TRM Weekly Roundup | October 17, 2024
The weather might be cooling down, but the news across the cryptoverse is heating up! ??
In this edition of The Weekly Roundup, our team of experts — Ari Redbord , Angela Ang , and Isabella Chase —?shed light on these latest and developing stories:
???Let’s get into it.
?????Taiwan pilots crypto custody services by local banks, clamps down on unlicensed crypto business
According to local media , Taiwan’s Financial Supervisory Commission (FSC) plans to launch a pilot program for local banks to provide crypto custody services.
The pilot is slated for the first quarter of 2025, and aims to promote the institutional adoption of crypto. Brenda Hu (the FSC’s Director General in the Department of Planning) told media that more details will be released at least 15 days prior to application opening, and that the regulator would solicit public feedback to refine the trial framework. This follows FSC guidance late last month on access to overseas crypto ETFs for professional investors.
While Taiwan is supporting responsible crypto adoption, it is also tightening enforcement on unlicensed activity. Earlier this month, the Legislative Yuan, Taiwan’s highest legislative body, passed a bill criminalizing unlicensed crypto activity in Taiwan. The law will take effect on January 1, 2025, and VASPs providing crypto products and services in Taiwan must register with the regulator by September 2025. Failure to do so may result in an imprisonment or a fine.
??♂? FBI Cleveland works with Tether to seize funds
Recently, the U.S. Department of Justice ?announced ?the civil forfeiture of 200,000 in USDT — the proceeds of a fraud scheme involving cryptocurrency assets stolen from a victim, identified as "L.D.," located in Ohio. TRM Labs is proud to support the Department of Justice in this, and other cases, to identify and disrupt the illicit use of cryptocurrency.
The DOJ team, led by FBI Cleveland and the US Attorney’s Office for the Northern District of Ohio, was able to:
Additionally, the DOJ team used a novel technique for delivering “notice” to the foreign-based controllers of the frozen TRON addresses. The FBI sent a transaction to the address which included a note, with a link to the forfeiture, explaining that the funds had been forfeited by the US government.
Read TRM’s in-depth discussion of the investigation and seizure here .
???? Government recommends sentences in Bitfinex case ahead of November sentencing
According to a Tuesday court filing, prosecutors are recommending a sentence of five years in prison for Ilya Lichtenstein, who pled guilty to a money-laundering conspiracy tied to the 2016 Bitfinex cryptocurrency hack.
Lichtenstein and his wife, Heather "Razzlekhan" Morgan, laundered over 120,000 stolen bitcoin, now valued at more than USD 4.5 billion. While Lichtenstein was identified as the primary hacker, Morgan, also known for her rap persona "Razzlekhan," admitted to helping him conceal the stolen crypto after discovering his involvement.
The couple employed sophisticated techniques to launder the funds, including using darknet markets, mixing services, and obfuscation methods. Their efforts included converting some assets to gold, NFTs, and Walmart gift cards, and even burying gold coins to avoid detection. A crucial breakthrough came in January 2022, when law enforcement accessed one of Lichtenstein’s wallets, seizing nearly 94,636 BTC — valued at USD 3.6 billion — marking the largest seizure in US history.
The investigation, led by IRS Criminal Investigation (IRS-CI), Federal Bureau of Investigation (FBI) , and Homeland Security Investigations (HSI), spanned several years, tracking the stolen bitcoin across various exchanges and platforms.
In early 2022, Lichtenstein and Morgan were arrested after years of complex transactions attempting to disguise the source of the funds. Prosecutors recommended a shorter 18-month sentence for Morgan, citing her lesser role and cooperation. Lichtenstein’s cooperation in other cases — including testifying in a money-laundering trial related to the Bitcoin Fog mixing service — led prosecutors to request a sentence below the maximum. Both are scheduled for sentencing in November.
领英推荐
Lots more to come on this case and sentencing. In the meantime, TRM breaks down the Bitfinex case here .
??? Trump and Harris lean into crypto on campaign homestretch
This week, both US presidential candidates made announcements involving crypto.
Vice President Harris announced her support for a “regulatory framework for cryptocurrency and other digital assets.” Speaking in Erie, Pennsylvania, she positioned this framework as part of a broader “Opportunity Agenda” aimed at increasing financial access for underrepresented communities, particularly Black Americans. According to her campaign, over 20% of Black Americans have owned cryptocurrency, and her proposal emphasizes protecting these investors. Harris’s regulatory framework seeks to offer secure access to financial systems for those historically excluded, while ensuring clear rules around digital asset ownership and investment.
Meanwhile, Donald Trump is leaning into his role as a high-profile advocate for the crypto industry. The Trump family’s latest venture, World Liberty Financial, kicked off its WLFI token presale. Billed as a DeFi platform, World Liberty Financial allows accredited investors to participate in lending, liquidity pooling, and stablecoin transactions. Trump himself has embraced the title of “chief crypto advocate,” with his sons, Eric and Donald Jr., serving as “web3 ambassadors.”
Whatever the outcome of the election next month, it is pretty extraordinary to see both candidates spend time on issues related to building, regulation, and policy-making for digital assets.
For more on crypto and the election, check out TRM’s “The Crypto Election” blog post here .
?? Big fines teach important lessons
Last week, TD Bank paid a massive USD 3 billion fine to settle charges for failing to comply with the BSA while scaling. This week, reports revealed that USD 1 billion worth of TD’s transaction volume was tied to two unnamed crypto asset firms: one, a sending exchange in the UK, and the other, apparently received wire transfers in Colombia.
Similar to the [Starling Bank fine](https://www.fca.org.uk/news/press-releases/fca-fines-starling-bank-failings-financial-crime-systems-and-controls#:~:text=The FCA has fined Starling,to 3.6 million in 2023.) earlier this month in the UK, the TD Bank fine offers valuable lessons for crypto asset service providers and fintech companies. The fine:
Both banks failed to meet regulators' expectations and failed to create risk based frameworks rather than check-the-box approaches.
Crypto firms seeking to learn more about these shortcomings and how to avoid them can read Thomas A. (TRM’s Head of Compliance Advisory)'s post on the topic here .
??????????The EU and UK step up statements on malign state threats
In last week’s edition of the Weekly Roundup, we spotlighted TRM’s research on the historic use of crypto in election interference campaigns by malign states. This week, the focus is on ransomware .
In 2024, ransom payments and demands reached unprecedented levels. In the first half of 2024, the average extortion demand per ransomware attack was over USD 5.2 million. That number includes the March 2024 record victim payment of USD 75 million. It’s not just payments that have accelerated. The attacks themselves are more complex than ever, thanks to the proliferation of new ransomware strains, advanced attack techniques, and the rapid expansion of Ransomware-as-a-Service (RaaS).
???So why does this matter, especially to the UK and EU? EU and UK national security apparatus’ have recently stepped up their statements on cyber and hybrid threats — like disinformation and ransomware — that they face. Given the use of crypto in both of these threat areas, crypto service providers should be up to date on their direct and indirect exposure to the funds related to these activities, and have controls in place to identify, stop, and report related funds.
Read our deep dive into ransomware trends here .
Global Head of Policy and Government Affairs at TRM Labs
1 个月This was only one week Pippa Armes? ??