From the erratic ups and downs in bitcoin and ethereum value, to the explosion in initial coin offerings, and the unstoppable demand for mining-ready GPUs, cryptocurrency has become an inescapable story. It’s also become increasingly difficult to make sense of — as the industry expands, new currencies sprout up, and companies form overnight. Check here for the complete coverage of bitcoin, ethereum, litecoin, monero, Venezuela’s petro, cryptocurrencies at large, and the ways that ICOs and the underlying blockchain technology are helping shape a burgeoning industry and giving life to a new wave of startups and entrepreneurs.
The authorities say they’ve seized nearly 50,000 Bitcoins from an operator of Movie2K, a major piracy website that was shut down in 2013. That’s on top of the $29.7 million in Bitcoin the FBI helped German police seize from the operators in 2020.
Last summer, Heather Morgan (a Forbes blogger who also rapped under the name Razzlekhan) and her husband Ilya Lichtenstein pleaded guilty to charges they conspired to launder Bitcoin stolen from Bitfinex in 2016. At the time of their arrest in early 2022, the stolen crypto was worth $4.5 billion.
Netflix previously ordered a documentary series about the couple, and now Deadline reports that Amazon MGM Studios has started development on a Razzlekhan film inspired by this New York Times story.
Terraform Labs filed for Chapter 11 bankruptcy on Sunday, listing assets and liabilities between $100 million and $500 million.
The company’s co-founder, Do Kwon, is facing extradition to the US following the fall of TerraUSD and its sister token Luna, which vaporized billions of dollars in 2022.
GameStop will shut down the NFT marketplace on February 2nd “due to the continuing regulatory uncertainty of the crypto space,” reported by Decrypt yesterday.
That’s the same reason the company offered for shutting down its crypto wallet last year. The marketplace opened just a year and a half ago. The SEC was keenly interested in crypto throughout 2023, and took its first unregistered security enforcement against an NFT project in August.
Earlier this month The Guardian reported that the CEO of a crypto firm called HyperVerse didn’t seem to be a real person: “Steven Reece Lewis” had an impressive resume, but there was no evidence he existed.
Now The Guardian has tracked down Steven Harrison, “an Englishman living in Thailand,” who was paid to appear in HyperVerse’s investor materials. He says he didn’t realize he was being used in a scam:
“I went away and I actually looked at the company because I was concerned that it could be a scam,” Harrison said. “So I looked online a bit and everything seemed OK, so I rolled with it.”
More than a year after its SPAC plan to go public crumbled, Circle has filed for an IPO. Get your engines ready, it’s S-1 time!
It’s a delightful run through Very Recent History, with a helpful tracker of the number of submissions that happened and the price of Bitcoin. Of course, we all know how the story ends.
[www.axios.com]
“I kind of don’t understand the trade here?” Bloomberg columnist Matt Levine writes of the hack of the SEC’s Twitter account yesterday, in which a fake approval of Bitcoin ETFs was briefly posted.
Linda Yaccarino was at CES yesterday to try to talk more businesses into using Xitter. If I were a troll, using the opportunity of screwing with one of X’s core constituencies and the feds at that precise moment in time would be too good to pass up. The trade is an epic lol, I believe.
[Bloomberg]
The Elon Musk-owned platform quietly removed the option for Premium subscribers to use NFTs as their profile pictures, as spotted earlier by TechCrunch. X also scrubbed all mention of NFT profile pictures from its support page.
This comes a little less than one year after Meta ended tests that let users share NFTs on Instagram and Facebook.
Do you even need deepfakes? The Guardian reports that while “Steven Reece Lewis” helped pull in millions of dollars as CEO of “Hyperverse,” a collapsed crypto / pyramid scheme, their investigation has been unable to turn up any evidence he exists.
Meanwhile, Web3 is Going Just Great points out a crypto wallet company exec who lost $125k due to a phishing link. Naturally, he’s trying to use the incident to promote his company’s wallet technology instead of reconsidering the whole venture.
It seems like Bitcoin ETFs may be a new trend for the financiers among us:
The companies getting involved here are, in many cases, household names (and not just for people who have their own pet theories about what happened to Satoshi Nakamoto). Industry giants BlackRock and Fidelity are among those positioned to make the first offerings, which could trade on exchanges like NASDAQ. Expectations around the new ETFs have led to a boom not just of bitcoin’s price but also boosted other digital currencies, including ones that were all but left for dead after their close association with convicted fraudster Sam Bankman-Fried.
[Intelligencer]
The Wall Street Journal writes that federal prosecutors won’t pursue the five leftover charges that District Court Judge Lewis Kaplan previously split off to avoid delaying the trial that resulted in a guilty verdict for Bankman-Fried last month.
The prosecutors justified the decision in a letter to Kaplan yesterday:
... Much of the evidence that would be offered in a second trial was already offered in the first trial and can be considered by the Court at the defendant’s March 2024 sentencing. Given ... the strong public interest in a prompt resolution of this matter, the Government intends to proceed to sentencing on the counts for which the defendant was convicted at trial.
Terraform Labs founder Do Kwon is still in Montenegro waiting to be extradited, but the SEC’s case against him will proceed, with a January 29th scheduled start date.
The TerraUSD (UST) stablecoin, its linked Luna crypto token, and the whole Anchor Protocol crashed in May 2022, wiping out about $40 billion. According to the judge, while UST on its own is not a security, when combined with the Anchor Protocol, it is, while Luna joined investors in a “common, profit-seeking enterprise.”
[DocumentCloud]
CoinDesk points out Binance’s year-end wrapup, noting that despite the guilty plea and $4 billion in fines for engaging in “Anti-Money Laundering, Unlicensed Money Transmitting, and Sanctions Violations,” its new CEO says the user base has grown by 30 percent to 170 million.
Meanwhile, former CEO Chaopeng Zheng’s wealth reportedly grew by $25 billion this year, but he remains stuck in the US awaiting sentencing. Yesterday, his lawyers filed a sealed request for permission to travel.
That’s what NYU student and Bitcoin mine owner Jerry Yu is learning. His company BitRush (also known as BytesRush) allegedly failed to pay some contractors who worked on his Bitcoin mine in Channing, Texas.
That naturally led to lawsuits, which in turn led to a quite revealing journey of how money moved between China and the United States via Binance while skirting regulations of both countries.
Remember to pay your bills folks!
[The New York Times]
X (formerly Twitter) will let you replace the username in a post’s URL with... really, whatever you want, and it will still go to the original post. It’s been that way since at least 2019.
Bleeping Computer reported that scammers have been using the trick to direct people to fake crypto giveaways from Binance, Ethereum, and the like. If someone falls for it and connects a wallet, the scammers drain it.
Tiffany Fong, who’s been heavily involved with the FTX storyline, interviewed FTX creditor Louis D’Origny about the FTX bankruptcy plan. If you want to look at the Chapter 11 plan for yourself, it’s here.
The New York Times published an investigative piece on the slave labor behind some of those innocuous-seeming crypto scam texts and calls.
The story focuses on one person who escaped from a compound where he was where he was forced to carry out intricate online romance scams involving crypto. The money earned from these scams is then laundered through other countries, including the US.
A word of warning: This story has descriptions of torture and captivity.
[The New York Times]
Crypto wallet company Ledger’s Connect Kit software was compromised to insert a wallet drainer. Ledger’s CEO blamed a phishing attack on an ex-employee without explaining how their account still had access.
Even though the Solana Saga crypto phone flopped, selling only 2,500 units, it suddenly sold out in the US on Thursday. The Block reports each phone comes with 30 million “bonk” tokens. Their price has spiked to $0.000028 each, which adds up to more than the phone’s $599 price — assuming you can get the phone and sell them in time.
And Web3 is Going Just Great points out that a blockchain-linked online chess platform, The Immortal Game, has dropped NFT and play-to-earn features after finding out “that by offering large amounts of cash with no limit barrier to entry, we encouraged heavy cheating on the platform and degraded the user experience for our legitimate player base.”
The Sam Altman-backed crypto project announced the rollout of World ID 2.0, which can apparently use your eyeball scan to verify your identity when signing into an account or applying for online verification status. Worldcoin says the update should make it “easier to distinguish between bots and verified humans online.”
David Mills, the Stanford Law prof who also defended ‘80s bond villain Michael Milken, flew to the Bahamas in his own jet when Bankman-Fried was first jailed. His friendship with Bankman-Fried’s parents may not survive the case.
A judge ruled on Thursday that Zhao — who resides in the United Arab Emirates — must stay in the US ahead of his February 2024 trial, citing his “enormous wealth and property abroad” as well as a lack of ties to the US.
Zhao stepped down as CEO of Binance in November and pleaded guilty to breaking anti-money-laundering laws after a months-long investigation from the US government.
Anatoly Legkodymov, aka Anatolii Legkodymov, Gandalf, and Tolik, was arrested in Miami earlier this year. The feds said his crypto exchange advertised its lack of ID requirements for users and processed more than $700 million over the years for ransomware gangs and other criminals as a counterparty for Hydra Market, a Russian dark web site they shut down last year.
He now faces a maximum penalty of five years in prison, and his guilty plea comes a week after another Russian man, Vladimir Dunaev, pleaded guilty to helping develop the Trickbot malware.
Netflix has released a trailer for its new crypto documentary, Bitconned, about the rise and fall of Centra Tech, a scam that was part of the wave of initial coin offerings in 2017. The blowback from the scheme caught DJ Khaled and Floyd Mayweather, who had promoted it — they were fined by the SEC. Ray Trapani, one of the co-founders, appears to be a key narrator of the Netflix documentary.
Here’s a fun profile of Gary Gensler, the head of the Securities and Exchange Commission, with a lot of details on his approach to enforcement (“Though you might think otherwise, I don’t spend the majority of my time on crypto,” he says). Don’t worry, there’s even an explanation of his genuinely weird social media antics.
CoinDesk and TechCrunch report U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) action against Sinbad.io, calling it a money laundering tool used by the “Lazarus” state-sponsored hackers used to move a “significant” portion of the $620 million in crypto stolen from Axie Infinity last year.
This follows sanctions against other mixing services like Blender.io and Tornado Cash.
Lazarus Group has operated for more than ten years and is believed to have stolen over $2 billion worth of digital assets... the DPRK has resorted to using illicit tactics, such as heists perpetrated by the Lazarus Group, to generate revenue for its unlawful weapons of mass destruction and ballistic missile programs.
Last week, Changpeng Zhao agreed to step down as CEO of the massive cryptocurrency exchange Binance — part of a plea deal with the DOJ for breaking anti-money-laundering laws.
However, one remaining disagreement has been where he will spend his time while awaiting sentencing for the felony charges. Despite agreeing to a $175 million bond, prosecutors consider him a flight risk and wanted to keep him in the US. That question isn’t fully answered, but Reuters reports a judge ruled CZ is staying the US for now while the court considers it, instead of being allowed to return to the UAE.
What if we really have already found every criminal who runs a cryptocurrency exchange?
Now that Binance reached a $4 billion settlement with the DOJ and ditched its CEO Changpeng Zhao, Coinbase head Brian Armstrong said to CNBC in an interview, “The enforcement action against Binance, that’s allowing us to kind of turn the page on that and hopefully close that chapter of history.”
Coinbase is also being sued by the SEC for allegedly selling unregistered securities, by the way.
But now the question is: to where? Kwon faces charges in both the US and South Korea in connection with the collapse of the Terra stablecoin and its sister token Luna.
Kwon was arrested in Montenegro in June and spent four months in prison for attempting to use a fake passport. Federal prosecutors in the US filed additional charges against Kwon following his arrest, accusing him of wire fraud, commodities fraud, securities fraud, and more.
A Montenegrin Justice Minister must now decide whether to extradite Kwon to the US or South Korea.
In a lawsuit filed on Tuesday, Genesis alleges Gemini, a crypto exchange owned by the Winklevoss twins, made “significant withdrawals” before Genesis filed for bankruptcy, contributing to a “run on the bank.”
This comes after Gemini sued Genesis owner Digital Currency Group (DCG) in July, claiming it engaged in fraud through the high-yield Earn program they partnered on. When not waging legal battles against each other, Gemini, Genesis, and DCG must deal with the lawsuit New York’s Attorney General filed against all three of them.
