A&D Forensics Brief, June 23, 2023
A&D Forensics
Financial and Blockchain Intelligence Consulting, Blockchain Forensics, Crypto Investigations and Training Firm.
JP Morgan Chase has been fined $4 million by the US Securities and Exchange Commission (SEC) for mistakenly and permanently deleting around 47 million emails belonging to its retail banking group. The emails, dating from January to April 2018, were deleted in June 2019 from approximately 8,700 mailboxes, including those of about 7,500 employees. The bank's corporate compliance technology department sought help from an outside vendor to delete older communications, but the vendor failed to properly apply the retention settings, resulting in the permanent deletion of emails that were not subject to legal holds. JP Morgan has adopted new email coding procedures to prevent similar incidents. The bank has also faced difficulties complying with subpoenas and document requests in ongoing regulatory probes due to the deleted emails.
Nigerian authorities are intensifying efforts to help the country exit the grey-list of the global Financial Action Task Force (FATF), focusing on anti-money laundering and counter-financing of terrorism (AML/CFT) measures. The Nigerian Financial Intelligence Unit (NFIU) has organized a two-day compliance retreat involving stakeholders from the public and private sectors to reinforce actions following the implementation of new legislative and regulatory frameworks. The retreat comes after Nigeria engaged with the FATF and agreed on a reduced list of 15 items as part of the country's Action Plan, down from the initial 84 deficiencies identified in the 2021 evaluation report. All stakeholders, including private sector reporting entities, are urged to work together to prevent the financial sector from being a safe haven for illicit funds. Various organizations, including the Nigerian Bar Association and regulatory bodies, are committed to ensuring compliance with FATF standards and supporting AML/CFT measures.
Despite the crypto bear market, the Web3 ecosystem is thriving with over 23,300 monthly active developers in 2022. However, security is a growing concern, as vulnerabilities in smart contracts can lead to hacks and significant financial losses. To address this, CertiK, a blockchain security expert, has joined the Cointelegraph Accelerator program as a preferred security solutions provider and mentor. They will offer comprehensive smart contract audits to ensure the highest standards of security for Web3 startups and provide educational workshops on Web3 security, smart contract audits, and KYC processes.
A resident from Russia's Khabarovsk region has been detained by the Federal Security Service (FSB) on charges of treason for trying to send money to the Ukrainian military. The individual attempted to use cryptocurrency instruments to transfer funds for the purchase of drones, thermal imaging cameras, munitions, and medical supplies. The FSB released footage of the detainment and conducted a search of the suspect's house. Additionally, the FSB arrested a group of alleged saboteurs in the Ukrainian city of Melitopol, controlled by Russia, who were planning an assassination attempt against officials, although no further details were provided.
Two men have been charged and luxury sports cars worth around $2.7 million have been seized in Sydney following an alleged cryptocurrency scam that defrauded two companies of over $5.5 million. Fabio Sa Alves, 39, was arrested while driving in Cromer, and a subsequent search of a home and warehouse in the same area led to the seizure of cars, motorcycles, watches, nunchakus, and cryptocurrency wallets. The total value of the seized luxury cars amounted to $2.7 million, including a red Ferrari found at a dealership. One of the suspects, Mr. Sa Alves, has been charged with multiple counts of obtaining financial advantage by deception and dealing with proceeds of crime. The police emphasized the importance of using approved digital currency exchanges and exercising caution when engaging in cryptocurrency transactions.
Coinbase filed amicus briefs in two crypto-related lawsuits before the SEC sued the company in a separate case. The move aims to shape court rulings on open legal questions relevant to Coinbase's case. The SEC's focus has shifted to larger players like exchanges, with Coinbase as its main target. The company argues that the SEC lacks authority to regulate digital assets as securities and seeks clear guidelines for participants in the cryptocurrency industry.
The Federal Capital Territory Administration (FCTA) has issued a warning about scammers who have created fake social media accounts using the names of senior staff members of the administration. The scammers aim to deceive unsuspecting individuals by offering fake contract deals or employment opportunities. The FCTA emphasized that neither the Permanent Secretary nor the Executive Secretary has a LinkedIn account, and urged the public to avoid responding to tenders or job openings through social media accounts. The government has established proper procurement and employment processes that are not publicized through social media. Security agencies are working to identify and apprehend the scammers, and the public is advised to exercise caution and avoid falling victim to their schemes.
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The Nevada Financial Institutions Division has revealed that crypto custodian, Prime Trust is unable to fulfill all customer withdrawal requests, citing a breach of fiduciary duties and violation of Nevada trust laws. The regulator had been monitoring Prime Trust's solvency in relation to its planned acquisition by BitGo, which was ultimately called off. A cease-and-desist order was issued to Prime Trust, instructing it to stop accepting fiat and cryptocurrency from clients. Other companies, such as Stably and Securitize Markets, have been affected by Prime Trust's freezing of withdrawals and deposits, leading to service suspensions. Coinmetro has also reported difficulties processing new USD transactions.
Ukrainian cyber police have dismantled a fraudulent investment scam targeting Canadian citizens, involving the theft of cryptocurrency from their online wallets. The scammers, primarily from Ukraine's Khmelnytskyi region, used a rigorous hiring process and faked to be representatives of legitimate cryptocurrency companies. They tricked victims into installing a program, allowing them to access personal computers, wallets, login credentials, passwords, and card account details. Ukrainian and Canadian authorities conducted a joint operation, seizing equipment, mobile phones, SIM cards, vehicles, and cash. The arrested individuals will face charges under Ukrainian IT law, which can carry penalties of up to 15 years of imprisonment. Investigations are ongoing to identify other participants, determine the full extent of the scheme, and locate additional victims and the amount of money stolen.
Atomic Wallet announced a $100 million cryptocurrency theft on June 3-4, involving outbound transactions not approved by users. The team alerted blockchain analytics companies and exchanges, working with Web3 ecosystems and law enforcement agencies. They plan to seize frozen deposits and compensate affected users. Users demand more detailed explanations and compensation, urging Atomic Wallet to take responsibility and ensure asset security.
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