TRM Weekly Roundup | August 22, 2024
As we’re nearing the end of August, things are still heating up across the cryptoverse. This week, Ari Redbord , Isabella Chase , and Angela Ang dig into these headlines:
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???UK SOC assessment highlights risks from new technology
The UK National Crime Agency's 2024 National Strategic Assessment of Serious and Organised Crime (SOC) was published this week, and highlights SOC as the most harmful threat to the UK’s national security. The report estimates that GBP 12 billion of criminal cash is generated annually, with over GBP 100 billion laundered through UK-based structures every year.
Key drivers of this threat include the increasing potency and availability of drugs, the increased digitization of everyday life increasing online fraud and online child exploitation, and the use of crypto assets in money laundering. The use of crypto assets is put in the wider context of the UK’s money laundering landscape, however, which also features the abuse of corporate structures and the use of professional enablers, over the counter methods, money mules, cash intensive businesses and international controller networks.
???? DOJ charges Tennessee man with helping North Korean IT workers pose as US citizens
Earlier this month, the U.S. Department of Justice announced the arrest of Matthew Isaac Knoot, a 38-year-old from Nashville, Tennessee, for his involvement in a scheme that allegedly supported North Korea's illicit weapons program. Knoot is accused of helping North Korean IT workers pose as US citizens to secure remote employment with American and British companies.
These IT workers used stolen identities and US-based "laptop farms" to deceive employers into believing they were hiring US-based workers. Knoot's role included hosting company laptops at his residences, installing unauthorized software to allow remote access by the North Korean workers, and facilitating the laundering of payments, which were funneled to accounts linked to North Korean and Chinese actors.
DOJ highlighted the broader threat posed by North Korea's deployment of IT workers worldwide to evade sanctions and fund its WMD programs. These workers can individually earn up to USD 300,000 annually, contributing to the hundreds of millions of dollars generated each year for North Korea’s WMD efforts.
TRM continues to closely track North Korea’s malign activity and attempts to attack the growing crypto ecosystem. Over the last five years, according to a TRM report, the DPRK has stolen well over USD 3 billion to fund weapons proliferation and other destabilizing activity.
For more, watch “TRM Talks: The North Korea Threat,” here.
?????Australian authorities take down 615 crypto scam sites, allege 58% of crypto ads on Meta are scams
On Tuesday, ASIC announced that it had taken down more than 7,300 phishing and investment scam websites since July 2023, including 615 crypto investment scams.
"Scammers use digital platforms, including social media, to lure unsuspecting consumers, directing them to scam websites. Shutting down these websites disrupts the transmission of the scam and breaks the link between scammers and their potential targets," the regulator said.
Earlier this month, in a Federal Court of Australia ruling on the ongoing case brought by the ACCC against Meta , the competition watchdog said that 58% of crypto ads on Facebook violated Meta's own advertising policies or potentially involved scams. In particular, the ACCC called out the use of fake celebrity ads involving at least 25 public figures. ACCC further contended that Meta had been aware of these scam ads and had not adopted reasonable safeguards to prevent or reduce them.
According to Cointelegraph , a Meta spokesperson said the data in the ACCC’s statement of claim relies on old information from 2018 and is from a “limited data set,” and that other contact methods are still the top way people are scammed. The spokesperson argued that it’s unlikely the ACCC “data is an accurate representation of our platform today.”
Earlier this year, Meta was also called out by the Ministry of Home Affairs Singapore for having “consistently pushed back” on anti-scam measures, despite Facebook, WhatsApp, and Instagram being over-represented amongst the platforms exploited by scammers.
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?? Heatwave sparks crackdown on crypto mining in Iran
According to reports, Iran is escalating its crackdown on illegal cryptocurrency mining amid a severe heatwave that is causing electricity shortages. The state-run power company, Tavanir, is offering citizens a USD 23 bounty to report unauthorized miners exploiting subsidized electricity. Illegal mining in Iran has surged due to its potential to bypass international sanctions, consuming vast amounts of electricity. Over 230,000 illegal mining units have reportedly been confiscated.
This crackdown reflects global concerns, as other countries like Kazakhstan and Kosovo face similar issues with illegal crypto mining and power shortages. Similarly, back in May, Venezuela announced plans to disconnect crypto miners from the national grid to reduce the strain they were putting on the country’s energy supply. These moves spark interesting questions about the role that crypto assets can play in propping up authoritarian regimes who have competing energy concerns.
??? Senate Majority Leader says goal is to pass crypto legislation by end of year
In a recent call with industry leaders, US Senate Majority Leader Chuck Schumer, said, “We cannot afford to continue to sit on the sidelines, because then we risk crypto going overseas to lowest common denominator countries where there'll be no regulation at all.”
“My goal is to get something passed out of the Senate and into law by the end of the year, and I believe we can make that happen. I think we should strike a balance for crypto from between promoting innovation and providing common sense guardrails. It's a similar approach we've taken with another innovative technology, artificial intelligence, with the right regulation, we can provide a foundation that will help crypto reach its full potential so it can continue growing and innovating. Innovation is our North Star when it comes to AI or crypto, but we also need to provide some guardrails to keep users of this technology safe, to preserve our national security, and to ensure that this tech can't be abused by criminal organizations or other nefarious actors at the expense of the public good, and only Congress has the ability to provide this kind of balanced regulation.”
“Sadly, there are a lot of members in Congress nowadays who built their political brands around creating spectacle and sensationalism instead of putting in the hard work of legislation. Nonetheless, passing legislation this year is absolutely possible, even in these divided times.”
This is perhaps the strongest language we have heard from a senior government official on the importance of passing cryptocurrency legislation in the years-long debate over how to regulate the space. Although the statement was made in the context of the upcoming election between former President Donald Trump (who has made supportive statements about the promise of bitcoin and cryptocurrencies over the last few months) and Vice President Kamala Harris (who has been quiet on the issue), it is clear that both Republicans and Democrats are hearing demand from constituents on the importance of passing a comprehensive framework.
?? US Treasury and Federal Reserve seek to include virtual assets under definition of “money” under AML law
The U.S. Department of the Treasury 's semiannual regulatory agenda, released on August 16, 2024, details upcoming plans to adjust the Bank Secrecy Act by revising the definition of "money" to include digital assets, such as cryptocurrencies and central bank digital currencies.
The goal is to ensure that financial institutions treat these assets similarly to traditional fiat currency in terms of reporting domestic and cross-border transactions.
The agenda indicates that the revised definition of "money" will specifically include convertible virtual currencies, which are digital assets that act as a medium of exchange but do not have legal tender status.
The regulation will apply to both domestic and cross-border transactions involving CVCs. This includes cryptocurrencies like Bitcoin, Ethereum, and other tokens that operate similarly within the financial ecosystem.
The proposal also aims to extend the reporting requirements to digital assets that possess legal tender status such as CBDCs.
The proposal is currently in the drafting stage, with the final notice of proposed rule-making scheduled for September 2025.
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