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Texas Regulators Issue Cease-and-Desist Letter to Phony Crypto Venture

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Texas Regulators Issue Cease-and-Desist Letter to Phony Crypto Venture
A cryptocurrency firm in Dallas, Texas has received a cease-and-desist letter from state regulators telling it to stop making false promises to its customers. The company, known as Forex and Bitcoin Trader

Texas Regulators Issue Cease-and-Desist Letter to Phony Crypto Venture

A cryptocurrency firm in Dallas, Texas has received a cease-and-desist letter from state regulators telling it to stop making false promises to its customers. The company, known as Forex and Bitcoin Trader, was advertising on Craigslist that those who invested their funds in the company early would receive 900 percent gains within a matter of weeks.

 Texas Seems to Be the Chosen Hunting Ground for Crypto Criminals

Obviously, this sounds too good to be true… Virtually impossible. 900 percent that quickly? Unless the investment is in some sort of newly discovered mineral ore that’s vital to the existence of human life, this number seems a little farfetched… Just way too big.

Texas officials took issue with these claims and immediately jumped into action, telling the company to end its phony bologna promises or face the consequences. The company claimed it could produce such returns through an insurance policy it had purchased designed to back client crypto funds, along with a “balance sheet” that could guarantee net returns within a specified timeframe.

However, the company failed to produce any information regarding the policy or its capital. It also did not put out any notices warning customers regarding the risks commonly associated with crypto investing (i.e. price volatility, etc.)

The move comes just days after two other cryptocurrency-based investment firms, stationed in New Jersey, were issued cease-and-desist orders by lawmakers who claimed the companies were spewing similar (and blatantly false) stories to their customers. The firms – known as Uno Call and Zoptax LLC – were allegedly hosting fake initial coin offerings (ICOs) and selling unregistered securities.

Attorney General Gurbir S. Grewal issued a statement on the matter, explaining:

 Today’s action demonstrates that our Bureau of Securities stands ready to enforce our investor protection laws in cases involving initial coin offerings and cryptocurrency-related investment schemes. As innovation in the online cryptocurrency-related investment market continues, market players need to understand that the rules still apply to them.

Texas has become something of a haven for cryptocurrency scams over the past year. The state recently shut down two separate operations – Coins Miner and Digital Bank – on several accusations including selling false securities, posting fake endorsements from several well-known cryptocurrency exchanges and trading platforms, and holding phony giveaways.

In addition, the state is warning investors that this is not the last time they’ll hear of such scams. Recently, Joe Rotunda – the director of enforcement at the Texas State Securities Board – said that malicious actors are looking for new technology to exploit, and crypto presents the perfect opportunity.

 This Could Happen Again

He claims:

 It’s unfortunate and inevitable. Bad actors tend to follow the news and the things that get widespread public attention… Absolutely, there will be more. It’s tough because there are a lot of legitimate firms out there dealing with this new technology.

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Convicted Thief Of $30 Million Crypto Scheme Allegedly Stole From Hundreds of US Investors

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Convicted Thief Of $30 Million Crypto Scheme Allegedly Stole From Hundreds of US Investors
Convicted Thief Of $30 Million Crypto Scheme Allegedly Stole From Hundreds of US Investors

Boaz “Bo” Manor, a convicted hedge fund scammer, has been charged with raising over $30 million from investors in an allegedly fraudulent initial coin offering. Prosecutors say he ditched his real identity, donned red hair, grew a beard and masqueraded as “Shaun MacDonald,” a blockchain entrepreneur. Prior to surfacing in New York, the notorious scammer spent four years in a Canadian prison after his bogus $730-million hedge fund evaporated in 2005. 

The latest indictment names Manor’s accomplice, Edith Pardo, and two firms, CG Blockchain Inc. and BCT Inc. SEZC, as defendants. The cohorts allegedly sold crypto asset securities between August of 2017 and September of 2018. According to the complaint, they also falsely claimed to have 20 hedge funds piloting technology to register transactions on a blockchain.

The SEC clarified,

“In reality, the defendants had only sent a prototype to a dozen funds, and none of the funds used it or paid for it.”

Joseph G. Sansone, chief of the SEC’s market abuse division, remarked,

“Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed the defendants to take over $30 million from investors’ pockets.”

Pardo has been arrested, but authorities say Manor remains on the run.

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Victims of Dunamiscoins Scam In Ugandan Petition Gov’t For What They Lost

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Victims of Dunamiscoins Scam In Ugandan Petition Gov’t For What They Lost
Victims of Dunamiscoins Scam In Ugandan Petition Gov’t For What They Lost

Over 5,000 victims of the alleged cryptocurrency pyramid scheme Dunamiscoins have petitioned the Ugandan Parliament asking to refund money lost in the scam.

Arthur Asiimwe, the leader of the petitioning group who presented the request to the Parliament’s speaker Rebecca Kadaga, claims that the government has licensed the alleged scam firm, according to an official announcement by the Parliament of Uganda on Jan. 16.

First spotted in early December 2019, Dunamiscoins is allegedly involved in defrauding over 10,000 people, causing them losses of around $2.7 million. The apparent scam company reportedly closed its offices just a month after opening, stealing money from its investors and employees after previously promising 40% returns on cash investments. Asiimwe emphasized that the Ugandan government must be held liable for the Dunamiscoins incident:

“Government licensed this company and gave it a go-ahead to work as a non-deposit taking financial institution; it carried out its duties as a microfinance company. They gave unrealistic bonuses.”

As two Dunamiscoins directors stood trial in early January, Asiimwe also pointed out that one of the key individuals behind the scam, Susan Awon, has still remained at large. The group leader expressed dissatisfaction with the status of the investigation, arguing that Ugandan authorities should take further steps to arrest the third director and refund the money.

Subsequently, Parliament’s speaker Kadaga promised to engage with the responsible state authorities in order to solve the issue. According to the official announcement by the Parliament, she said:

“Since you petitioned the President already, I will talk to him and invite the Minister of Finance, Uganda Micro Finance Regulatory Authority next week so we can forge a way forward.”

While Dunamiscoins victims apparently accuse their government of not taking necessary measures to prevent the scam, some media reports claim that Uganda’s President Yoweri Museveni endorsed the firm earlier. According to local news publication The Independent, the victims told Kadaga that their faith in the company was driven by the President’s endorsement alongside constant media adverts.

 Meanwhile, Museveni has definitely taken a positive stance towards both blockchain technology and cryptocurrencies. Back in 2018, the President met with executives at major global crypto exchange Binance to discuss the developments in the industry.

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Chainalysis Finds Terrorists Are Improving Their Crypto Financing Operations

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Chainalysis Finds Terrorists Are Improving Their Crypto Financing Operations
Chainalysis Finds Terrorists Are Improving Their Crypto Financing Operations

Earlier today, Jan. 17, the blockchain analysts identified Izz ad-Din al-Qassam Brigades (AQB), Hamas’s military arm and noted terrorist organization, as the first confirmed case of terrorists using cryptocurrency to aid their activity. AQB used a website to generate a new Bitcoin address for each donor to deposit funds. It included a how-to video on donating with maximal anonymity. 

Compared to similar earlier campaigns, AQB raised as much money and garnered more donors but in less than half the time. Cryptocurrency has been linked to crime before, including Ponzi schemes and hate crimes. In other recent research, Chainalysis tracked $2.8 billion in Bitcoin from criminal enterprises to exchanges. Over 50% — $1.4 billion in Bitcoin — moved through major exchanges Binance and Huobi.

Crypto-enabled crime has caught the attention of regulators and government officials who would like greater oversight of digital currencies. Last year, Treasury Secretary Steve Mnuchin, speaking at a gathering of the Financial Action Task Force (FATF), applauded global regulatory standards that would combat crypto crimes:

“The FATF will make sure that virtual asset service providers do not operate in the dark shadows […] This will enable the emerging FinTech sector to stay one-step ahead of rogue regimes and sympathizers of illicit causes…”

The FATF, whose 200 countries, including the U.S., promote measures to combat financial crime, now demand that exchanges know more about customers and transactions. More data will hopefully help identify money laundering and terrorism financing in exchange for institutions that largely lack the oversight needed to combat this growing problem. In a statement to Chainalysis, Binance CCO Samuel Lin said,

“Binance is committed to cleaning up financial crime in crypto and improving the health of our industry. We will continue to improve on our proprietary KYC and AML technology, as well as the third-party tools […] One of our core values at Binance is to protect our users…”

Binance, one of the largest crypto exchanges, exceeded $1 billion in profits last fall.

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