Another scammer targeting the cryptocurrency space has been taken out. In a press release by the U.S. Department of Justice (DOJ) from this past Wednesday, the agency announced that the Federal Bureau of Investigation has arrested the co-founder of a crypto platform following his indictment on charges that resulted in millions of dollars in losses to a number of investors.
30-year-old Jared Rice Sr., co-founder of AriseBank, scammed investors out of more than $4 million, enticing them to invest in the “first decentralized banking platform” in the U.S. He concocted a story that the institution would offer bank accounts insured by the FDIC (Federal Deposit Insurance Corporation), as well as credit and debit cards backed by Visa. He also claimed that he had raised “$600 million within just a few weeks” through an initial coin offering (ICO). Unfortunately, everything he said was a lie.
None of the money he collected was used for its stated purpose. Instead, Rice used it to buy clothes, eat in fancy restaurants and take luxury vacations.
Rice has been charged with three counts of wire fraud and three counts of securities fraud. The U.S. Attorney for the Northern District of Texas, Erin Nealy Cox, asserts, “My office is committed to enforcing the rule of law in the cryptocurrency space. The Northern District of Texas will not tolerate this sort of flagrant deception – online or off.”
This isn’t the first time that regulators have had a run-in with Rice. This past January, he, along with the company’s co-founder, Stanley Ford, was sued by the U.S. Securities and Exchange Commission (SEC) for fraud and unlawfully issuing securities. He was also served with a cease-and-desist order from the Texas Department of Banking in relation to his activities. The SEC has also indicated, in February, that he had been on probation after being indicted in 2015 for charges related to theft and tampering with government records. A separate felony indictment also hangs over the crook in Dallas County, Texas for assault.
His next trip will be to a court to find out if he is to be convicted on all charges. If that happens, he could be sentenced to up to 120 years in federal prison.
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SIM card scams are becoming a major issue. This past July, a Californian man barely out of his teens was arrested for his involvement in a theft ring that stole over $5 million through the scheme. The subject of SIM card frauds has been a hot issue with regulators over the past couple of weeks as more cases are being seen. Now, another victim of the scam has surfaced, revealing that he lost over $1 million to SIM card thieves.
Robert Ross is an angel investor out of San Francisco whose main focus is on initial coin offering (ICO) presales. According to an article in the New York Post, his cell phone was stolen, resulting in a swap of his SIM card that allowed a thief to steal $500,000 from two accounts he held on the Gemini and Coinbase exchanges. He had been saving the money so he could send his daughters to college.
In a SIM swap scam, a fraudster gains access to personal data of the holder of a particular phone number. The phone number can be found on a business card, social media or one of a number of other sources. Having the phone number and personal data in hand, the thief will then contact the service provider and report a “lost” phone, tracking the provider into assigning the victim’s phone number to a new phone and a new SIM. Then, using two-factor identification that is common today, the fraudster is able to gain access to a variety of accounts.
The thief in Ross’s case was eventually caught and identified as Nicholas Truglia, a 21-year-old con artist out of New York. He was found to have attempted to conduct a number of hacks of other executives, but those attempts were unsuccessful. Truglia now faces 21 different charges, including fraud, embezzlement, identity theft and attempted grand theft auto. However, the problem isn’t going to go away anytime soon.
According to Erin West, Santa Clara Superior Court deputy district attorney, “It’s a new way of doing an old crime. It’s a pervasive problem, and it involves millions of dollars […] You’re sitting in your home, your phone is in front of you, and you suddenly become aware there is no service because the bad guy has taken control of your phone number.”
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At the beginning of the week, users of the South Korean cryptocurrency exchange PureBit had a rude awakening when they realized that the exchange’s owner had pulled a fast one and had run off with their money. They were out about 13,000 Ether (ETH) tokens – worth around $2.8 million at the time – with nothing more than an “I’m sorry” from the owner. It now appears that the would-be fraudster has had a change of heart and is beginning to issue refunds.
Immediately after the scam, the crypto community, including a number of exchanges, rallied together to start to track the movements of the digital assets. The news made the airwaves around the world, helping support efforts to prevent the coins from getting too far. All of the work paid off, with the Upbit exchange ultimately freezing several accounts tied to the fraudsters.
Those initiatives undoubtedly played a part in preventing a catastrophe, as well as compelling the exchange owner to have a change of heart. Partial refunds have already started to be delivered and the company has promised to refund all of the ETH that was taken.
In a statement released by PureBit through local media channels, the scamming CEO said that he had made an “unforgiveable mistake.” The announcement went on to say, “This is Pure Bit. First off, I would like to apologize to everyone that was affected by the ICO. Since November 5, I raked in 16,000 ETH and did not open a crypto exchange as promised. I kicked out everyone in our social media chat groups and disappeared without any message. I negatively affected investors in the project psychologically and financially.
“I made an unforgivable mistake that cannot be turned around, blinded by money. It has been less than a day and I have already started to suffer from guilt. Although it cannot be compared with the hardship faced by the investors, I also felt significant guilt. I sincerely apologize to all of the investors in the ICO [initial coin offering] who were affected by the operation.”
The ICO referred to was a PureBit ICO that had attracted $30 million. In addition to the ETH stolen, the would-be criminal had also tried to run off with those funds, as well.
The CEO went on to say that the guilt had been too much, leading to his decision to issue the refunds. More than likely, it wasn’t the guilt as much as it was the angry mob with torches and pitchforks ready to attack.
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Four fake cryptocurrency wallet apps were recently found on the Google Play Store, and subsequently taken down.
Malware researcher Lukas Stefanko said in a blog post that he found that the apps “tried to trick users either into luring their credentials or impersonating cryptocurrency wallets.” These apps gave the impression of legitimacy by the use of known names, such as Neo, Tether, and Meta Mask.
The fake Meta Mask app, according to Stefanko, is classified in the phishing category, as it sought to obtain the private keys and wallet passwords of users. The three other wallets, of which there were two Neo wallets, and one Tether, were created by the same person, whose public address was given for users to transfer their money into, while the private key remained with the creator of the app. Stefanko showed how he had created two different accounts, where the same public address was displayed for receiving funds.
He noted that the apps had been created with a drag-and-drop app builder, where no coding knowledge was needed. “That means that —once Bitcoin price rises and starts to make it into front pages— [then] literally anyone can ‘develop’ simple but effective malicious app either to steal credentials or impersonate cryptocurrency wallet,” he said.
Stefanko himself reported the apps to Play Store, which soon after removed them.
In a tweet, he warned those looking for wallet apps to “always go through comments” among reviews of an app “before installing apps— it can save you some trouble.”
David got scammed because, he didn't read app comments.
Always go through comments before installing apps – it can save you some trouble.
David downloaded fake app and entered login credentials in, even though there were comments indicating it is a scam already. pic.twitter.com/FoosGpgYef
— Lukas Stefanko (@LukasStefanko) November 2, 2018
Last August, it was reported that one app in Play Store, listing ‘Google Commerce Ltd’ as developer, was asking $388 for one ETH, for which those who payed received a mere image of an ETH token.
ETH has been identified by cybersecurity company Kaspersky as a favorite target of phishing scammers, where users are lured to websites that are made to look like actual sites for wallets or trading. Aside from this, the scammers have also used social media to get users to put their funds in the scammers’ accounts.
Crypto traders using the South Korean exchange PureBit understand why Mondays are typically considered to be bad days. Over the weekend, the small exchange suddenly and unexpectedly turned off its lights and locked its doors, walking away with 13,000 Ethereum. The Kakao social media account of the exchange’s founder offered little to appease the investors – it carried a simple caption of “I’m sorry.”
According to a report by South Korean media outlet EDaily, the exchange had only been operational since September 9. There are reportedly several hundred users, possibly more, affected by the closure.
The exchange was apparently a scam all along. Business registration documents were allegedly falsified and it had misrepresented itself to investors, claiming to be a part of corporations that do not exist.
When it began to go offline, it began to kick out all participants of its forum on Kakao Talk and closed its homepage. Several quick-thinking viewers were able to capture screenshots and site data, which should aid in the investigation.
PureBit had launched an initial coin offering (ICO) behind its Pure Coin cryptocurrency as part of the scam. It collected investments from individuals, ultimately receiving around $2.8 million in Ethereum. The exchange has reportedly been trying to move the crypto through several exchanges, including Upbeat and Binance, which means that there is at least some ability to track the theft.
Upbeat is already working to ensure that access to the stolen funds cannot be used. It said that it has confirmed the arrival of Ether to its platform and that it can “arbitrarily withdraw [the Ether] deposited into the account in accordance with the terms and conditions of use restrictions.” It added, “We have taken measures to stop the suspension, including suspension of withdrawal.”
ICOs are banned in South Korea, but PureBit was targeting international buyers. Pure Coin was billed as an “exchange coin,” which is seen by many as a source of guaranteed returns. However, the PureBit ICO only guaranteed returns for its operator.
As the cryptocurrency industry matures, detecting theft and scams are becoming easier. Since the exchanges to which the crypto assets were sent have already, to a certain degree, already identified suspicious activity related to the PureBit exit scam, it’s only a matter of time before law enforcement is able to resolve the issue.
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A small group of foreigners in Pasay City in the Philippines have been arrested after allegedly stealing almost $100,000 (five million pesos) worth of cryptocurrency. The thieves, who were identified as Chinese nationals, were turned over to the Chinese embassy for further processing. However, the subsequent investigation revealed that they were all simply pawns for another criminal.
According to the Pasay Assistant Chief of Police for Operations, Superintendent Gene Licud, another Chinese citizen, You Jin Gai, approached the Station Investigation Division Management Branch (SIDMB) over the weekend, claiming that his cryptocurrency had been stolen. The victim was able to identify the suspects, and gave the police their names. They were identified as Lai Ze Lin, Chen Xiao Yu, Cheu Zhi Pens, Wu Zhao Hua, Zhou Jin Lian and Xu Bao Yi.
All six were rounded up on Sunday by the SIDMB. Investigators determined that they had not perpetrated any crimes, but that they were only employees of the real criminal, Chen Yi. They all subsequently turned to the police for help, claiming that Chen had “promised them an honest work here in Philippines.” Chen has not yet been located.
South Korea has been cracking down on all types of illegal activity, particularly that associated with cryptocurrencies. It busted a major ring of Chinese and South Korean nationals last month that were involved in a $33-million crypto scam. Immigration Commissioner, Jamie Morente, said at the time, “We reiterate our warning to all foreign criminals who are hiding in the country that the long arm of the law will eventually catch you and we will send you back to your homelands.”
Pasay City is taking an especially hard stance against illegal activity. The city’s police chief, Senior Superintendent Noel Flores, said after the latest crackdown, “We will always continue our mandate in serving the Pasay City through our relentless anti-criminality and anti-illegal drugs operation with the observance of human rights in all our police operations in order to maintain peace and order and public safety.”
While there is no way to permanently rid the world of scammers, fraudsters and thieves, the efforts of law enforcement offices around the globe to clean up the cryptocurrency industry will go a long way to ensure crypto can mature and evolve as a viable alternative to fiat.
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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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A suspect involved in a Thailand cryptocurrency scam is unable to return home after the Foreign Ministry of Thailand revoked his passport, Bangkok Post reported. This has prevented him to return home to face charges.
Prinya Jaravijit is now illegally staying in the United States, after the Thai government agency revoked his passport. According to the report, Jaravijit is allegedly the mastermind behind a big cryptocurrency scam that defrauded a Finnish investor out of $24 million in 2017.
Police claimed that Jaravijit had worked together with members of his family to defraud Aarni Otava Saarima and his business partner. The suspects had lured the two into investing BTC in a fake investment scheme. It is believed that the scammers used three gambling companies to operate the scheme, which was allegedly perpetrated using a crypto token called Dragon Coin.
The alleged scammers took the investors to a Macau-based casino for the transaction, claiming that the casino was accepting these tokens. The investors transferred the agreed amount of BTC to the suspected scammers’ wallets; however, they began to worry when they did not receive returns for their money. They also did not get any shareholder papers or proof of investments in Dragon Coin. The Finnish investor decided to report the matter to the authorities in January.
When the case was reported, Jaravijit was in the United States. Authorities asked him to surrender, giving him until September 17 to comply with the order. However, Jaravijit failed to do so, causing authorities to revoke his passport. Reports showed that he will soon be extradited to Thailand in order to face the charges against him.
According to reports, the Thai Anti-Money Laundering Office (AMLO) confiscated funds worth $6.4 million from Jaravijit’s family and other people who were suspected to be involved in the matter this past Tuesday. The family and the accomplices will be charged next week with money laundering.
Other people believed to be part of the operation include an investor, Prasit Srisuwan, and a businessman, Chakrit Ahmed. The two have reportedly agreed on a compensation plan with the Finnish investor.
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Authorities in India have finally caught up with a prolific cryptocurrency scam artist, alleged to have been involved in a number of scams affecting dozens of investors in the country.
In a major coup for law enforcement agencies, Asif Ashraf Malkani was finally arrested after several months on the run, following complaints to police from aggrieved investors in his cryptocurrency scams, Times of India reported.
The first, known as Kassh Coin, was launched two years ago at a lavish function, where Malkani hired models and dancers to entertain guests—including notable Bollywood celebrities. The air of credibility, however, was short lived after investors soon began complaining of a lack of the returns they were promised for investing in the project.
Over the last few weeks, authorities identified Malkani had moved to Uttar Pradesh, where he had been involved in running similar alleged scam—this time around a new cryptocurrency, dubbed V-flix.
Investigators said Malkani was also found to have been soliciting investment for a “commercially viable” video streaming service he had called V-Tube when authorities tracked him down. According to their findings, Malkani had also been involved in sending substantial bank transactions through his fake company, Puneet Enterprises.
After the initial success of their launch event, Malkani set up a number of satellite events across India and into Nepal, including “youth seminars,” designed to stoke interest from younger investors.
However, after Malkani and his co-conspirators withdrew their funds and disappeared, anger had been mounting amongst those caught up in his latest scam. His previous career track record looks equally dubious, with known involvement in several other scams and high profile frauds, including around real-estate and chain-marketing scams.
His arrest was confirmed by senior officers earlier this week. The case is just the latest example of a scammer turning to the crypto sector to cash in on unsuspecting investors.
The case shows the difficulties for investors in largely unregulated crypto markets, with countless instances of unsuspecting individuals being caught out by investment frauds linked to the sector.
Coupled with the threats inherent in older cryptocurrencies, perhaps most prominent with BTC, the case shows safety should still be a priority for anyone looking to get involved in investing in cryptocurrency.
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Usually, a 51% attack is designed to steal money. It allows the scammer to temporarily gain control of a blockchain and proceed to enter double spends on the network as a means to surreptitiously fill the hacker’s own wallet. While that may usually be the reason, an upcoming attack doesn’t want money. Additionally, while announcing 51% attacks are obviously counterproductive to the end cause, the perpetrator of the upcoming attack was all too happy to announce the event.
The attack is going to be led by someone going by the name of “piracy1,” according to the announcement. It will be conducted at 4 a.m. Eastern U.S. time on October 13, and is designed to only show how easy it is for someone to perform an attack. It will be performed against the Einsteinium (EMC2) cryptocurrency and will “demonstrate how easy these attacks are for anyone to do.” It will also “generally teach people about the nuts and bolts of these attacks and potential mitigations.”
51% attacks have been a popular subject this year among developers who stress how dangerous the attacks can be. Already there have been a number of attacks, including two against the cryptocurrency Verge and one against BTC Gold—all within a three-month window.
Attacking EMC2 won’t have any dire ramifications on the Einsteinium blockchain, or cryptocurrency in general. EMC2 is almost worthless, having dropped 97% of its value in the past year. However, it makes for the perfect target, as those cryptocurrencies with extremely low hashrates are easier to pick through.
In fact, piracy1 is more than likely going to have to dig into his own pockets to perform the attack due to the extremely low value of the cryptocurrency. He even indicated in his announcement that he was “putting in $50” of his own money, and is willing to accept donations from others for the attack.
Most developers and blockchain experts already understand the dangers of a 51% attack, especially among those digital assets outside of the top ten list. However, this is the first time that someone has announced that he will be conducting such an attack, and the whole world is invited to watch. It will be livestreamed on Twitch.
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