A&D Forensics Brief, June 7, 2024

China and the United Arab Emirates (UAE) vow to combat cybercrime involving cryptocurrency.

China and the UAE have formed a strategic alliance to combat cybercrime involving cryptocurrency. This partnership, announced during UAE President Mohammed bin Zayed Al Nahyan’s visit to China, targets areas like telecom fraud, online gambling, money laundering, and human trafficking. The alliance also emphasizes the potential of Central Bank Digital Currencies (CBDCs) to revolutionize cross-border trade and investment, highlighting the UAE's pioneering role in completing a significant cross-border CBDC transaction.

The United Kingdom crypto industry published Travel Rule navigation guide.

The UK crypto industry, through CryptoUK, has released a comprehensive 36-page guide to help businesses comply with the U.K.’s crypto Travel Rule. This rule, implemented on September 1, 2023, requires virtual asset service providers (VASPs) to collect, verify, and share information about crypto transactions and conduct risk-based assessments before transferring cryptocurrency to recipients. The guide was developed by the CryptoUK Travel Rule Working Group, led by experts from Elliptic and Notabene, and addresses compliance challenges and industry perspectives.

Epoch Times executive charged in alleged $67 million money laundering scheme.

Widong "Bill" Guan, Chief Financial Officer of the far-right Epoch Times media company, was indicted on charges of money laundering conspiracy and bank fraud for his alleged involvement in a cryptocurrency scam and money laundering operation. According to the Justice Department, Guan used cryptocurrency to purchase prepaid debit cards that were loaded with fraudulently obtained unemployment insurance benefits.

The Linea-based decentralized exchange Velocore lost $6.8 million in a hack.

Velocore, a decentralized exchange on linea network confirmed a breach on June 2, during which attackers stole Ethereum tokens worth $6.8 to $10 million. The hackers exploited vulnerabilities in the CPMM pool contract, forcing Velocore to freeze operations. Despite efforts to mitigate the issue by adjusting transaction fees, the team realized their approach was too late. Velocore is actively pursuing the hackers, negotiating for a settlement, and working with security partners.

The United Arab Emirates (UAE) central bank approved a licensing system for stablecoins.

The Central Bank of the United Arab Emirates (CBUAE) approved a new system to oversee and license stablecoins during a meeting in Abu Dhabi. This decision is part of the government's financial infrastructure transformation (FIT) program, aimed at boosting digital transactions and fostering innovation in the country's digital economy. The regulations require stablecoins to be backed by UAE dirhams and not linked to other currencies or assets. Additionally, the Dubai Financial Services Authority (DFSA) updated its rules for recognizing stablecoins, allowing investments in unrecognized crypto tokens within certain limits.

Japanese exchange DMM lost $305 million in Bitcoin due to a private key hack.

DMM, a centralized cryptocurrency exchange, lost over $305 million worth of Bitcoin due to a hack of its servers on May 30. The hack involved the loss of 4,502.9 BTC from the exchange's wallet, leading to the temporary suspension of withdrawals and other services. DMM confirmed the hack on its website and assured users that all deposits would be guaranteed. They also stated that they would compensate users by acquiring an equivalent amount of BTC with support from their group companies.

AI-Driven Cryptocurrency Crime on the Rise, Says Elliptic Report

Elliptic's 2024 report highlights the growing threat of AI-driven crypto crimes, including deepfake scams and state-sponsored cyberattacks. The report warns that these dangers are just beginning, with advanced technologies being exploited for illicit activities. It exposes unethical AI tools on the dark web and the increasing use of deepfake videos to promote fraudulent schemes. This underscores the need for heightened vigilance and awareness in combating these evolving threats in the digital space.

An associate Professor rejects link between Nigerian currency depreciation and crypto trading.

Associate Professor Iwa Salami from the University of East London argues that Nigeria's decision to stop naira trading on cryptocurrency exchanges could worsen the country's currency volatility. She disagrees with Nigeria's view that global cryptocurrency platforms caused the naira's depreciation. Salami suggests that instead of banning crypto trading, Nigeria should adopt a balanced regulatory approach to protect consumers and investors while allowing the industry to flourish without disrupting financial stability. She favors regulation over ostracizing crypto exchanges and believes that using established regulatory frameworks can address concerns about suspicious activities in the crypto space.

The New York Attorney General sued crypto trader NovaTech, claiming $1 billion in fraud.

New York Attorney General Letitia James has filed a lawsuit against two cryptocurrency firms and their founders, alleging fraud resulting in over $1 billion in losses for investors. The suit targets NovaTech, a crypto trading company, and AWS Mining, a defunct mining company, both with overlapping founders. The suit claims that NovaTech operated as a Ponzi scheme, attracting investors through religious appeals and misrepresenting its registration status. The founders, Cynthia and Eddy Petion, were also involved in AWS Mining, which allegedly failed to deliver promised returns.

The 85-year-old ex-attorney confessed to a $9.5 million cryptocurrency Ponzi fraud.

Former attorney David Kagel, aged 85, has confessed to participating in a cryptocurrency Ponzi scheme that defrauded victims of over $9.5 million. Operating in Beverly Hills, California, Kagel's scheme involved false promises of high returns using AI trading bots, with Kagel posing as an attorney to lend legitimacy. He faces up to five years in prison and admitted to using victims' funds for personal gain. The legal proceedings continue for his co-conspirators in the Ponzi scheme.

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