2016 Bitfinex Hack: Couple Charged over $4.5B in Stolen BTC Strikes Plea Deal

American rapper, Heather ‘Razzlekhan’ Morgan, and her husband, Ilya Lichtenstein, have entered into a plea agreement with US prosecutors, according to a court document seen by Reuters. The couple was first arrested in February 2022 for allegedly laundering cryptocurrency worth $4.5 billion stolen via a hack of the digital asset platform, Bitfinex, in 2016.

US Couple Enters Plea Agreement

According to Reuters, the pair will appear before Senior Judge Colleen Kollar-Kotelley in Washington on August 3, 2023, for a plea hearing. In its action last year, the Department of Justice (DoJ) charged the couple with conspiracy to commit money laundering and defraud the United States.

In August 2016, hackers stole over 119,000 bitcoins from Bitfinex via thousands of unauthorized transactions. The stolen BTCs, which were priced at $71 million at the time, are worth about $3.5 billion at today’s BTC spot market price.

Last year, the DoJ after the arrest of Morgan and Lichtenstein announced that it seized about $3.6 billion in stolen digital assets directly linked to the hack. However, prosecutors are now seeking to have the couple forfeit billions of dollars in assets.

Bitfinex Continues Recovery Efforts

Meanwhile, Finance Magnates reported that Bitfinex has continued to maintain efforts to get back some of the stolen cryptocurrencies. Last month, the exchange received $315,000 in cash and cryptocurrencies from the United States Department of Homeland Security (DHS). The cryptocurrencies were seized by the US Customers and Border Protection, an enforcement agency of the DHS.

Previously, Bitfinex recovered little amounts of the stolen bitcoins. In 2021, the exchange retrieved 6.5 BTC worth $305,000 at the time through its partnership with another crypto trading platform, Poloniex. Similarly, Bitfinex in February 2019 reclaimed 28 BTC worth over $107,000 from the US government.

Meanwhile, a recent report by the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, claimed that Bitfinex never made public a confidential report that found its security lapses responsible for the 2016 hack. Reacting, dismissed the claims, calling them “factually incorrect.”

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US DoJ Accuses FTX Founder of Leaking Caroline Ellison’s Private Diary

US prosecutors have accused Sam Bankman-Fried, the embattled Founder of now-bankrupt cryptocurrency exchange, FTX, of sharing with the media personal documents belonging to Caroline Ellison, his former ally and romantic partner. The Department of Justice (DoJ) made the allegations yesterday (Thursday) in a filing addressed to Lewis Kaplan, the US District Judge presiding over the case between the United States and the ex-CEO of FTX.

US Prosecutors Allege Sabotage

Ellison is the former CEO of FTX’s sister trading firm, Alameda Research. In December 2022, a month after FTX’s collapse, Ellison alongside Zixiao (Gary) Wang, the former Chief Technology Officer of FTX, pleaded guilty to criminal charges initiated by the DoJ. Ellison and Wang also started cooperating with public authorities in their investigation into FTX’s demise.

On Thursday, the New York Times published an article in which it wrote that it reviewed certain Google documents written by Ellison. The documents reportedly contain observations about the personal and professional relationship between the former Alameda Research boss and Bankman-Fried.

The outlet described details in the documents as ‘personal and raw’, adding that the documents illustrate the complexity of the relationship between Bankman-Fried and Ellison. However, the publication did not disclose how it got the document.

In the court filing submitted yesterday, the DoJ attributed the ‘extrajudicial statements’ to Bankman-Fried, noting that the crypto entrepreneur’s lawyers confirmed that the crypto exchange founder met in person one of the reporters credited with writing the article. The lawyers also reportedly admitted that Bankman-Fried shared documents that are not part of the prosecutors’ discovery material with the said reporter. Providing more details, the enforcement agency said it believes that the documents “likely came from [Bankman-Fried’s] personal Google Drive account.”

Furthermore, Damian Williams, the District Attorney for the Southern District of New York, alleged that Bankman-Fried shared the details in order to sabotage Ellison who has agreed to testify at Bankman-Fried's upcoming trial in October that she entered into an arrangement with the Founder to defraud customers and investors as well as Alameda Research's lenders.

“By selectively sharing certain private documents with the New York Times, the defendant is attempting to discredit a witness, cast Ellison in a poor light, and advance his defence through the press and outside the constraints of the courtroom and rules of evidence: that Ellison was a jilted lover who perpetrated these crimes alone,” Williams argued.

Additionally, the District Attorney contended that Bankman-Fried with the move attempted to interfere with a fair trial by an impartial jury. He also sought to publicly discredit a government witness.

As a result, DoJ asked the court to issue an order that limits extrajudicial statements by parties and witnesses likely to interfere with a fair trial by an impartial jury. The enforcement agency added that the alleged leakage by Bankman-Fried "could have a chilling effect on witnesses”.

Bankman-Fried Fails to Successfully Dismiss Charges

The new allegation is the latest development in the federal prosecution of the FTX’s Founder following his arrest in the Bahamas last year and subsequent extradition to the United States. Federal prosecutors in the US initially brought eight counts of charges against the disgraced crypto entrepreneur, but later expanded them to 13, Finance Magnates reported.

Some of the charges include conspiracy to commit commodities and securities fraud, violation of US money laundering and federal campaign finance laws, and conspiracy to contravene the anti-bribery provisions of the Foreign Corrupt Practices Act.

Reacting, Bankman-Fried’s lawyers took up the matter at the Bahamas Supreme Court, seeking dismissal of the extra charges. This is even as Bankman-Fried previously pleaded not guilty to all charges.

Furthermore, the former crypto billionaire's legal counsel recently filed pre-trial motions in the United States, requesting that the court dismiss 10 of the 13 charges filed by federal prosecutors. However, Judge Kaplan recently struck out all the motions.

Meanwhile, Finance Magnates reported on Friday that FTX has initiated legal action against Bankman-Fried, Ellision, Wang, and Nishad Singh, the company's former Engineering Director, in an attempt to recover a total of 1 billion USD. The amount is part of a larger sum of money allegedly misappropriated by the executives before the company folded up.

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Forsage Platform Founders Indicted in $340 Million Ponzi Scheme

The founders of a DeFi crypto investment platform, Forsage, have been indicted by the federal grand jury in the District of Oregon for running a [...]

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SBF Is Trying To Pull The Strings From Behind Bars

In the ongoing criminal case against the former FTX Chief executive, SBF, the United States prosecutors disclosed email and text messages from Bankman-Fried to the [...]

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OneCoin's Co-Founder Karl Greenwood Pleads Guilty to Wire Fraud

<p class="MsoNormal">Karl Greenwood, the Co-Founder of OneCoin, the multi-billion dollar cryptocurrency pyramid scheme, has pleaded guilty to charges of wire fraud and money laundering in connection with his role in the fraudulent crypto project. The charges before him carry a maximum potential sentence of 20 years each, the Department of Justice (DOJ) said on Friday.</p><p class="MsoNormal">Karl Greenwood Arrested and Convicted of Fraud</p><p class="MsoNormal text-align-justify">Greenwood, who was arrested in Thailand in July 2018 and extradited to the United States, confessed to the charges in a Manhattan federal court before Judge Edgardo Ramos who accepted the guilty plea. He is to be sentenced by Judge Ramos on April 5, 2023, the DOJ said.</p><p class="MsoNormal">“This guilty plea by the Co-Founder of <a href="https://www.financemagnates.com/tag/onecoin/" target="_blank" rel="follow">OneCoin</a> caps a week at the Southern District of New York (SDNY) that sends a clear message that we are coming after all those who seek to exploit the cryptocurrency ecosystem through fraud, no matter how big or sophisticated you are,” Damian Williams, the United States Attorney for SDNY, said in the DOJ statement.</p><p class="MsoNormal">Ruja 'Cryptoqueen' Ignatova Remains at Large in OneCoin Fraud</p><p class="MsoNormal">According to the DOJ, Ruja Ignatova, who co-founded OneCoin alongside Greenwood, remains at large. The declaration comes eight months after Ignatova, also known as “the Cryptoqueen” <a href="https://www.financemagnates.com/cryptocurrency/news/onecoin-founder-ruja-ignatova-named-among-europes-most-wanted/">was included</a> in the list of Europe’s most wanted fugitives by Europol. The run-away Co-Founder was added to the Federal Bureau of Investigation’s (FBI) Top 10 Most Wanted List earlier in June. </p><p class="MsoNormal">On October 12, 2017, the United States charged Ignatova with fraud and money laundering at the US District Court for the SDNY. Moreover, it issued a federal warrant for her arrest. In addition, the FBI has offered to pay $100,000 to anyone with information that leads to her arrest. </p><p class="MsoNormal">However, since Ignatova travelled on a commercial flight from Sofia, Bulgaria to Athens, Greece on October 25, 2017, she has not been seen publicly, the <a href="https://www.financemagnates.com/tag/department-of-justice/" target="_blank" rel="follow">DOJ</a> noted.</p><p class="MsoNormal">OneCoin Backstory</p><p class="MsoNormal">Greenwood and Ignatova founded OneCoin in 2014 in Sofia, Bulgaria from where they marketed and sold the fraudulent scheme through global multi-level marketing (MLM). The DOJ noted that as a result of misrepresentations the Co-Founders and others had made about OncCoin, victims across the globe invested over four billion dollars in the scheme.</p><p class="MsoNormal">“This MLM structure influenced the rapid growth of the OneCoin member network. Indeed, according to OneCoin’s promotional materials, over three million people invested in fraudulent cryptocurrency packages. OneCoin records show that, between the fourth quarter of 2014 and the fourth quarter of 2016 alone, OneCoin generated €4.037 billion in sales revenue and earned 'profits' of €2.735 billion,” the DOJ explained.</p> This article was written by Solomon Oladipupo at www.financemagnates.com.

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US’ DOJ Calls for Stronger Crypto Crime Laws, Launches DAC Network

<p class="text-align-justify">The United States Justice Department (DOJ) on Friday announced that its Criminal Division has launched a nationwide Digital Asset Coordinator (DAC) Network. </p><p>The DAC Network was created to boost the federal executive department’s efforts to “combat the growing threat posed by the illicit use of digital assets to the American public,” it explained.</p><p>The network comprises over 150 designated federal prosecutors selected from US Attorneys’ Offices across the country and the justice department’s litigating components, DOJ explained <a href="https://www.justice.gov/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network">in a statement</a>.</p><p>“Each DAC will act as their office’s subject-matter expert on digital assets, serving as a first-line source of information and guidance about legal and technical matters related to these technologies,” the executive department noted.</p><p>DOJ said it launched the DAC Network in response to the March 9 <a href="https://www.financemagnates.com/cryptocurrency/unpacking-president-bidens-crypto-executive-order/">Executive Order issued</a> by President Joe Biden, calling for responsible development of digital assets.</p><p>It added that the network is being led by, among others, its National Cryptocurrency Enforcement Team (NCET) which <a href="https://www.financemagnates.com/cryptocurrency/news/us-justice-department-announces-national-cryptocurrency-enforcement-team/">was created</a> in October last year to tackle cryptocurrency crimes.</p><p>The Justice Department explained that the DAC Network “will serve as the department’s primary forum for prosecutors to obtain and disseminate specialized training, technical expertise, and guidance about the investigation and prosecution of digital asset crimes.”</p><p>It further noted that the Network will also serve “as a source of information and discussion addressing new digital asset issues, such as DeFi, smart contracts, and token-based platforms, and their use in criminal activity.”</p><p>Eun Young Choi, the Director of the NCET, chaired the network’s first meeting on September 8, <a href="https://www.financemagnates.com/tag/department-of-justice/" target="_blank">the executive department</a> added. </p><p>“The efforts announced today reflect the commitment of the Justice Department and our law enforcement and regulatory partners to advancing the responsible development of digital assets, protecting the public from criminal actors in this ecosystem, and meeting the unique challenges these technologies pose,” explained Attorney General Merrick B. Garland.</p><p>DOJ's Report on Digital Assets</p><p>In addition to the formation of the DAC Network, the Justice Department on Friday also launched <a href="https://www.justice.gov/ag/page/file/1535236/download">a report</a> on digital assets in response to the executive order. </p><p>The report is titled, "The Role Of Law Enforcement In Detecting, Investigating, And Prosecuting Criminal Activity Related To Digital Assets."</p><p>DOJ said the report was prepared in partnership with multiple federal agencies such as the Department of Treasury, the Department of Homeland Security, and the Department of States.</p><p>It added that this is in line with the executive order’s call for inter-agency harmonization of efforts in crypto regulation efforts. </p><p>In the report, the Justice Department called for virtual asset service providers to be subjected to provisions that prevent the employees of financial organizations from tipping off suspects in ongoing investigations.</p><p>The DOJ also called for the strengthening of the laws that criminalize the operation of unlicensed money transfer businesses in the country.</p><p>Furthermore, the department sought for the extension of the statute of limitations of certain laws to account for the complexities of digital assets investigations.</p> This article was written by Solomon Oladipupo at www.financemagnates.com.

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United States Department of Justice Has Restored 12.1 BTC to a Victim in Asheville

Dena J. King, the United States Attorney for the Southern District of New York, announced the civil forfeiture and restitution of cryptocurrencies worth hundreds of thousands of dollars stolen from an elderly victim of a government impostor hoax.  According to the legal complaint, scammers presumably acting from overseas contacted the victim, an elderly Asheville resident, by […]

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US Prosecutors Charge New Suspect in $45M Blockchain Fraud ‘CoinDeal’

US prosecutors have filed a lawsuit against a new suspect, Bryan Lee, 57, for his alleged involvement in ‘CoinDeal’, a fraudulent investment scheme that raised $45 million by selling unregistered securities. Neil Chandran, the mastermind behind the scheme, was arrested in June last year and indicted for wire fraud and monetary transaction in unlawful proceeds.

Despite a similar brand, the scheme has no connection with CoinDeal, a St. Vincent and Grenadines-based crypto exchange run by Adam Bicz and Kajetan Mackowiak.

SEC Arraigns ‘CoinDeal’ Promoters

Earlier in January, the US Securities and Exchange Commission (SEC) charged Chandran and four other individuals for their involvement in the scheme. The securities regulator named the individuals as Garry Davidson, Michael Glaspie, Amy Mossel and Linda Knott.

According to the regulator, the individuals through three entities: AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC, were involved in the sale of unregistered securities between January 2019 to 2022.

In the latest on the case, the US Department of Justice disclosed on Friday that Lee will make an initial appearance before a federal court in Las Vegas as part of its prosecution. The public prosecutor noted that Lee conspired with Chandran and others to defraud investors via companies controlled by the latter.

How Chandran Ran ‘CoinDeal’

According to US prosecutors, Chandran and his cohort ran various companies under the nane ‘CoinDeal’. The firms, which were also operated under the banner of ‘ViRSE,’ included Free Vi Lab, Studio Vi Inc., ViDelivery Inc., ViMarket Inc., and Skalex USA Inc., among others.

Citing court documents, the prosecutors explained that Chandra falsely claimed that they were developing virtual-world or blockchain technologies, including their own cryptocurrency, for use in a metaverse. They also misled investors by promising “extremely high returns,” claiming that the company was about to be purchased by a group of wealthy buyers.

In particular, prosecutors said Lee was the nominee and director of ViMarket. In this role, he followed Chandran’s directives on how to disburse investor funds sent into ViMarket’s bank accounts.

Furthermore, DOJ alleges that both executives misappropriated “millions of dollars of investor funds and spent them on luxury cars and real estate." The prosecutor said over 10,000 victims were affected by the scheme.

“Lee is charged by indictment with one count of conspiracy, two counts of mail fraud, one count of wire fraud, and three counts of engaging in monetary transactions in criminally derived property,” the DOJ said in a statement. “If convicted, Lee faces up to 20 years in prison for each of the wire fraud, mail fraud, and conspiracy counts, and up to 10 years in prison for each count of engaging in unlawful monetary transactions.”

Meanwhile, the public prosecutor noted that Michael Glaspie, who helped to market’s Chandran’s companies, pled guilty to wire fraud in February and will be sentenced on June 16.

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Celsius Hit with Multiple Lawsuits as Founder Alex Mashinksy Is Arrested

Alexander Mashinsky, the Founder of the bankrupt cryptocurrency lender Celsius Network was arrested today (Thursday) in New York. The arrest comes as the United States Department of Justice (DOJ) and several regulators slammed multiple lawsuits against the troubled Founder and his company.

DOJ, SEC, CFTC and FTC Head to Court

In the complaint filed by DOJ before the district court in New York, United States Attorney Damian Williams unveiled seven counts of charges against Mashinksy and Roni Cohen-Pavon, Celsius’ former Chief Revenue Officer. These include allegations of securities, commodities and wire fraud as well as token manipulation.

UPDATE: Per DOJ indictment, legal minds expect Alex Mashinsky to face a lengthy prison sentence. “These (DOJ) charges, and the scale of capital involved, means he doesn’t have a meaningful path to a plea; looking at 15-20 years.”Securities fraud, wire fraud, conspiracy:…

The US law enforcement agency accused Mashinky of luring investors by lying about Celsius’ financial status and inflating the price of the business’ native token CEL. Because the former Celsius CEO ‘falsely portrayed’ Celsius as a 'safe and secure institution’, the digital lending business ‘grew exponentially’ to become one of the biggest crypto lenders in the world, ‘purportedly’ managing about $25 billion at its peak period in the fall of 2021.

Finance Magnates reported that Celsius, which entered the markets in 2018 through an initial coin offering, filed for bankruptcy in July last year, weeks after suspending withdrawal on its platform, citing market volatility.

In its own lawsuit before the same New York court, the Securities and Exchange Commission (SEC) accused Celsius and Mashinsky of committing offences similar to those of the DOJ. However, it added that the company and its former CEO raised billions of dollars from investors “through unregistered and fraudulent offers and sales of crypto assets securities.”

“Thousands of retail investors have experienced significant financial hardship as a result of Celsius’s and Mashinsky’s illegal conduct, and today we are holding Celsius and Mashinsky responsible for defrauding thousands of retail investors,” Gurbir S. Grewal, Director of the SEC’s Enforcement Division, stated in a statement.

Furthermore, the charges filed by the Commodities Futures Trading Commission (CFTC) and the Federal Trade Commissions are similar to those of the DOJ and the SEC. However, the CFTC in its lawsuit—the first against a digital asset lender—said Celsius and Mashinsky operated a “massive [‘unregistered’] commodity pool scheme involving digital assets commodities.”

However, the derivatives regulator in a statement said it reached an agreement with Celsius to settle the charges through a court order that will permanently bar the company from engaging in such activities in the future. On the other hand, CFTC will continue its litigation against Mashinsky and seek an order for the return of customers’ assets and illicit profit as well as a civil monetary penalty. In addition, the derivatives watchdog wants the court to slam a permanent trading and registration ban on the Celsius Founder.

FTC Fines Celsius Network $4.7 Billion

Meanwhile, in addition to raising similar allegations at the New York court, the United States Federal Trade Commission (FTC)accused Celsius and its executives of lying to investors that they maintained a $750 million insurance policy for their deposits. On top of that, they deceived investors that they kept sufficient reserves to meet their customer obligations to them.

“Far from securing customers’ cryptocurrency deposits, Celsius took title to and misappropriated these deposits totalling more than $4 billion,” FTC explained in a statement, citing the complaint. “The company used consumer deposits to fund its operations, pay rewards to other customers, borrow from other institutions, and make high-risk investments, which even the company acknowledged often lost money.”

What is more, the FTC alleged that Celsius lacked any system to track its assets and liabilities until mid-2021. And as a result of these, FTC issued a $4.7 billion fine on Celsius and its affiliates. It, however, said that it has reached an agreement with the companies to suspend the ‘judgment’ in order to “permit Celsius to return its remaining assets to customers in bankruptcy proceedings.”

Moreover, FTC plans to continue its case against Mashinky and other Celsus Co-Founders, Shlomi Daniel Leon and Hanoch ‘Nuke’ Goldstein, who it said have not agreed to a settlement.

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FTX’s Sam Bankman-Fried Battles US Post-Extradition Charges in Bahamas

Sam Bankman-Fried, the disgraced founder of bankrupt cryptocurrency exchange FTX, has made a move to dismiss the charges slapped on him by US prosecutors after his extradition from the Bahamas, Reuters reported on Tuesday. The former crypto billionaire’s lawyers have asked the Supreme Court of the Bahamas to stop the island’s country’s government from consenting to the post-extradition charges.

Bankman-Fried Moves against US Charges

According to the wire agency, Bankman-Fried’s lawyers disclosed the move in documents filed before a federal court in Manhattan, United States, on Monday evening. The lawyers are arguing that the extra charges contravene the terms of extradition agreement between Bahamas and the United States. The extradition treaty between both countries requires the country releasing a defendant to give its consent before additional charges can be initiated after the extradition.

Bankman-Fried was arrested in the Bahamas in late 2022 over the collapse of FTX after criminal charges were filed against him in the United States. He was later extradited to the US where he was initially charged with eight counts, including conspiracy to commit wire and securities fraud, money laundering and conspiracy to avoid campaign finance regulations.

However, prosecutors have since expanded the charges to 13, including conspiracy to commit bank fraud and violate the anti-bribery provisions of the United States by bribing Chinese officials in late 2021. However, Bankman-Fried lawyers in the new court filings said they intend to contest the extra charges in Bahamas court should the island country’s government consent to the charges, Wall Street Journal (WSJ) reported.

The lawyers also asked US District Judge Lewis Kaplan to throw out the changes or try them separately from the FTX founder’s trial scheduled for October 2, 2023.

“Mr. Bankman-Fried will suffer if required to prepare for a trial that is less than four months away without knowing whether he will be tried on nearly half of the counts,” the lawyers said in the filing, as quoted by WSJ.

In May, the US Justice Department said it would drop some of the charges against Bankman-Fried if the Bahamas does not consent to them. However, the prosecutors last month slammed pre-trial motions filed by Bankman-Fried’s lawyers to dismiss a number of the 13 charges against him.

FTX crumbled in November last year after a liquidation crisis, costing billions of dollars in losses to investors.

BidFX hires eFX expert; Orbex's prepaid card; read today's news nuggets.

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2 Russian Citizens behind 2011 Hack of Mt. Gox, US Alleges

US prosecutors have fingered two Russian nationals as the masterminds behind the 2011 hack of Mt. Gox, the largest Bitcoin (BTC) exchange in the world at the time. The Department of Justice (DOJ) in an indictment unsealed on Friday charged Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, with conspiracy to launder about 647,000 bitcoins following their hack of the exchange.

DOJ Indicts Two Russian Nationals

According to the prosecutors, between September 2011 and at least May 2014 Bilyuchenko and Verner stole the vast majority of bitcoins belonging to Mt. Gox customers. This allegedly contributed to the eventual demise of the platform in February 2014.

The DOJ said it unsealed charges against the Russian nationals in both New York and California, following an ongoing multi-agency investigation into the case. In addition, the prosecutor accused Bilyuchenko of partnering with another individual, Alexander Vinnik, to run the defunct Bulgaria-based cryptocurrency exchange, BTC-e, using ‘ill-gotten gains’ from his Mt. Gox hack.

According to the prosecutors, for years, BTC-e, aided criminals across the world, ‘to launder billions of dollars’. These included computer hackers, ransomware actors, narcotics rings and corrupt public officials.

How Mt. Gox’s Stolen Bitcoins Were Moved: DOJ

According to the DOJ, Mt. Gox kept its customers’ crypto wallets and private keys on a computer server in Japan. However, after Bilyuchenko, Verner and their accomplice allegedly stole some of the bitcoins, they laundered most of them through their accounts at two other online BTC exchanges.

Furthermore, the DOJ claimed that Bilyuchenko, Verner and others as part of a device to launder the Bitcoin sometime in April 2012 entered into a so-called advertising services contract with a New York-based Bitcoin brokerage. The firm allegedly helped the accused to hide and liquidate their stolen Bitcoins by making wire transfers of about $6.6 million to overseas bank accounts that they controlled and those in the names of shell companies.

“In exchange for the wire transfers, the New York Bitcoin Broker allegedly received ‘credit’ on Exchange-1, through which Bilyuchenko, Verner, and their co-conspirators allegedly laundered more than 300,000 of the Bitcoins stolen from Mt. Gox,” the DOJ noted, explaining its unsealed indictment.

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Ex-Coinbase Staffer Bags 2-Year Jail Term for Insider Trading Plot

Ishan Wahi, a former Product Manager at Coinbase, has been sentenced to two years imprisonment in a case US prosecutors called the country's first ever cryptocurrency insider trading case. Thirty-two-year-old Wahi from Washington bagged the jail term for tipping off his brother and friend on multiple occasions with confidential information about Coinbase’s upcoming token listings.

With the information, Wahi’s brother, Nikhil, and friend, Sameer Ramani made over $1.1 million from trading ahead of Coinbase’s public announcements, according to the US securities regulator which filed charges against the three individuals in July last year.

Coinbase Former Employee Pleads Guilty

The US Department of Justice announced Wahi's fate on Tuesday, noting that he was sentenced by US District Judge Loretta Preska. However, prosecutors did not comment on the fate of Nikhil and Ramani.

The sentence comes over three months after Wahi pleaded guilty to two counts of conspiracy to commit wire fraud. The confession contradicts the former Coinbase staffer's claim in 2022 that he was not guilty of wrongdoing.

“Today’s sentence should send a strong signal to all participants in the cryptocurrency markets that the laws decidedly do apply to them,” said Damian Williams, the US Attorney for the Southern District of New York.

"[The district] will hold those who engage in insider trading to full account, regardless of whether their illegal conduct occurs in the equity markets or in the market for crypto assets," added Williams.

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US Senators Say Binance May Have Lied to Congress: Report

Two US lawmakers have asked the Department of Justice to look into whether Binance made false representations to lawmakers earlier in March about its business dealings and ties to its local unit, Bloomberg reported on Thursday. Senators Elizabeth Warren and Chris Van Hollen made the request in a letter sent to the US Attorney General Merrick Garland, according to the outlet.

Lawmakers Doubt Binance’s Response

In March, Warren, Hollen and another US Senator Roger Marshall questioned Binance about its regulatory compliance and finances as well as the independence of its US arm. In response, Patrick Hillmann, Binance’s Chief Strategy Officer, said the crypto exchange prioritized local regulatory compliance as it grew. He added that “Binance.com and Binance.US are separate entities—contrary to suggestions in public reporting.”

However, the senators in their letter said Binance and its US branch seemingly “undermined this important investigation” by providing inaccurate information to Congress, Bloomberg reported, quoting the letter.

SEC Moves against Binance

The report about the senator’s letter emerged days after the US securities watchdog charged Binance to court for allegedly operating illegal trading platforms, offering unregistered crypto asset securities and commingling customers’ funds. The regulator also claimed that Binance’s global entity and its US affiliates ‘were intimately involved’ in running Binance.US, the trading platforms for US investors.

In addition, the Securities and Exchange Commission (SEC) accused Binance of tweaking its controls to enable high-value US customers to trade on Binance.com, contrary to the exchange’s public claim that US clients were barred from using the global trading platform.

Today we charged Binance Holdings Ltd. (Binance); U.S.-based affiliate, BAM Trading Services Inc., which, together with Binance, operates https://t.co/swcxioZKVP; and their founder, Changpeng Zhao, with a variety of securities law violations.https://t.co/H1wgGgR5irpic.twitter.com/IWTb7Et86H

Responding to the lawsuit, Binance accused SEC of rushing 'to claim jurisdictional ground from other regulators' rather than seek to serve the interest of investors. The crypto exchange said allegations that its users' assets in the US are at risk are "simply wrong.”

Our response to the SEC's complaint.https://t.co/mgXxGTKr67

In recent months, the SEC has intensified its regulatory crackdown on digital asset exchanges. On Tuesday, it sued Coinbase, the country’s largest cryptocurrency trading platform, on allegations that it operates an illegal exchange and offers unregistered securities and crypto staking programme. The charges came a day after the financial watchdog's action against Binance.

Ex-CFTC chair joins Circle; Marqeta shuts Aussie office; read today's news nuggets.

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US Opposes Crypto Exchange Bittrex’s Customer Repayment Plan

The United States has objected to a proposal by cryptocurrency exchange Bittrex to return customer cash and cryptocurrency as part of a process to window its operations in the country. Bittrex’s US arm filed for bankruptcy protection in May weeks after exiting the country over regulatory challenges.

In the same month, the cryptocurrency exchange sought permission from the bankruptcy court in Delaware to pay its customers their crypto holdings in line with terms agreed with customers and to avoid costly litigation. The exchange argued that courts have previously permitted payments such as for critical services before a firm’s bankruptcy plan confirmation hearing.

US Calls Bittrex’s Plan ‘Premature’

However, in its motion filed yesterday (Wednesday), the US government countered the proposal, describing it as ‘premature’ as ‘confirmation is months away.’ It noted that if Bittrex sought to avoid litigation expense, then it ought to instead have filed a motion seeking compromise authority or permission to settle the dispute without going to trial.

Furthermore, the government dismissed Bittrex’s argument that courts previously authorized payments for critical services, noting that the ‘critical vendor’ standard does not apply to the case.

“This is not the case here. Instead of reorganizing, the Debtors [Bittrex] intend to liquidate and shutdown their exchange,” the government’s counsel noted. “The Debtors shall soon have no business and no future customers, vendors, or creditors.”

The US government’s opposition to Bittrex’s proposal for customer withdrawal follows a $29 million violations settlement reached with the cryptocurrency exchange in October last year. The US Treasury Department’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) had charged the Seattle-based exchange with violating federal sanctions by permitting crypto transactions from sanctioned jurisdictions including Iran and Sudan, between 2014 and late 2017.

In April, the US Securities and Exchange Commission also charged Bittrex and William Shihara, its Founder and former CEO, with illegal operation of a national securities exchange, broker and clearing agency. It said the activities fetched Bittrex about $1.3 billion in revenue. The securities watchdog also accused the exchange of instructing its crypto issuers to evade US securities law.

US Objects to Debt Classification

Meanwhile, the US government in its opposition to Bittrex’s proposal also disapproved of the exchange’s plan to ‘subordinate certain regulatory claims’ and create ‘classes of customers, general creditors and subordinated creditors.’

“The United States objects to any subordination of the OFAC and FinCEN Debts and reserves its rights with respect to other issues of classification of claims,” it wrote in the court filing.

According to Bittrex’s court filing in May, the US branch as of March 27, 2023, served more than 600,000 customers spread across 46 states in the country. The arm also holds $250 million and $50 million in customer cryptocurrency and cash, respectively, the exchange’s attorney Susheel Kirpalani told the bankruptcy court last month, according to a CoinDesk report.

Ex-CFTC chair joins Circle; Marqeta shuts Aussie office; read today's news nuggets.

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2016 Crypto Hack: Bitfinex Gets $312K in Latest Recovery from US

Bitfinex, the cryptocurrency exchange from whose platform hackers stole over 119,000 bitcoins (BTCs) in August 2016, has retrieved about $315,000 in cash and cryptocurrencies in its latest recovery efforts. The BTCs stolen from the exchange, worth about $71 million then, are currently priced at approximately $3.7 billion.

Bitfinex Announces New Recovery

Bitfinex announced the latest recovery today (Thursday) in a statement on its website, noting that it obtained the cash and digital asset from the United States Department of Homeland Security (DHS). The cryptocurrencies were seized by the US Customers and Border Protection, an enforcement agency of the DHS.

Previously, Bitfinex retrieved little amounts of the stolen bitcoins. In 2021, the firm in collaboration with the crypto exchange Poloniex obtained 6.5 BTCs worth $305,000 at the time. Earlier in February 2019, Bitfinex also reclaimed 28 BTCs worth over $107,000 from the US government.

However, the latest recovery follows the seizure of about 94,000 bitcoins worth $3.6 billion by the US Department of Justice in February last year. US prosecutors seized the digital currencies after arresting and charging a couple, Ilya Lichtenstein and Heather Morgan, for allegedly trying to launder roughly $4.5 billion in cryptocurrency linked to the hack.

Insufficient Recovery

According to Bitfinex, the newly recovered amount will be distributed to holders of the Recovery Right Tokens (RRTs), which is a digital currency it issued to indebted users after the hack. However, there are currently 30 million RRTs in circulation, meaning that the amount recovered is not sufficient.

“Pursuant to Bitfinex’s contractual commitments, all RRT holders must be redeemed at $1, following which up to 80 per cent of any remaining recovered assets will be paid to UNUS SED LEO token holders,” Bitfinex explained. “RRT holders will have their tokens redeemed pro rata by today, based on the size of their RRT holdings on July 6, 2023, at 12:00.01 am UTC.”

Who Is Responsible for the Hack?

Meanwhile, the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, recently reported that Bitfinex never made public a confidential report that found its security lapses responsible for the 2016 hack. OCCRP said the crypto exchange failed to execute operational, financial and technological controls recommended by its digital security partner Bitgo.

However, Finance Magnates reported that Bitfinex in its response said the “assertions made by the OCCRP are factually incorrect.” OCCPR also quoted Bitfinex as saying there was “evidence of negligence…on the part of other counterparties that led to the hack.”

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DOJ Weighs Fraud Charges against Binance, Worried about Bank Run: Report

US prosecutors are mulling over whether to initiate criminal charges against Binance, thereby turning the heat on 13 civil charges filed by the securities watchdog against the top crypto exchange earlier in June, Semafor reported today (Wednesday), citing insider sources. However, the Department of Justice (DOJ) is worried that such action could lead to a bank run, throwing the exchange into a position similar to that of the now-bankrupt crypto exchange, FTX.

Prosecutors Contemplate Charges

According to the report, the DoJ is contemplating opting for other measures such as fines and deferred or non-prosecution agreements (NPAs). An NPA means that the federal prosecutor, despite believing that a crime has been committed, will delay prosecution in exchange for the crypto firm's compliance with certain conditions.

These conditions could range from payment of fines and the institution of corporate reform to full cooperation with the department's probe. In such cases, the charges are dismissed if the defendant complies with the conditions.

Binance, the biggest global crypto exchange in terms of trading volume, entered the US crypto market in September 2019 after obtaining registration from the Financial Crimes Enforcement Network (FinCEN) for its affiliate in the country. The local unit was to serve US customers independently of the global exchange.

Regulatory Hurdles in the US

However, in recent months, pressure has mounted on the crypto exchange with regard to its operations in the United States. In June, Senators Elizabeth Warren and Chris Van Hollen asked the DOJ to look into whether Binance made false representations to lawmakers earlier in March about its business dealings and ties to its local unit

The US lawmakers’ request came days after the SEC accused Binance and its CEO, Changpeng Zhao of operating illegal trading platforms, offering unregistered crypto asset securities and commingling customers’ funds. Two months earlier, the Commodity Futures Trading Commission (CFTC) made similar allegations against the exchange and Zhao.

However, Binance in its response said the allegation that users' assets on its US trading platform were at risk was "simply wrong.” The exchange also recently slammed the securities watchdog over a recent press statement in which the agency claimed Binance commingled customers’ assets with company resources. Binance in a motion asked the district court in Columbia to order the SEC “to comply with all applicable rules of conduct concerning extrajudicial statements.”

Furthermore, the exchange and its CEO are planning to seek the dismissal of charges filed by the CFTC in March, Finance Magnates recently reported. However, recent media reports suggest that Zhao was aware of wash trading activities on Binance.US, which is one of the allegations in the SEC's lawsuit. Reports also suggest that the Binance's CEO also considered shutting down the US affiliates earlier this year to protect the crypto exchange’s wider global operations.

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