We’ve all heard the lame excuses – cryptocurrency is only good for criminal activity, cryptocurrency is only useful for money laundering, cryptocurrency has no real purpose – in trying to derail crypto as a legitimate alternative to fiat. Of course, the statements need to always be taken with a grain of salt and the speaker needs to be identified. In every case, the person uttering the words was a definite fiat pundit who either didn’t understand crypto or who was too imbedded with fiat to be able to see the bigger picture. The truth has begun to surface, though, and none of those arguments stand up to scrutiny. Japan has just given us another good indication of the fallacy behind the arguments.
The Japan Times reports that, according to an “official police document,” the country has seen a total of 340,000 suspected cases of money laundering activity or abuse this year in all types of financial transactions. Of this amount, only 6,000 transactions were related to cryptocurrency. Quickly crunching numbers, that means that only about 2% of all the money-laundering activity was found in crypto.
6,000 is still a big number, for sure. However, given the fact that 334,000 cases of money laundering were recorded through fiat, it’s merely a drop in the bucket. Measures are already being undertaken to help reduce the number more, but the fact that money laundering can still be so prevalent in fiat after centuries of existence shows how difficult the activity is to control.
Japan is working diligently to provide better oversight of cryptocurrency entities and exchanges. It is introducing a number of measures that will help prevent tax evasion and control initial coin offerings (ICO) and the Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory entities overseeing crypto exchanges, has authority to patrol the industry, as well.
Any system anywhere in the world can be used positively or negatively – nothing can escape this, not even cryptocurrency. However, it has already shown itself to be a viable option and one that allows users to take back control of their own money. It is not “that thing that criminals use” or “an environmental disaster.” It is a legitimate type of currency that continues to be accepted by more and more merchants every day.
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Alexander Vinnik, who allegedly founded the BTC-e cryptocurrency exchange before running off with everyone’s money, just got a brief reprieve. A district court in Cyprus has reportedly dropped a number of charges that had been levied against Vinnik, according to the RIA Novosti news outlet out of Russia.
The news outlet reports that Vinnik’s lawyers have said that the court withdrew its lawsuit against the accused, which included charges of “fraud, money laundering and other crimes.” In addition, Vinnik might also be compensated “for all legal costs incurred by him.”
The lead lawyer for Vinnik, Timofey Musatov, added, “The defense of Alexander Vinnik, while appreciating the decision taken by the Cyprus court, pays special attention to the fact that the case against Alexander collapsed at an early stage and, importantly, at the initiative of the plaintiffs themselves, which clearly indicates the weakness of the accusatory component against Alexander, the vulnerability of the legal position of the plaintiffs and their unwillingness to bring the case to open legal proceedings.”
The withdrawal doesn’t mark the end of the ordeal for the Russian citizen. Vinnik could be extradited to France or the U.S., or even Russia. All three countries have requested extradition, with France also filing a separate petition through a European Arrest Warrant.
First up could be France, which already saw its extradition request approved this past July. He is accused by French authorities of participating in cybercrime from January 2016 to June 2018, as well as “in another period,” as well as in extortion and money laundering. Whether or not he is sent to France could be decided today, when Vinnik makes another court appearance.
Vinnik had been detained in Greece on request of the U.S. Department of Justice over a year ago. He was picked up in July of last year after authorities asserted that he was connected to money-laundering activity on the now-defunct exchange and that he possibly facilities the illicit movement of as much as $4 billion.
The allegedly scammer has routinely argued that his rights have been violated while being locked away. Most recently, he threated to go on a hunger strike over the issue.
A former cryptocurrency exchange executive accused of using BTC to launder billions of dollars is preparing to go on hunger strike, according to statements issued by his legal team.
Russian citizen Alexander Vinnik was arrested in Greece at the request of U.S. authorities back in 2017, at the outset of what has become an embittered multi-jurisdictional battle for his extradition. After a ruling in the Greek Supreme Court that Vinnik should be extradited to the U.S., separate petitions from France and Russia have been presented, including a European Arrest Warrant issued by France back in June.
The courts are set to review their decision later this week, considering the multiple vying claims to extradition ahead of deciding how to proceed with Vinnik’s case.
Vinnik’s legal team are agitating for his extradition to his home nation of Russia, having labelled the alternatives as “close to a life sentence,” with the inevitable conclusion of eventual extradition to the United States.
Russian news agency TASS quoted the head of Vinnik’s legal representatives, Timofey Musatov, as saying that the man is now preparing a hunger strike in protest at what he alleges will be an unfair hearing. According to the report, “Alexander Vinnik decided to go on a hunger strike because he realized he was stripped of the right for defense in France and, consequently, in Greece…Moreover, it became clear that the European arrest warrant [issued by France] expired.”
“The Greek Supreme Court’s judge completely ignores the work of lawyers who cannot even file a petition. She does not give them an opportunity to speak or do it. After observing this situation, Alexander realized that he would either get a fair trial or die.” Musatov said. “If there is no fair trial, he will inevitably be deported to the United States through France, where he will get something close to a life sentence, which equals death.”
Vinnik is accused of laundering as much as $9 billion through the now defunct crypto exchange, BTC-e, in what has become one of the most high profile of the outstanding BTC fraud cases.
With authorities in France, Greece, the U.S. and laterally Russia apparently interested in bringing criminal convictions, it remains to be seen whether his planned hunger strike will assist Vinnik in getting his desired outcome.
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The three siblings arrested in Thailand on allegations of fraudulently tricking a Finnish investor into shelling out over $24 million in cryptocurrency have pleaded not guilty to money laundering charges.
On Wednesday, the Bangkok Post reported that Prinya Jaravijit and his younger siblings, Jiratpisit and Supitcha, appeared before the Criminal Court where they were arraigned on collusion and conspiracy to launder money charges.
Prosecutors told the court the three, along with six other accomplices, lured Finn investor Aamai Otava Saarimaa into investing with them during the June-July period in 2017. According to the report, Saarimaa was tricked into buying 500 million DNA Co. shares, purchasing Expay Software Co. shares., and investing in an NX Chain Inc. project called Dragon Coin.
During that period, Saarimaa sent funds several times to an electronic wallet which belonged to Jaravijit. However, a few months later, the defendants decided to sell the digital assets, worth THB797.41 million ($24 million) at the time, which investigators said they deposited into their own accounts.
Prosecutors said the defendants spent the money—Jiratpisit reportedly bought land in Chatuchak District in Bangkok for THB43 million ($1 million), while his elder brother Prinya spent THB124 million ($4 million) to buy seven blocks of land in Bangkok’s Chatuchak and Din Daeng districts, as well as in Nonthaburi province.
Supitcha, meanwhile, allegedly spent THB8.5 million ($250,000) in December to register six blocks of land in Chatuchak.
Saarimaa eventually filed a complaint with the Thai Crime Suppression Division (CSD) after his efforts to follow up on his cash bore no fruit.
Jiratpisit and Supitcha were arrested in August, but they were released on bail of THB2 million ($61,000) each. Prinya fled to the United States to avoid the charges. When the Thai CSD revoked his passport, it became illegal for him to reside in the United States, leading to his return to Thailand. On arrival, Prinya was arrested by Thai authorities and charged. He is currently being held in the Bangkok Remand Prison.
The three will be back in court on December 24 for the examination of witnesses and evidence lists.
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For all of 2018, cryptocurrency enthusiasts have wanted more transparency of the Tether stablecoin. As far back as January, there have been concerns over the coin’s stability, attributed to the fact that it has not been able to hold onto auditors and hasn’t been willing to release financial reports. Most recently, Tether saw its price come unglued, even though it’s reportedly pegged to the U.S. dollar, after news broke that the bank formerly holding the funds that supposedly back the coin, Noble Bank, was having financial difficulty. Now, its new banking partner is the target of regulators, painting a grim picture for the bank, as well as Tether.
According to the Brazilian media outlet O Globo, Brazil’s Deltec Bank & Trust may have run afoul of regulators. There is an allegation circulating that the bank may have been involved in a large money-laundering scheme that involves a Brazilian government official. The official reportedly funneled $25 million through a bank in Panama and then back into Brazil through Deltec. Given that the transfer supposedly took place in a single transaction, many are wondering whether Deltec was involved in facilitating the activity or, at the very least, why it didn’t question the activity.
The investigation into the bank’s activity only further worsens Tether’s stance in the market. Earlier this week, Tether spoke highly of Deltec and said that the partnership between the two entities should be seen as legitimizing Tether. It said at the time, “This included, notably, an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.”
However, that analysis now seems to have been either grossly exaggerated or is non-existent. In either case, it leaves the crypto community seriously concerned about the viability of Tether and whether or not those behind the stablecoin are actually fit to continue to manage its operations. To date, Tether has not been able to produce confirmed records indicating that it definitively holds enough fiat to cover the $1.7 billion in coins currently in circulation and the general consensus is that the funds are nonexistent.
Binance has frozen accounts belonging to another cryptocurrency exchange, Wex, after users claimed the latter was involved in money laundering activities.
Binance CEO Changpeng Zhao made the announcement on Twitter, stating that they had frozen all accounts belonging to Wex. The decision was made in response to an alert made by Twitter user RedDragon, who warned the public about the suspicious activities happening in the Wex exchange.
the identified accounts are frozen, please report to law enforcement and have a case number. We will work with LE. This is part of centralization we hate too, dealing with other exchange's mess (we don't even know the details). But we will do what we can. https://t.co/tgyYI5ptqx
— CZ Binance (@cz_binance) October 30, 2018
In his tweet, Zhao said Binance had no knowledge of money laundering activities being done by Wex. He noted that they froze the accounts to stop the exchange from further using their platform for money laundering operations, saying that they are willing to cooperate with any law enforcement agency wishing to conduct a criminal investigation against the exchange.
Twitter user RedDragon claimed that Wex was using the Binance platform to move a large amount of the clients missing money to other accounts. Zhao explained that there had been an increase of smaller exchanges using big platforms to move their money. He added it is tiresome to have to sort messes created by other people.
Binance also asked investors with any of the blocked accounts from Wex to report the matter to the police before making any claims on the Binance platform.
Since its inception, Wex appears to have been operating on the wrong side of the law. The Russian-based cryptocurrency exchange, first came to the spotlight last year after its founder, Alexander Vinnik, was arrested for allegedly taking part in a $4 billion fraud. The investigations are still ongoing in the U.S. and Greece. Back then, Wex exchange was under the name BTC-e.
After the re-brand, the exchanges soon began observing suspicious activities including having BTC prices significantly higher than other players in the market. In July 2018, Wex stopped withdrawal services claiming that their system was under scheduled maintenance. Clients have since not been able to withdraw both cryptocurrencies and U.S. dollars, according to reports. Many of its users have gone to social media with claims that the exchange was a scam. They also termed the “maintenance” as an exit strategy organized by the owners.
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A man who ran a Bitcoin Core (BTC) operation through LocalBitcoins could possibly go to jail. According to a press release published on the U.S. Department of Justice (DOJ) website this past Monday, the individual pleaded guilty to operating an “unlicensed money transmitting business” through the site and is now looking at spending as much as five years behind bars.
Jacob Burrell Campos is accused of running an operation that sold “hundreds of thousands of dollars” in BTC to more than 1,000 clients in the U.S. from January 2015 to April 2016. Because of the amount, the DOJ categorized his activity as an unregistered cryptocurrency exchange and indicted him on charges.
The 21-year-old Campos would organize the sales by advertising on LocalBitcoins and then communicate with clients through text messages or encrypted email. Payments were facilitated either in cash, ATM withdrawals or money exchange services such as MoneyGram.
Campos reportedly stored his fiat in Mexico through a precious metals dealer out of San Diego, Joseph Castillo. Castillo has already pleaded guilty to filing false tax returns and is expected to be sentenced on December 13.
As an exchange, Campos was required to register with the U.S. financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of Treasury. He never fulfilled the requirement, nor did he conduct Know-Your-Customer checks as required by law.
According to U.S. attorney Adam Braverman, who was quoted in the press release, “Unlicensed money transmitting businesses, especially those operating at or near the border, pose a serious threat to the integrity of the US banking system, and provide an ‘open door’ for criminals to utilize such businesses to launder the proceeds of their illicit activities.”
Campos admitted to the activity and revealed that he had also had an account with an unidentified “U.S.-based, regulated” crypto exchange suspended over concerns of suspicious activity. He then moved his operation to an exchange based in Hong Kong, where he is believed to have purchased as much as $3.29 million in BTC between March 2015 and April 2017.
Campos also agreed to surrender $800,000 as part of his plea deal. He is expected to be sentenced on February 11 next year.
Erik Voorhees, the founder of ShapeShift.io, has responded robustly to claims made in the Wall Street Journal (WSJ) that he says are “factually incorrect and deceptive.”
In an article entitled ‘How Dirty Money Disappears Into the Black Hole of Cryptocurrency,’ two WSJ journalists who had been working with Vorhees alleged the firm was involved in money laundering, the latest hit piece from a mainstream media outlet to target legitimate crypto businesses.
The WSJ piece implied Voorhees’ firm had been engaged in laundering money for scammers and North Korean spies, claims the ShapeShift CEO flat-out refuted as untrue.
According to the report, “A North Korean agent, a stolen-credit-card peddler and the mastermind of an $80 million Ponzi scheme had a common problem. They needed to launder their dirty money. They found a common solution in ShapeShift.”
In response to the allegations, Voorhees revealed how the company had been working with the journalists on false pretenses for as long as five months, as well as highlighting a number of areas in which their report had deceived or misled on crucial facts around the business.
In a blog post, the ShapeShift chief claimed, “Overall, the article contains factual inaccuracies, omits significant details about how ShapeShift operates, and reflects a fundamental misunderstanding of how blockchain transactions work.”
“Blockchains and cryptocurrency represent a new, fast-evolving technology and industry. For those who are not real experts, it can be confusing. And the WSJ reporters appear to have gotten confused about how our platform functions. Based on our own analysis of the transactions cited in the article, the WSJ erroneously attributed vast sums of allegedly illicit transactions to ShapeShift in a way that exhibits a profound failure to grasp how blockchains, in general, and our system in particular, really work,” Voorhees said.
Roundly condemning the hit piece, Voorhees said ShapeShift’s record in fact compared favourably to its peers.
“The WSJ article’s implication that ShapeShift is somehow negligent or complicit on this issue of money laundering is false and absurd; emblematic of a media industry that cares more about clickbait sensationalism than it does about improving the financial state of mankind. But we should not expect the Wall Street Journal to change Wall Street,” he said. “An objective observer will find no complacency here; ShapeShift’s record (based on facts) compares favorably against any peer, within the crypto industry or without.”
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