigations, Agent Says

FBI agent Kyle Armstrong said the Bureau has 130 ongoing crypto-related cases, with dark web drug sales a particular concern, Bloomberg reported Wednesday, June 27.

Speaking at the Crypto Evolved conference in New York on Wednesday, the supervisory special agent said the number represented “a small sliver,” of the FBI’s activities, which number “thousands of cases.” The agency has nonetheless noticed an increase in illegal activity facilitated by cryptocurrency payments, he said.

The 130 “threat tagged” files related to crypto span a gamut of crimes, including human trafficking, kidnapping, ransomware attacks and illicit drug sales.

This latter has become a focus for the Bureau, according to Armstrong, highlighting the opioid epidemic in the U.S. He considered the dark web to be a factor in enabling drug abuse, saying that 10 percent of global drug users make their purchases on illegal online marketplaces.

Armstrong’s figure of 10 percent is notably not higher than statistics released by an older Global Drug Survey from 2017, which found the global median for the percentage of drug users who use the darknet to be 10.1 percent. 90 percent then, continue to purchase illicit substances via more ‘traditional’ methods.

Armstrong, who manages the three-year-old Virtual Currency Initiative for the FBI as it relates to money laundering activities, said that while the underlying blockchain technology makes it easier for investigators to trace cryptocurrencies than cash, the relative anonymity of transactions can prove an obstacle.

In February, a two-year study of the dark web ecosystem claimed that Bitcoin may in fact be losing its cachet as the most popular currency on dark web markets, seemingly due to consumers’ annoyance at network traffic and high transaction fees.

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FBI Agent Confirms 130 Crypto-Related Investigations

The U.S. Federal Bureau of Investigation (FBI) is currently running 130 different cryptocurrency-related investigations, Bloomberg reported Wednesday.

FBI Supervisor Special Agent Kyle Armstrong told the Crypto Evolved conference in New York that the agency is investigating a variety of crimes, including human trafficking, drug transactions, kidnapping and ransomware, which have a cryptocurrency component, according to Bloomberg.

Further, there has recently been an uptick in cases involving cryptocurrencies, he said, citing opioids as one area where the bureau needs to focus on. Roughly 10 percent of drug users worldwide purchase drugs online in illegal digital marketplaces.

Some parts of the U.S. have also seen an increase in extortion schemes, where the perpetrators wish to use cryptocurrencies.

That being said, these “threat-tagged” investigations only make up a “small sliver” of the thousands of  cases the agency has, he said.

And unlike crimes involving cash, Armstrong said the blockchain’s immutability makes it easier to track transactions. On the flip side, cryptocurrencies’ anonymity or pseudonymity make it more difficult to properly investigate a crime.

FBI logo image via Kristi Blokhin / Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Prosecutors: Options Seller Duped Investors With 'Worthless' Crypto

Federal prosecutors say a New York resident misled investors about a cryptocurrency as part of a wider investment fraud scheme.

The U.S. Attorney’s Office for the Eastern District of New York said Monday that Blake Kantor, also known as Bill Gordon, was being charged with conspiracy to commit wire fraud, making false statements and obstruction of an official proceeding in connection with a binary options investment platform he founded called Blue Bit Banc. The company, officials said, allegedly manipulated its investor data “so that the probability of investors earning a profit favored BBB and disadvantaged investors,” according to statements.

According to the Attorney’s Office, Kantor pitched investors on an “ATMCoin” and converted investor funds into the cryptocurrency.

“To further the scheme, Kantor directed the opening of bank accounts – including one in the island nation of St. Kitts and Nevis -using aliases and the identifying information of other people,” Monday’s statement reads. “Kantor further converted monies that investors invested into ATM Coin, a worthless cryptocurrency that Kantor misleadingly told investors was worth substantial sums of money.”

Through the scheme, Kantor allegedly raised $2.1 million from more than 700 investors over a three-year period. And during the government’s investigation, Kantor allegedly claimed that he had no involvement with binary options, and he was also accused of “[directing] a co-conspirator to alter lists of BBB customers after FBI agents informed Kantor that they were investigating his involvement in binary options.”

“The allegations outlined in this indictment detail acts of deceit and offshore money movement in the evolving world of cryptocurrency, which impacts the trust investors have with our financial system,” he added.

Kantor was arrested and arraigned on Monday.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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US DOJ Accuses Listings Site Backpage Of Laundering Millions In Crypto

Listings website was seized on Friday by the US Department of Justice (DOJ) in part on charges that it laundered half a billion dollars in illegal revenue, some via cryptocurrencies, a DOJ press release announced Monday, April 9.

The 93-count federal indictment, obtained through joint action by the FBI, IRS and others, alleges that Backpage earned “over $500 mln in prostitution-related revenue since its inception.” IRS Criminal Investigation Chief John D. Fort dubbed the defendants “masterminds,” who committed “egregious financial crimes such as money laundering […] at the expense of women and children,” using “virtual currencies… and the anonymity of the Internet” to cover their tracks.

“By laundering the illegal gains of an enterprise, Backpage perpetuated the exploitation of victims and continued to finance their business,” Chief Postal Inspector Guy Cottrell said.

The indictment explicitly states that the defendants “converted customer payments into and out of cryptocurrency” in order to conceal their misconduct and evade law enforcement. But beyond the indictment, the crypto trail goes further, involving not only the defendants, but the sex workers who used the online hub as well.

In 2015, Visa and Mastercard stopped processing transactions from Backpage, citing “moral, social and legal” reasons. Bitcoin became one of the few available payment methods, with one Backpage escort bitterly riposting that although altcoins “may seem scary,” they were becoming the only way to “stay safe and successful” in the online industry. A reddit thread that same year proposed a Sex Industry Bitcoin Training Manual in the wake of Backpage’s Visa shutdown. This “wave” of new crypto users was dubbed by Bitcoin advocacy reddit groups as “The Backpage Effect.”

Law authorities globally are working to set a precedent for cases in which cryptocurrencies are exploited to conceal layers of misconduct and corruption. According to the head of Europol, as much as $5.5 billion is being laundered through cryptocurrencies annually.

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FBI Publishes PSA About Tech Support Fraud Targeting Cryptocurrency Holders

The FBI’s Internet Crime Complaint Center (IC3) has published a public service announcement on March 28 warning about the prevalence of scammers posing as tech support for a variety of industries, including the cryptocurrency sector.

The announcement defines tech support fraud as a “criminal claiming to provide customer, security, or technical support in an effort to defraud unwitting individuals,” and references the increasing frequency of this type of fraud leading to criminals“pos[ing] as government agents, even offering to recover supposed losses related to tech support fraud schemes or to request financial assistance with ‘apprehending’ criminals.”

Tech support fraud, which can occur through the telephone, search engines, pop-ups, locked screens, and phishing emails, is now also being perpetrated through the new targets of virtual currency exchanges, according to the FBI’s PSA.

The section on the new variations and trends of this type of fraud notes that virtual currency fraud has led to “individual victim losses often in the thousands of dollars.” The scam is carried out by a criminal who pretends to be a virtual currency service’s support representative in order to gain access to a crypto holder’s wallet, then transferring all of the crypto out while the fake “maintenance” is taking place, only to “cease all communication” and disappear with the funds.

The FBI suggests that the public update their ad-blocking and anti-virus software, examine customer support numbers found on search engines more carefully, and “resist[s] the pressure to act quickly” in online tech situations, as “criminals create a sense of urgency to produce fear and lure the victim into immediate action.”

Victims of any tech support fraud scams are asked to immediately report the incidents in as much detail as possible to the IC3.

In January of this year, the IC3 warned the public about a different new method of cryptocurrency extortion – false death threats to individuals that requested crypto and fiat ransoms to spare their lives.

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Scammers Are Posing As Crypto Exchange Support Staff, Says FBI

The Federal Bureau of Investigation (FBI) said Wednesday that consumers should watch out for would-be scammers posing as support staffers for cryptocurrency exchanges.

The agency’s Internet Crime Complaint Center (IC3) sounded the alarm about tech support scams in a recent notice, stating that it constitutes “a problematic and widespread scam.” In 2017, the center said, consumers submitted roughly 11,000 complaints and claimed losses in excess of $11 million connected to tech support fraud.

According to the FBI warning, cryptocurrency investors are becoming an increasingly more common target for fraudsters, “with individual victim losses often in the thousands of dollars.”

The scam plays out like this: fake support numbers are posted online, which are then found by victims who are looking for information. During the course of conversation, the scammer directs the victim to send their cryptocurrency to a “temporary” wallet while the issues are addressed. But in these instances, the funds are never returned.

“The fraudulent support asks for access to the victim’s virtual currency wallet and transfers the victim’s virtual currency to another wallet for temporary holding during maintenance,” IC3 explained. “The virtual currency is never returned to the victim, and the criminal ceases all communication.”

The warning highlights the lengths to which scammers seeking to defraud cryptocurrency users will go to find targets. But this isn’t a new phenomenon: a number of popular online platforms, from Google to Facebook to Twitter, have been used as a conduit to fraud, prompting the companies behind them to cut off advertising for services and token sales in particular.

Other frauds masquerading as real entities include a recent wave of fake websites pretending to sell tokens for message app Telegram’s ongoing token sale.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Crypto Death Threat Scams More Frequent, FBI Warns Cases Are ‘Heavily Underreported’

The US Federal Bureau of Investigation (FBI) has warned Internet users about false death threats as a new method of cryptocurrency extortion, ABC California reported on Friday Jan. 26.

One of the victims, introducing themselves as Christiane, used FBI’s Internet Crime Complaint Center (IC3) to inform the agency that she received an email with a death threat. The email said: “I’ll be short. I’ve got an order to kill you,” and demanded Christiane to pay $2,800 in U.S. dollars or Bitcoin in order be spared by the would-be assassin.

Even though she realized that it was a scam, Christiane told ABC7 that she found the message distressing enough to make her look over her shoulder in fear of a potential threat on the way to work.

According to FBI agent Laura Eimiller, the case represents a new method of online extortion that is specifically increasing in frequency in California right now, ABC reports.

Eimiller also emphasizes the fact that the emails are structured and written in a way that is likely to make the target feel deeply affected, even if they are able to recognize them as a hoax.

Thus, FBI warns Internet users and encourages potential victims to provide information about any new cases, given that the number of reports is “about 15 percent of the scams that are actually taking place,” according to Eimiller. She added that the crimes like these are “heavily underreported.”