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Washington Court Convicts Bitcoin Fog Founder of Aiding Darknet Drug Trade Money Laundering

In a recent development, the founder of “Bitcoin Fog,” a cryptocurrency-mixing service, was found guilty by a federal jury in Washington of helping to launder tens of millions of dollars from darknet markets notorious for illegal drug sales.

Multi-Million Dollar Crypto Money Laundering Case

According to a Bloomberg report, Roman Sterlingov, a 35-year-old Russian-Swiss national, was convicted by a jury on multiple counts, including conspiring to money launder, money laundering, and failing to register a money transmitting service. The prosecution argued that Bitcoin Fog facilitated over $400 million in untraceable transactions, with some funds originating from illicit markets.

The verdict not only marks another victory for the United States in its crackdown on crypto criminals but also sheds light on the role of Chainalysis, a Wall Street-backed firm utilized by the Justice Department and Treasury Department to trace cryptocurrency flows in money laundering cases. The defense raised concerns about the reliability of Chainalysis during the trial, questioning its methods and credibility.

During the month-long trial, prosecutors presented evidence showing how they tracked the flow of crypto from darknet markets through Bitcoin Fog, which they claimed Sterlingov operated. The government also relied on testimony from other crypto criminals, including Ilya Lichtenstein and Larry Harmon, who testified about using mixers for money laundering purposes.

Bitcoin Fog Founder Maintains Innocence Despite Conviction

Sterlingov, who has consistently denied running Bitcoin Fog, testified that he allegedly worked in information technology and helped clients create domain names during his employment at a marketing and web firm. 

Furthermore, Sterlingov claimed that he did not recall creating the Bitcoin Fog domain name or engaging in certain transactions referenced by the government.

Defense attorney Tor Ekeland also claimed that there was no concrete evidence linking Sterlingov to the operation of Bitcoin Fog, emphasizing a lack of eyewitness accounts or server logs. 

Ekeland also questioned the logic of using a secretive multi-step process to fund Bitcoin Fog when the initial transaction originated from an account registered in Sterlingov’s name. Sterlingov now faces a potential prison sentence of up to 20 years for the most serious charges. 

Bitcoin

As of the latest update, Bitcoin, the largest cryptocurrency in the market, experienced a minor 2% correction, briefly dipping to $68,500 and temporarily falling below the significant $70,000 milestone. However, the cryptocurrency swiftly rebounded and is currently trading at $71,400 at the time of writing.

Despite this temporary correction, Bitcoin has still exhibited notable gains of 11%, 25%, and 48% over the past seven, fourteen, and thirty days, respectively. These substantial increases propelled BTC to achieve its recent all-time high (ATH) of $73,000, which was reached on Monday.

Featured image from Shutterstock, chart from TradingView.com 

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US Banks Rally For Updated Crypto Guidelines As Digital Asset Prices Surge

Amidst a significant surge in cryptocurrency prices, which propelled the total crypto market capitalization to a high of $1.93 trillion on Thursday, influential interest groups are urging the US Securities and Exchange Commission (SEC) to revise accounting guidance that imposes higher costs on US banks for holding digital assets on behalf of their customers.

Banking Trade Groups Urge SEC To Revise Crypto Accounting Rules

According to a Bloomberg report, a coalition of trade groups, including the Bank Policy Institute, the American Bankers Association, the Securities Industry and Financial Markets Association, and the Financial Services Forum, sent a letter to the SEC on Wednesday outlining their desired changes. 

The existing guidance requires public companies, including banks, to treat cryptocurrencies they hold in custody as liabilities on their corporate balance sheets. Consequently, banks must allocate assets of a similar value to comply with capital requirements and protect against potential losses.

According to Bloomberg, the trade groups have requested the SEC to consider the following key changes:

  1. Exclude certain assets from being classified under the broad crypto umbrella. This includes traditional assets recorded or transferred using blockchain networks, such as tokenized deposits, as well as tokens underlying SEC-approved products like spot Bitcoin exchange-traded funds (ETFs).
  2. Grant regulated lenders an exemption from the current balance sheet requirement while maintaining the disclosure of crypto activities in financial statements.

The trade groups argued that if regulated banking organizations are unable to provide digital asset-safeguarding services at scale, it would negatively impact investors, customers, and the broader financial system. 

However, the SEC has defended its accounting guidance, citing the “unique risks” and uncertainties posed by cryptocurrencies compared to other assets held by banks. 

Limiting Custody Expansion?

The specific guidance in question, known as Staff Accounting Bulletin No. 121, has faced criticism from banks since its publication in 2022. 

Lenders argue that the bulletin limits their ability to expand digital asset services for customers due to the associated high costs. Consequently, banks missed out on providing custody services for recently approved Bitcoin exchange-traded funds, with Coinbase emerging as the preferred custodian for the majority of ETF issuers.

The trade groups also highlighted additional challenges resulting from the guidance, including a “chilling effect” on plans to utilize blockchain technology for traditional assets. While the SEC described SAB 121 as non-binding staff guidance, it acknowledged that following it enhances disclosure to investors regarding firms safeguarding crypto assets for others.

As the SEC faces mounting pressure, there have been efforts by lawmakers to repeal the guidance.  A resolution was introduced in the House Financial Services Committee, spearheaded by Representatives Mike Flood and Wiley Nickel, while Senator Cynthia Lummis sponsored identical legislation in the Senate. These measures aim to remove the SEC’s authority in making rules that impact bank custody.

The outcome remains uncertain, as the legislation’s success depends on garnering sufficient support, particularly among Democrats and within the White House. 

However, the collective efforts of trade groups, lawmakers, and industry stakeholders could potentially lead to regulatory changes that alleviate the burden on banks holding digital assets, facilitating their participation in the evolving cryptocurrency landscape.

Furthermore, the recent endeavors undertaken by US institutions exemplify a growing interest and eagerness to adopt and invest in cryptocurrencies, particularly Bitcoin. 

This heightened institutional involvement has significantly contributed to the swift success of Bitcoin spot ETFs, which gained regulatory approval merely a month ago.

Crypto

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Prometheum’s Ethereum Custodial Launch Puts SEC’s ETH Classification In The Spotlight

Prometheum, an “alternative” trading platform for crypto “securities” assets, has recently announced the launch of its custodial services for Ethereum (ETH). This move has significant implications for the legal status of the second-largest cryptocurrency by market capitalization. 

Fortune Magazine reported that the company’s strategy is to compel regulators, particularly the Securities and Exchange Commission (SEC), to recognize Ethereum as a security. 

SEC Pressured To Settle Ethereum Legal Status

Per the report, Prometheum, based in New York, has positioned itself as a compliant player in the crypto industry by claiming to have discovered a path to operate within existing laws. 

The company received regulatory approval in 2021 to operate as an alternative trading platform for securities. It gained further attention when it obtained a special-purpose broker-dealer license from the Financial Industry Regulatory Authority (FINRA).

The license allows them to operate as a broker-dealer in “digital asset securities,” a designation no other firm has achieved. This has prompted crypto companies and even members of the US Congress to call for investigations into the firm’s activities.

Previously, the SEC refrained from definitively classifying Ethereum as a security despite declaring several other cryptocurrencies as such. 

Prometheum aligns with the SEC’s assessment that most cryptocurrencies are securities and argues that Ethereum can be listed as a security under an exemption called Rule 144, typically used for trading restricted stocks. 

The embattled company claims it can use blockchain data to determine whether the assets have been circulating for over a year, a crucial factor in claiming the exemption.

What’s interesting is that Prometheum’s custodial services for Ethereum could potentially force the SEC to determine Ethereum’s legal status. The company’s registered status with FINRA and the SEC, prominently displayed on its website, adds weight to its claim. 

Legal experts and academics speculated that the SEC may be forced to rule on Ethereum’s classification due to Prometheum’s custodial launch. This decision could have far-reaching consequences for the crypto industry, challenging the industry’s argument that cryptocurrencies cannot operate under existing securities laws.

Backlash Mounts As Prometheum Shakes Up Crypto Regulations

SEC Chair Gary Gensler, who has intensified enforcement efforts following the collapse of FTX, has emphasized the sufficiency of existing rules while filing lawsuits against exchanges for failing to register with the agency. 

Prometheum’s approach contrasts with other crypto exchanges like Coinbase, which argue that the existing rules are outdated. Prometheum’s strategy has drawn criticism from the crypto industry and Republican lawmakers who accuse Gensler of supporting the firm to advance his regulatory agenda.

Overall, Prometheum’s introduction of Ethereum custodial services has thrust the debate over Ethereum’s legal classification into the spotlight.

This move could compel the SEC to decide whether Ethereum should be classified as a security, challenging the crypto industry’s argument for new laws. 

While the success of Prometheum’s approach is still uncertain, it remains to be seen how subsequent SEC administrations will respond and whether institutional investors will be attracted to Prometheum’s compliant approach.

Ethereum

Currently, ETH is trading at $2,428, reflecting a marginal 0.5% price increase in the last 24 hours.

Featured image from Shutterstock, chart from TradingView.com 

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US Treasury Secretary Janet Yellen Urges Congress To Pass Crypto Legislation

In a recent statement before the House of Representatives, US Treasury Department Secretary Janet Yellen emphasized the need for Congress to pass legislation that provides clarity and regulation in the crypto markets. 

Secretary Yellen Calls For Action ‘Digital Asset Risks’ 

During the Financial Committee hearing, Yellen highlighted the “risks” associated with digital assets and called for measures to address potential vulnerabilities and non-compliance with applicable laws and regulations.

Yellen specifically mentioned concerns related to runs on crypto-asset platforms, stablecoins, and the “proliferation” of platforms acting outside regulatory boundaries. 

The Treasury Secretary stressed the importance of enforcing existing rules and regulations while urging Congress to enact legislation specifically targeting stablecoins and “non-securities” crypto assets in the spot market.

Notably, Taylor Barr, head of policy at the blockchain trade association Chamber of Digital Commerce, pointed out that the bipartisan FIT for the 21st Century Act, led by Representative French Hill, aligns with Yellen’s call for market structure and regulation.

Hill, a proponent of the legislative environment for crypto, previously highlighted the progress made in the House of Representatives. He emphasized passing the first comprehensive regulatory framework for digital assets and the prudent approach to stablecoins. 

Furthermore, Hill believes that these initiatives address significant “regulatory gaps” and contribute to the crypto industry’s growth.

Pro-Crypto Stance And Legislative Initiatives Align

Barr also commended the Clarity for Payment Stablecoins Act proposed by the Chairman of the US Financial Committee, Patrick McHenry. 

This act aims to establish consistent oversight and consumer protection for payment stablecoins, incorporating successful state-level regulations and striking a balance between innovation and regulatory certainty.

McHenry, who has been vocal about the importance of the US leading the financial system of the future, has already emphasized the bipartisan progress on legislation to address the regulatory challenges posed by digital assets. 

McHenry called for the “completion of the job,” highlighting the Clarity for Payment Stablecoin Act as a crucial step towards establishing a federal framework for stablecoins.

Overall, the convergence of Secretary Yellen’s call for regulation, Representative Hill’s legislative initiatives, and Chairman McHenry’s pro-crypto stance reflect a growing momentum toward establishing a comprehensive regulatory framework for the crypto industry. 

However, it remains to be seen how Secretary Yellen’s proposed regulatory enforcement ideas and proposals will strike a balance between fostering innovation, as emphasized by McHenry and Hill while ensuring the growth of nascent technology. 

As discussions on crypto legislation continue, the industry eagerly anticipates the outcome, seeking a regulatory environment that provides clarity and consumer protection and positions the United States at the forefront of digital asset innovation.

Crypto

Featured image from Shutterstock, chart from TradingView.com 

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Regulatory Victory: Gemini Receives Digital Asset Service Provider Registration In France

Cryptocurrency exchange Gemini, founded by the Winklevoss twins, has been granted crypto registration by the French markets watchdog Autorite des marches financiers (AMF). 

According to a recent announcement made by the exchange, this approval allows Gemini to offer its services as a virtual asset services provider in France. The company plans to roll out its products to both retail and institutional clients in the coming weeks.

Gemini Seizes Growth Opportunities In Europe

As announced, Gemini customers in France will gain access to a wide range of cryptocurrencies for trading, as well as “advanced” trading platforms such as ActiveTrader. Institutional clients will also benefit from Gemini eOTC, an electronic over-the-counter trading solution.

Gemini’s regulatory approval in France marks a milestone in the company’s European expansion strategy. According to the exchange’s statement, with a strong sense of regulatory support for the cryptocurrency industry in Europe, Gemini sees growth opportunities in the French jurisdiction. 

The founders of Gemini recognized the need for regulatory clarity, which is on the horizon with the European Union (EU) Markets in Crypto-Assets Regulation (MiCA). MiCA allows crypto companies to obtain licenses in one EU country and operate across the entire EU. 

Interestingly, Gemini chose Ireland as its European headquarters, joining other major US crypto companies that have selected Ireland as their regulatory hub. On this matter, Gillian Lynch, Gemini’s Head of Ireland and EU stated:

We are delighted to welcome customers based in France onto the Gemini platform in the coming weeks as we further expand access to crypto across Europe. France is a global innovation leader and has a vibrant crypto community as showcased by the success of Paris Blockchain Week. We are excited to soon be able to provide French customers with compliant and secure access to the future of finance as we continue on our mission to unlock the next era of financial, creative, and personal freedom

US Crypto Companies Seek Regulatory Haven In Europe

According to a CNBC report, major US crypto companies are increasingly looking to expand their operations in Europe driven by regulatory challenges in the United States. 

The crypto industry has faced scrutiny from US regulators, including the Securities and Exchange Commission (SEC). Gemini and Genesis, a crypto lender, were charged by the SEC last year for allegedly selling unregistered securities. Gemini is contesting the lawsuit, asserting that its interest-bearing products do not qualify as securities. 

Per the report, the European Union offers a “more favorable” regulatory environment, and the MiCA regulation provides a framework for companies to operate across EU member states.

While the US has yet to approve comprehensive federal-level crypto regulation, recent developments indicate a growing acceptance of cryptocurrency trade. The SEC’s approval of the first-ever spot Bitcoin exchange-traded funds (ETFs) is seen as a significant step toward integrating crypto into traditional finance. 

Despite initial concerns about market manipulation, the approval of Bitcoin ETFs by the SEC is a positive development for the industry. At the same time, several bills related to crypto regulation are making their way through the US House of Representatives. 

Gemini

Featured image from Shutterstock, chart from TradingView.com 

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Crypto Fraud Unveiled: $1.3B Loss As Chuck Norris-Endorsed CEO Turns Out To Be Illusion

In a recent investigation by The Guardian, alarming details have emerged regarding a crypto project, HyperVerse, that allegedly lost $1.3 billion of investors’ funds. 

The report reveals that the chief executive officer promoted by the project, supposedly backed by celebrity endorsements including Chuck Norris, appears to be absent.

Investigation Exposes HyperVerse Crypto Scam

HyperVerse, promoted by Australian entrepreneur Sam Lee and his business partner Ryan Xu, founders of the now-collapsed Australian Bitcoin (BTC) company Blockchain Global, has been scrutinized for its deceptive practices. The project attracted thousands of investors, who ultimately lost millions of dollars.

The investigation raises concerns about the legitimacy of HyperVerse’s CEO, as the qualifications and credentials attributed to the supposed chief executive, Steven Reece Lewis, have no basis. 

Promotional material released for HyperVerse claimed that Lewis graduated from the University of Leeds and held a master’s degree from the University of Cambridge. However, neither institution has any record of his existence.

Furthermore, there are no records of Lewis on the UK companies register, Companies House, or the US Securities and Exchange Commission (SEC). Interestingly, Adobe, a publicly listed company, also has no record of any acquisition involving a company owned by “Steven Reece Lewis.”

The report indicates that HyperVerse managed to secure celebrity endorsements, including video messages of support from Steve Wozniak, co-founder of Apple, and actor Chuck Norris. 

However, it is unclear how these messages were obtained, as all four celebrities mentioned in the report are available for hire through Cameo, where individuals can pay to have high-profile individuals read scripted messages.

Australian Authorities Under Fire

The investigation also highlights regulatory concerns, as HyperVerse operated without significant scrutiny in Australia despite being flagged by regulators overseas as a possible scam or suspected pyramid scheme. 

The Australian Securities and Investments Commission (ASIC) has been referred to the case but has not yet taken action.

Investors in HyperVerse were lured with promises of substantial returns and the opportunity to explore a new digital metaverse similar to Facebook. However, the scheme ultimately resulted in significant losses for investors, estimated at $1.3 billion in 2022, according to blockchain analysts Chainalysis.

The Guardian’s findings shed light on the deceptive practices employed by HyperVerse and raise questions about the responsibilities of regulators in overseeing such projects. 

As the aftermath of this cryptocurrency scandal unfolds, investors and authorities alike are left grappling with the consequences of a scheme that capitalized on false claims and celebrity endorsements to defraud unsuspecting individuals.

Crypto

Featured image from Shutterstock, chart from TradingView.com 

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Ripple Vs. SEC: Epic Battle Unfolds Over $770M Disgorgement Demand

In a recent interview with CNBC, Brad Garlinghouse addressed the ongoing legal battle between Ripple and the US Securities and Exchange Commission (SEC) over the classification of XRP. 

Garlinghouse highlighted three consecutive wins for Ripple in the legal proceedings, emphasizing that the first judgment on July 13 clearly stated that XRP is not a security. He also mentioned denying the court’s interlocutory appeal and dismissing allegations against Ripple co-founder Chris Larsen and himself.

Ripple CEO Brad Garlinghouse Criticizes SEC’s Regulatory Approach

In the interview, Garlinghouse criticized the SEC’s approach to regulation by enforcement and lawsuit patterns, stating that the SEC needs to step back and realize that their actions are deviating from its mission to protect investors. 

Garlinghouse questioned who the SEC is truly protecting in this journey and called for a change in their regulatory approach.

Commenting on the exchange-traded funds (ETFs) currently awaiting approval, Garlinghouse acknowledged that an approved ETF could bring significant capital to the market.

However, Brad emphasized that regulatory clarity, utility, and scalable problem-solving are essential for the industry to thrive. Garlinghouse expressed his optimism for the industry’s future, citing macro catalysts that will propel it forward in the next five to ten years.

Pro-XRP Lawyer Challenges SEC’s $770M Disgorgement Demand

In a separate development, pro-XRP lawyer John Deaton chimed in on X (formerly Twitter), stating that Ripple would not come close to paying the $770 million disgorgement demanded by the SEC. 

Deaton argued that the SEC’s claim for disgorgement related to XRP sales in the UK, Japan, Switzerland, and other jurisdictions is flawed. He pointed out that XRP is deemed a non-security in those jurisdictions and was considered a legal exchange/utility token. 

Deaton questioned the SEC’s attempt to disgorge sales made in those jurisdictions and emphasized that the Court’s goal is not to punish Ripple as this is not a fraud case.

Deaton further explained that the disgorgement amount would be significantly reduced after deducting non-US sales, sales to accredited investors and considering the minimal harm caused by ODL (On-Demand Liquidity) transactions. 

Deaton highlighted that a petition filed by 75,000 XRP holders claimed that the SEC, not Ripple, was causing harm, further bolstering Ripple’s position.

The remarks made by Brad Garlinghouse and John Deaton underscore the ongoing legal battle between Ripple and the SEC, with Ripple asserting its stance on XRP’s classification and criticizing the SEC’s regulatory approach. 

The outcome of this high-profile case will likely have significant implications for the cryptocurrency industry as a whole.

Ripple

As of the time of writing, XRP is currently trading at $0.660, exhibiting a sideways price movement and consolidating above this crucial level. Despite the lack of significant upward or downward movement, the token has experienced substantial gains amidst the recent bullish reversal in the market.

Over the past 30 days, XRP has surged by more than 35%, and on a year-to-date basis, it has recorded an impressive growth of over 70%.

Featured image from Shutterstock, chart from TradingView.com 

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US Treasury Cracks Down: Sanctions Crypto Money Launderer Tied To Russian Elite

In a significant move to combat sanctions evasion and illicit financial activities, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on Ekaterina Zhdanova, a Russian national allegedly involved in laundering and transferring funds using crypto on behalf of Russian elites. 

According to the announcement, the action aligns with the G7’s commitment to closing loopholes that allow Russian state actors, oligarchs, and proxies to exploit virtual currency to circumvent international sanctions.

Crypto Money Laundering Exposed

Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson emphasized the alleged role played by key facilitators like Zhdanova in aiding Russian elites, ransomware groups, and other illicit actors in evading US and international sanctions through the abuse of cryptocurrencies. 

Nelson stated that the Treasury remains steadfast in its efforts to safeguard the global financial system against such exploitation and other risks within the crypto ecosystem.

Allegedly, Zhdanova’s involvement in obfuscating the source of wealth for a Russian client, enabling the transfer of over $2.3 million into Western Europe via fraudulent investment accounts and real estate purchases, drew OFAC’s attention. 

Zhdanova’s services provided sanctioned Russian individuals access to Western financial markets that would otherwise be restricted due to US and international prohibitions. 

The US Treasury Department alleges that such illicit financial activities enable the evasion of multilateral sanctions and undermine efforts to hold Russia accountable for its unprovoked war and aggression.

Utilizing cryptocurrencies as a facilitator of large cross-border transactions, Zhdanova relied on entities lacking Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) controls, including the OFAC-designated Russian cryptocurrency exchange, Garantex Europe OU. 

Zhdanova employed various methods to transfer funds internationally, including cash transactions and leveraging connections with other money laundering associates and organizations. 

Additionally, she utilized traditional businesses, such as a luxury watch company with global offices, to maintain access to the international financial system.

Furthermore, it is alleged that Zhdanova conducted crypto exchange transfers on behalf of oligarchs who relocated internationally, facilitating the movement of over $100 million to the United Arab Emirates. 

Unveiling The Scheme

Zhdanova also provided a tax residency service in the UAE to Russian clients, potentially participating in identity obfuscation. This service offered clients a UAE tax residency, identification card, and bank account, with payments made in cash or virtual currency, subsequently transferred to foreign bank accounts at the client’s discretion.

Notably, Zhdanova’s services extended to individuals associated with the notorious Russian Ryuk ransomware group. Zhdanova allegedly laundered approximately $2.3 million in suspected victim payments for a Ryuk ransomware affiliate, which has targeted numerous victims worldwide, including the United States, particularly in the healthcare sector.

As a consequence of this action, all US persons must report any property or interests in property belonging to Zhdanova or any entities directly or indirectly owned by her. Transactions involving such property are generally prohibited unless authorized by OFAC.

Crypto

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Binance And Tether Accused By Lawmakers: DOJ Investigation Requested For Illicit Finance

In a recent development, US lawmakers have urged the US Department of Justice (DOJ) to initiate a criminal investigation into cryptocurrency exchange Binance (BNB) and stablecoin issuer Tether (USDT). 

The lawmakers, led by Senator Cynthia Lummis, reference a controversial Wall Street Journal (WSJ) report that alleges Hamas and its affiliate raised significant funds through cryptocurrencies. 

Binance And Tether Face Calls For Criminal Charges

In a joint letter signed by Senator Lummis and Representative French Hill, the lawmakers express deep concern over reports indicating that “unregulated crypto intermediaries” outside the United States have allegedly facilitated illicit financial activities, including financing terrorism, such as Hamas’s attacks on Israel.

Lummis and Hill urged the DOJ to promptly reach a charging decision regarding Binance, considering the extent of its involvement, and to conclude the ongoing investigation into Tether’s alleged illicit activities.

The lawmakers refer to the WSJ report of October 10, 2023, which disclosed that Hamas, Palestinian Islamic Jihad, and Hezbollah had received cryptocurrency funding since August 2021. They stress the DOJ’s need to hold any entities facilitating illicit activities accountable. The letter further reads: 

We believe that it’s imperative that the Department of Justice hold bad actors accountable if they are shown to facilitate illicit activity. Binance, notably, is an unregulated crypto asset exchange based in the Seychelles and Cayman Islands. Binance has historically been linked to illicit activity and is purportedly the subject of a current Department of Justice investigation.

On the other hand, Tether faced a fine by the Commodity Futures Trading Commission (CFTC) in 2021 for issues related to backing its stablecoin USDT. 

The lawmakers urged the DOJ to thoroughly assess whether Binance and Tether have provided material support and resources for terrorism by violating applicable sanctions laws and the Bank Secrecy Act. Lummis and Hill emphasize the importance of swift action to cut off funding sources for terrorists targeting Israel.

Tether Counters Allegations

In response to Senator Lummis and Rep. Hill’s claims, Tether issued a statement addressing the “misinformation” surrounding the potential misuse of cryptocurrencies. 

Tether references independent investigations by Chainalysis and Elliptic, which found significant errors and faulty attribution techniques in reports, including the WSJ’s article. 

Tether emphasizes its commitment to regulatory compliance, due diligence, and global collaboration with law enforcement agencies. They highlight their track record of freezing assets tied to illicit activities and assert no evidence of sanctions law or Bank Secrecy Act violations.

Tether further notes the inherent transparency of blockchain technology and the proactive measures taken by virtual asset service providers to monitor and report potentially illicit activities. 

They reaffirm their dedication to transparency, compliance, and collaboration with authorities, inviting constructive dialogue and cooperation.

As the call for a DOJ investigation unfolds, the cryptocurrency community awaits further developments and the potential impact on Binance and Tether’s operations.

Binance

As of this writing, BNB is trading at $221, representing a decrease of 0.9% within the last 24 hours. However, it is worth noting that the token has experienced significant gains over the past seven and thirty days, amounting to 5.3% and 4.9%, respectively.

Featured image from Shutterstock, chart from TradingView.com 

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FBI Busts Indian Citizen Group For $15 Million Crypto-To-Cash Money Laundering Scheme

In a recent crypto investigation, the US FBI successfully infiltrated a group of Indian citizens suspected of engaging in illicit activities involving the exchange of cryptocurrency for over $15 million in cash. 

The alleged transactions took place at various locations in Westchester County, with the group catering to customers seeking anonymity for their activities.

Crypto Crime Unveiled

According to recent reports, five out of the six suspects were apprehended on October 17 and subsequently charged in US District Court, White Plains. 

The charges primarily revolve around operating an unlicensed money-transmitting business. The investigation unfolded with the assistance of law enforcement agents who monitored 80 “cash hand-offs”. 

The FBI’s scrutiny began in April 2021 when they identified a suspect operating within the “dark web” criminal marketplaces. 

Although the individual remains unnamed in the criminal complaint, they are believed to be a co-conspirator of the arrested local suspects. Notably, the suspect offered to ship cash to customers in exchange for cryptocurrency.

According to the complaint, the unidentified co-conspirator disclosed to an undercover officer in January that some of their customers were involved in drug sales, while their wealthier clients were hackers. 

The co-conspirator claimed to have amassed approximately $30 million over three years by exchanging cash for cryptocurrency.

In February, an individual responsible for mailing packages of cash on behalf of the co-conspirator was arrested. The complaint reveals that this individual had been receiving sacks of cash from various individuals, three times a week for 18 months, at a Westchester County post office. The cash bundles ranged from $100,000 to $300,000.

In a bid to receive leniency during sentencing, the aforementioned individual agreed to assist the FBI with their investigation. Over several months (from February 10 to September 27), they allegedly participated in 80 controlled cash pick-ups amounting to $15,067,000.

One of the arrested individuals, Raju “Jay” Patel from Flushing Queens, played a significant role in the operation. The complaint alleges his involvement in 58 cash transfers totaling $10.8 million. 

Raju would collect cash from various locations in George, Massachusetts, North Carolina, Pennsylvania, and South Carolina. Subsequently, Raju allegedly coordinated the transfers with the co-conspirator and the FBI’s confidential source.

On March 6, Raju allegedly arranged an exchange of $250,000 at a Tarrytown supermarket parking lot. Surveillance conducted by law enforcement agents captured Raju leaving his Queens apartment with an orange cloth bag, which he handed over to the FBI’s confidential source upon arrival in Tarrytown. The bag reportedly contained $249,715.

Illicit Cash Exchange

Similar exchanges took place at a parking lot in Port Chester, further implicating the suspects involved. On August 6, Shaileshkumar Goyani allegedly handed over a bag containing $114,000 to the FBI’s confidential source.

Apart from Goyani, the complaint identifies Brijeshkumar “Samir” Patel, Hirenkkumar Patel, Naineshkumar Patel, and Nileshkumar Patel as additional suspects in the case. 

All the suspects are charged with operating an unlicensed money-transmitting business under New York and federal laws.

According to an affidavit by FBI agent Lawrence Lonergan, such unlicensed money-transmitting businesses operate as shadow banks, enabling funds to pass through without undergoing the scrutiny imposed by Congress on the United States financial system.

While the allegations against Goyani’s crypto fraud remain unproven, his defense attorney, Daniel A. Hochheiser, emphasizes that his client has not been indicted by a grand jury. Hochheiser further stated that if and when an indictment is issued, Goyani intends to enter a plea of not guilty.

Crypto

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Crypto-Terrorism Concerns? Senator Warren And 100 Lawmakers Push Biden For Swift Response

In the middle of escalating tensions between Israel and Hamas, over 100 legislators, led by Senators Elizabeth Warren and Roger Marshall and Representative Sean Casten, have issued a bipartisan note urging the Biden administration to address alleged close relations between crypto and terrorism. 

The lawmakers express alarm over reported evidence suggesting that Hamas successfully evaded US sanctions, acquiring millions of dollars through crypto assets. They are now pressing the administration to clarify its strategy for tackling this critical national security threat.

Lawmakers Sound Alarm On Crypto-Financed Terrorism

The bipartisan letter, addressed to National Security Advisor Jake Sullivan and Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the Department of the Treasury, highlights the concerns surrounding Hamas and Palestinian use of crypto funding. 

The letter states that between August 2021 and June of the following year, these organizations allegedly raised over $130 million in digital assets, with millions being transferred between them. 

The lawmakers stress the urgency of the situation, given the danger posed by the financing of militant organizations, and call on the Biden administration to provide details about its plan to prevent the use of crypto for terrorism financing.

In their letter, the lawmakers cite an article from the Wall Street Journal, which reports that researchers studying Hamas’s financing allegedly confirm that crypto remains one of several tools employed by the group to raise funds. 

While it has not been determined whether the crypto received by Hamas directly financed the October 7th terrorist attack on Israel, the group’s explicit solicitations for crypto have left no doubt about their intentions. 

Furthermore, the lawmakers highlight that both the Israeli and US governments have previously warned about the threat posed by crypto in the fight against terrorism. Israel has even seized crypto assets from terrorist organizations like Hamas and Hezbollah. 

However, experts believe that only a fraction of the digital asset funds flowing through Hamas have been successfully captured. 

Urgent Call To Curtail Alleged Illicit Activity 

In light of this, the lawmakers call for decisive action to address the risks associated with illicit crypto activity to prevent further tragedies. 

As Congress considers legislative proposals to mitigate alleged money laundering and illicit finance risks, they urge the Biden administration to swiftly and comprehensively act to curtail such activities and safeguard national security, as well as the security of US allies.

The lawmakers have set a deadline of October 31, 2023, for the Treasury and the Biden administration to respond to questions about their plans to address the serious national security threats arising from using crypto to finance terrorism.

As the debate surrounding the regulation of digital assets continues to intensify, the alleged crypto-financed terrorism adds another layer of complexity. 

Crypto

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