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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.

Scam News

Accounting firm recovers Cryptopia records to help return funds to victims

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Accounting firm recovers #Cryptopia records to help return funds to victims

The remaining funds left on the hacked New Zealand exchange can now be proportionally returned to its users.

People who had funds on collapsed crypto exchange Cryptopia are now more likely to get back roughly what they had on the exchange.

In January, hackers stole 9.4% of New Zealand-based exchange Cryptopia’s holdings, worth $16 million. But while the remaining money stayed in the exchange’s control—it lost its records showing how much each customer held on the exchange. That meant there was apparently no way to determine how much each person could get refunded.

Cryptopia hired the New Zealand-based arm of accounting firm Grant Thornton to sort out the mess. Today, the firm revealed that it got hold of the only remaining record of the funds held on the crypto exchange, which went into liquidation in May. That, of course, was key to figuring out how to proportionally divvy up the remaining funds to the exchange’s 900,000 customers, whose funds were frozen.

Grant Thornton said the data is now held in a “safe non-hacked environment.”

It turns out that some of the chaos was due to users’ funds being stored in a few large cryptocurrency wallets, rather than in individual wallets. The only thing tying some 400 different cryptocurrencies with each of its 900,000 customers’ claims to ownership was the exchange’s own record—which was somehow… lost.

Accounting firm recovers Cryptopia records to help return funds to victims

Accounting firm recovers Cryptopia records to help return funds to victims

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Chainalysis Reveals Real-Time Suspicious Cryptocurrency Transaction Alerts

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Chainalysis Reveals Real-Time Suspicious Cryptocurrency Transaction Alerts

Leading blockchain analysis firm Chainalysis has just revealed new tools to help cryptocurrency companies stay compliant with regulators. The firm’s existing “Know Your Transaction” (KYT) platform will now provide real-time alerts to companies using it.

The alerts will give the company accepting payment with a reading of how likely Chainalysis deems to the funds to have been involved in money laundering or other financial crimes. The service will be available for all fifteen cryptocurrencies currently supported by the blockchain investigation company.

Chainalysis Expands KYT Platform for Cryptocurrency Companies

According to a report in financial news publication HedgeWeek, the blockchain forensics firm Chainalysis has just launched new tools to help cryptocurrency companies remain compliant in an ever-changing regulatory environment.

The latest weapon in the company’s arsenal aimed at reducing the risks of companies handling funds involved with money laundering is a real-time alert system to Chainalysis’s Know Your Transaction service. The firm believes that the upgrade will substantially reduce the risk of a cryptocurrency-related service accidentally facilitating financial crimes.

One of the biggest concerns of companies like Chainalysis is the heightened risk of money laundering enabled by cryptocurrency.

According to John Dempsey, the vice president of product at Chainalysis, the new service is a response to the intensifying regulatory scrutiny towards the industry in recent years. He stated of the upgrade:

“Every minute counts when managing exposure to sanctioned entities, hacked funds, darknet markets, and other illicit activities, which is why Chainalysis is investing in fast, actionable alerts to help our customers mitigate risk across cryptocurrencies.”

The new suspicious transaction alerts will provide companies with an assessment of each transaction they receive. It will categorize them as either Severe, High, Medium, or Low risk based on various metrics.

The idea is that companies transacting frequently with cryptocurrency will be able to inspect each transaction they receive for the likelihood that it was involved in some financial crime. They can then take action if necessary. This might involve banning the user from the service and/or rejecting the transaction.

As you might expect, the tool has been welcomed by cryptocurrency exchange operators, themselves victims of perhaps the most regulatory scrutiny both today and likely going forward too. Gemini’s Chief Compliance Officer, Michael Breu, stated the following of the update to the KYT platform:

“Tools like KYT alerts, which provide real time and ongoing blockchain analysis, coupled with Gemini’s own compliance policies, help us meet our regulatory obligations.”

Such tools may well prove useful in examples in policing against cryptocurrency-related fraud like the recent PlusToken scam. In this example, the company duped thousands of investors to send more than 1,000 BTC to wallets under their control. Those investigating the case believe the funds are making their way to popular exchanges way in blocks of around 50 or 100 BTC per occasion.

Chainalysis is one of the leading companies dedicated to investigating blockchain-enabled crimes. The company has worked with several influential government agencies around the world to improve law enforcement’s efforts to bring criminals using cryptocurrency to justice. It also provides frequent reports about the state of Bitcoin ownership, and is often the source of the consistently-reported “X number of Bitcoins are lost for good” statistics.

Chainalysis Reveals Real-Time Suspicious Cryptocurrency Transaction Alerts insta

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Scam News

Never Underestimate a Cryptocurrency Dusting Attack

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Never Underestimate a Cryptocurrency Dusting Attack

Never Underestimate a Cryptocurrency Dusting Attack.

In the cryptocurrency world, there are numerous attack vectors. Users need to be aware of all potential problems at every waking moment. Dusting attacks are seemingly becoming slightly more common over the years. It is a very troublesome attack, as it can break [perceived] privacy of cryptocurrency transactions. Why anyone would organize a dusting attack, is a question which remains very difficult to answer. 

A Dusting Attack is Troublesome

Over the past few years, the term dusting attack has come by quite often. It is a very interesting method, although one which can also have nefarious consequences down the line. The main purpose of executing a dusting attack is to effectively break the privacy of any cryptocurrency transaction. This is achieved by sending fractional amounts of coins to personal wallets randomly found on that cryptocurrency’s blockchain. In the case of Bitcoin and Ethereum, obtaining such addresses is not all that difficult.

Every time such a transaction is received by a wallet, it leaves a trail of digital breadcrumbs. By following the trail back to the attackers, it is possible to perform an analysis of several cryptocurrency addresses. This can be a useful tool in terms of building an identity of specific wallet address owners. This is very problematic for both individual users and companies alike. While Bitcoin is not privacy-oriented, it offers pseudonymity. If that layer is removed, one has to wonder how the exposed information will be used by attackers.

Not a Cheap Attack

In the dusting attack, criminals will try to send fractional amounts of cryptocurrency. Although this can be as small as one Satoshi per transaction, a large-scale attack can still add up to a high overall cost. The reason for these small amounts is to ensure users don’t grow suspicious of these incoming transactions. Very few people would even notice such small incoming transfers. This leaves a lot more room for attackers to put together the information on wallet address they are looking for.

What is interesting is how there are different types of dust in the cryptocurrency industry. It all depends on which blockchain is being attacked. Moreover, all of those projects have their native software clients which determine such low transaction limits on their own accord. In Bitcoin’s case, there are various dust limits for SegWit and non-SegWit transactions alike. Pulling off a successful dusting attack on Bitcoin is not difficult, but there are certain aspects to take into account at all times.

The Bigger Picture

To most people, a dusting attack seems harmless. There is a chance some wallet addresses may be associated with one another. On paper, that is not a big deal or something worth losing sleepover. In reality, however, this information can be sued for much worse attacks down the line. Particularly when it comes to ransomware, extortion, phishing, or other types of scamming, such information can prove very useful in the long run.

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