A&D Forensics Brief, March 1, 2024
A&D Forensics
Financial and Blockchain Intelligence Consulting, Blockchain Forensics, Crypto Investigations and Training Firm.
Gemini Trust agrees to repay over $1.1 billion to users and pay $37 million in fines for compliance failures following a settlement with New York regulators. Gemini's negligence with its partner, Genesis Global Capital, led to 200,000 users being unable to access $1.8 billion worth of virtual currency. Gemini announces a settlement in principle with Genesis and creditors, aiming to return assets to users pending bankruptcy court approval.
The Nigerian government has called for a substantial fine of $10 billion from Binance, alleging the platform's involvement in illegal transactions in the country. This demand was disclosed by Bayo Onanuga, special adviser to President Bola Tinubu, as part of a broader crackdown on crypto exchanges. The Office of the National Security Adviser (NSA) has confirmed an ongoing investigation into Binance, reflecting the government's push for regulatory oversight in the crypto space amid concerns about the foreign exchange market. Stakeholders are closely monitoring the situation to gauge the future regulatory landscape for crypto exchanges in Nigeria.
A Philadelphia woman, Shrreya Datta, fell victim to a cryptocurrency romance scam, losing nearly $450,000. The scam involved a man named "Ancel" on the dating app Hinge, who claimed to be a French wine trader and persuaded Datta to invest in a fraudulent crypto trading app. Investigations revealed that Ancel's photos were of a German fitness influencer, exposing the scam. Cryptocurrency romance scams like Datta's have surged, with victims suffering significant financial and emotional losses. Statistics reveal a concerning trend in the prevalence of romance scams, impacting thousands annually with billions of dollars in losses, particularly affecting vulnerable groups like senior citizens.
Hong Kong ends its acceptance of license applications from crypto exchanges as of Feb. 29. Exchanges failing to apply by then must close by May 31, as per the Securities and Futures Commission (SFC). Only two operators, OSL Digital Securities and HashKey Exchange, have received formal licenses so far. The SFC received applications from 22 platforms, with some withdrawing or having applications returned. The SFC will maintain a public list of platforms subject to closure.
MicroStrategy's twitter account was hacked, promoting a fake Ethereum token airdrop called $MSTR. The hack caused over $440,000 in damages, with funds drained from users who fell victim to the scam. Despite the breach, MicroStrategy regained control of its account. The company has not issued a statement regarding the incident.
Spain's financial regulator, the CNMV, has issued warnings against 18 companies operating without licenses, including several in the cryptocurrency sector like Bitbinx, Crytomerge, and CryptoMaxiTrade. These unregistered entities lack authorization to offer investment services or operate under CNMV oversight. While Spain has witnessed a 56% surge in registered crypto firms in 2023, reaching 83 companies, regulatory efforts intensified. The CNMV initiated its inaugural case against Miolos, a technology provider, for allegedly violating crypto advertising regulations by not issuing risk warnings or obtaining CNMV approval for its marketing campaigns.
Kyrgyzstan's crypto exchange, Four Dragons, disclosed a security breach on February 22, resulting in the withdrawal of significant funds, estimated at around $100 million. Despite the incident, operational activities continue, and the exchange pledges to fulfill its obligations. The exchange has identified bitcoin addresses used for fund transfers and offers a 10% reward for assistance in recovering the stolen assets. Regulatory clarity regarding cryptocurrency exchanges in Kyrgyzstan remains uncertain.
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Blockchain sleuth ZachXBT raises alarm over suspicious activity at BitForex exchange. Approximately $56.5 million worth of crypto withdrawn from hot wallets on Feb. 23, followed by sudden withdrawal halt. BitForex still holds significant TRB and OMI tokens. No public statement from BitForex regarding the situation.
Shido, a layer-1 blockchain token, experienced a drastic 94% drop within 30 minutes due to an exploit on its Ethereum-based staking contract. The attack resulted in the withdrawal of over 4.3 billion Shido tokens, worth around $35 million before the plunge. The exploit involved transferring the staking contract to a new address and implementing a hidden function to withdraw staked tokens. Even the funder's assets were abruptly transferred prior to aiding the exploiter.
The Thai SEC recommends revoking the digital asset business license of troubled exchange Zipmex, citing failure to meet regulatory requirements. Zipmex's business suspension continues, with clients allowed to reclaim assets until March 11. Former CEO faces corruption charges.
A company based in Myanmar's KK Park compound has orchestrated "pig butchering" scams, defrauding victims of over $100 million using Tether tokens. Investigations by Chainalysis and the International Justice Mission revealed the extent of the fraud, highlighting the growing trend of digital assets in illicit activities. Tether, managing nearly $100 billion, faces scrutiny for its role in facilitating such scams.
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