Blockchain & Cryptocurrency , Cryptocurrency Fraud , Fraud Management & Cybercrime

Cryptohack Roundup: Crypto Losses Mount as Phishing Rages

Also: Bitcoin Fog Operator Convicted; EU Advances Stronger Sanctions Violation Law
Cryptohack Roundup: Crypto Losses Mount as Phishing Rages
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Every week, Information Security Media Group rounds up cybersecurity incidents in digital assets. This week, amounts for crypto and phishing losses were released, the Bitcoin Fog operator was convicted, the EU approved rules to strengthen sanctions, the federal government sought to recover losses linked to pig butchering, and the Philippines blocked unlicensed crypto websites.

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FBI Pegs Crypto Losses at $4 Million

The FBI said that losses from crypto investment scams in the United States reached $3.94 billion in 2023, marking a 53% increase from the previous year's $2.57 billion. Crypto scams constituted a staggering 86% of all investment fraud losses nationwide. Victims are often lured by the promise of substantial returns on their investments. Romance scams - in which criminals assume fake online identities, gain victims' trust, persuade them to send crypto and then disappear - are especially popular.

Phishing Losses Total $104 Million

In the first two months of this year, approximately 97,000 cryptocurrency users fell victim to phishing incidents and lost $104 million, The Block reported, citing security firm Scam Sniffer. In January, $57.7 million was lost, followed by $46.8 million in February. Ethereum users bore the brunt, as $78 million of the total losses were tied to assets such as Ether and ERC20 tokens. The primary cause was victims unwittingly signing malicious phishing signatures, which granted attackers access to victims' funds without their awareness. "Signing only one malicious signature may result in the loss of all assets stored in a wallet," The Block reported.

Bitcoin Fog Operator Convicted

A federal jury convicted Roman Sterlingov, a dual Russian-Swedish national, in Washington, D.C., for operating Bitcoin Fog, the longest-running bitcoin money laundering service on the darknet. Sterlingov ran Bitcoin Fog from 2011 to 2021, facilitating the movement of over 1.2 million bitcoin, approximately $400 million. The service gained notoriety as a go-to platform for criminals seeking to conceal illicit proceeds.

Cryptocurrency laundered through Bitcoin Fog primarily originated from darknet marketplaces and was linked to illegal narcotics, computer crimes, identity theft and child sexual abuse material. Sterlingov faces a maximum penalty of 20 years in prison for money laundering conspiracy and sting money laundering, along with additional charges related to operating an unlicensed money transmitting business. He is scheduled to be sentenced in July.

EU Moves to Strengthen Punishment for Sanctions Scofflaws

European Union lawmakers unanimously approved new rules aimed at strengthening the enforcement of sanctions, including those related to cryptocurrencies. Members of the European Parliament voted in favor of implementing sanction violation laws that cover travel bans, arms embargoes, business sector restrictions, and the freezing of assets, including crypto assets and wallets. Dutch MEP Sophie in 't Veld emphasized the need for this legislation, stating that diverging national approaches had led to weaknesses and loopholes.

The directive introduces stricter penalties for violating or circumventing sanctions, making such offenses criminal and punishable by a maximum prison sentence of five years across all EU member states. In the vote, 543 MEPs supported the new rules, 45 voted against them and 27 abstained. The statute still requires final approval by the European Council, a body of direct government representatives from trading bloc nations, although that step is likely just a formality.

Recovering Pig-Butchering Losses

U.S. federal prosecutors filed a civil suit to recover cryptocurrency linked to a pi- butchering scam that targeted 37 victims. The government aims to claw back approximately $2.3 million in various cryptocurrency, including USD Coin, Tether, Ether and Solana. A Massachusetts victim wired $400,000 to a crypto wallet hosted by a legitimate cryptocurrency exchange. Law enforcement traced the seized cryptocurrency to two Binance accounts, and the operation resulted in the apprehension of funds tied to 36 other fraud victims across the United States.

Philippines Blocks Unlicensed Crypto Websites

The Philippines National Telecommunications Commission blocked the websites of crypto companies that offer investment products in the country without the necessary licenses. Crypto firms MiTrade and OctaFX were reportedly inaccessible through one of the country's largest internet providers, according to local media reports. The NTC issued an order on Feb. 21 to internet service providers, mandating the blocking of applications and websites related to MiTrade for violating regulations enforced by the Securities and Exchange Commission of the Philippines.

Despite the NTC's efforts to block unlicensed crypto trading platforms, the Binance exchange remains accessible in the country. SEC Commissioner Kelvin Lee previously indicated that the Binance ban would take effect three months after its issuance on Nov. 29, implying a ban date of Feb. 29, CoinTelegraph reported.

About the Author

Rashmi Ramesh

Rashmi Ramesh

Assistant Editor, Global News Desk, ISMG

Ramesh has seven years of experience writing and editing stories on finance, enterprise and consumer technology, and diversity and inclusion. She has previously worked at formerly News Corp-owned TechCircle, business daily The Economic Times and The New Indian Express.

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