FinCEN Penalizes ‘First’ Bitcoin Mixer, Helix, for Violating Anti-Money Laundering Laws

The Financial Crimes Enforcement Network charged Larry Dean Hamon, the founder, and CEO of bitcoin mixer Helix and Coin Ninja, for violations of the Bank Secrecy Act.

FinCEN imposed a penalty of $60,000,000.

Currently, he is being prosecuted in the US District Court for the District of Columbia on the charges of money laundering and operating an unlicensed money transmitting business, Helix, from 2014 to 2017.

FinCEN argues that as per its 2013 Guidance, exchangers and administrators of digital currencies are money transmitters under the BSA and obligated to register with it. As per the 2019 clarification, the same rules extended to the mixers of virtual currencies.

FinCEN’s report says between June 2014 to December 2017, Helix conducted more than 1,225,000 transactions with at least 356,000 BTC transactions.

“Mr. Harmon operated Helix as a bitcoin mixer, or tumbler, and advertised its services in the darkest spaces of the internet as a way for customers to anonymously pay for things like drugs, guns, and child pornography.”

The bitcoin mixing service allegedly laundered tens of millions of dollars in crypto for darknet markets like Agora, Abraxas, Hydra, Hansa, and Wall Street Market. Former darknet giant AlphaBay allegedly also had close ties to Helix as it laundered $27 million in Bitcoin for the now-defunct marketplace.

Besides circumventing BSA’s requirements, they failed to collect and verify customer names and addresses of over 1.2 million transactions. Helix also deleted the minimal customer information it collected, and Harmon was also engaged in transactions with fraudsters, narcotics traffickers, counterfeiters, and other criminals.

This action, which FinCEN said to be the “first” one against a bitcoin mixer, is the first time such activity is called “crime” by the Department of Justice (DOJ), which could mean further troubles for services using obfuscation to make bitcoin not traceable.

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Author: AnTy

Bitcoin Price Crashes $450 on BitMEX CEO Arthur Hayes & Other Founders Indicted on Criminal Charges

CFTC has charged BitMEX with illegally operating a derivatives trading platform.

Back in July 2019 U.S. Commodity Futures Trading Commission (CFTC) started investigating the exchange with a focus on allowing Americans to trade on the platform while not being registered with the agency.

But as Jake Chervinsky, general counsel at Compound Finance, said the bigger news is BitMEX founder Arthur Hayes, Samuel Reed, and Benjamin Delo being indicted on charges of violating the Bank Secrecy Act, which carries a maximum prison term of five years.

Exchange’s first employee who later became the head of business development, Gregory Dwyer, was also charged and arrested this morning in Massachusetts —the rest remain at large, said the prosecutors.

The founders of BitMEX were indicted by federal prosecutors in New York for failing to comply with adequate anti-money laundering measures at the company.

“These defendants flouted (to do their part to help in driving out crime and corruption) obligation and undertook to operate a purportedly ‘off-shore’ crypto exchange while willfully failing to implement and maintain even basic anti-money laundering policies,” Acting Manhattan U.S. Attorney Audrey Strauss said.

The official press release further states that one of the defendants even bragged about the company incorporated outside the US where “bribing regulators…cost just ‘a coconut.’”

“Thanks to the diligent work of our agents, analysts, and partners with the CFTC, they will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time,” it reads.

The real question is, how fast will foreign exchanges that still allow US-based traders to use their service via VPN or without KYC. The implications of this could be huge for the cryptocurrency community.

In response to the news, bitcoin fell from above $10,900 to $10,460 within minutes and is currently trading at around $10,500. The rest of the crypto market also dropped in tandem.

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Author: AnTy

SEC Charges Rapper T.I. & Four Others for Promoting Fraudulent ICO, FLiK

The US Securities and Exchange Commission has charged Atlanta-based rapper Clifford Harris, Jr., better known as T.I., and four others for promoting an unregistered and fraudulent initial coin offerings (ICO).

T.I. promoted FLiK tokens in 2017 to his social media followers, falsely stating that he was a co-owner of the project boasted as “Netflix on the blockchain.” The platform was advertised as a streaming media platform with products that can be purchased with digital tokens, the SEC said in a statement on Friday.

The 39-year old rapper has agreed to pay the penalty of $75,000.

As per SEC’s order, he is not allowed to participate in offerings or sales of digital-asset securities for at least five years.

The company’s founder, a film producer, named Ryan Felton, who started FLiK and CoinSpark, is meanwhile facing claims that he misappropriated the raised funds to buy Ferrari, a million-dollar home, and other luxury goods.

“Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading,” said Carolyn M. Welshhans, Associate Director in the Division of Enforcement.

The complaint alleges that Felton secretly transferred FLiK tokens to himself and gained an additional $2.2 million in profits by selling them into the market.

Previously, boxer Floyd Mayweather and music producer DJ Khaled have also been sued by the regulators for hyping the ICOs.

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Author: AnTy

SEC Comes ‘Out For Justice’ As ‘Beyond The Law’ Star Steven Seagal Charged In 2018 B2G ICO

  • Actor and martial arts performer Steven Seagal has been charged by the US Securities and Exchange Commission (SEC) for failing to disclosed earnings from an initial coin offering (ICO) back in 2018.

The United States’ Securities and Exchange Commission (SEC) released a statement this Thursday, in which it states that the actor – Steven Seagal – failed to disclose payments he received for promoting Bitcoiin2Gen’s (B2G) token and Initial Coin Offering (ICO) in February 2018.

The actor and former martial arts performer faced charges for failing to disclose that he had been offered a $250,000 payment in cash and another $750,000 in B2G tokens for promoting the ICO.

Seagal ‘Zen Master’ Promoted B2G on Social Media

According to the SEC, Seagal took to social media, encouraging his fans and followers to invest in B2G tokens back in 2018.

The SEC also reported that he issued a press release titled: “Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen”, while another B2G press release quoted him saying that “he wholeheartedly backs the ICO” advising followers to invest to avoid “miss[ing] out.”

Celebrities: Promoting Securities? Disclose Your Compensation

Kristina Littman, speaking on behalf of the SEC’s Enforcement Division Cyber Unit as its chief said the following:

“These investors were entitled to know about payments Seagal received or was promised to endorse this investment so they could decide whether he may be biased.”

Littman further stated that celebrities seeking to use their platform to advertise a product should disclose their earnings.

“Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation.”

Meanwhile, B2G Fights Against Pyramid Scheme Accusations

Even when the ICO was launched, B2G fought an uphill struggle against accusations that it was a pyramid scheme. So much so that it issued statements about its marketing activity.

After a month, the Tennessee Department of Commerce and Insurance issued a warning about B2G’s token project. The SEC had previously advised celebrities to not endorse tokens if they are legally deemed securities.

In an announcement released on Thursday 27th February, it stated that promoters “must disclose the nature, scope, and total amount of compensation received in exchange for their promotion”.

Seagal to Pay $157,000 in Disgorgement

The SEC stated that Seagal didn’t respect the anti-touting provisions of federal securities and that he agreed to pay $157,000 in disgorgement.

While he didn’t have to admit or deny any wrongdoing, Seagal agreed to no longer be directly involved in the promotion of securities for a period of 3 years.

His promotional payments are covered by this disgorgement and the investigation will continue, the SEC concluded.

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Author: Oana Ularu

SEC Files Lawsuits Against Conspirators In Blockchain Terminal’s $30 Million Fraudulent ICO

CG Blockchain Inc., BCT In. (SEZC), has been charged with fraud by the US Securities and Exchange Commission (SEC), for funds raised on an ICO at over 30 million dollars by the companies operators, Edith Pardo and Boaz Manor.

In a SEC press release from Friday, it’s being said that Manor allegedly hid a criminal conviction from the past. It seems he was working under a fake a name and passed as Pardo’s employee in order to begin the raising of funds for the project. In an effort to do this, he even disguised himself because his actual identity may have been toxic for the company.

Investors Should Check the Identity of Those Who Are Raising Funds

Joseph Sansone, SEC Market Abuse Unit’s co-chief, said in a statement that investors should check the identities of people who are raising funds. These are his Sansone’s exact words:

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

The US Attorney’s Office for the District of New Jersey also filed criminal charges against Manor and Pardo also says the SEC. Back in 2017 and 2018, Manor raised funds for the Blockchain Terminal cryptocurrency version.

SEC Looking for Disgorgement of Profits Obtained Illegally

The SEC is seeking disgorgement of profits obtained illegally plus penalties, injunctive relief and interest. It also wants to bar Manor and Pardo from ever being able to occupy the positions of director and officer within public companies, also from taking part in any securities offering in the future.

Manor was sentenced to 4 years in prison in Canada back in 2012 because he siphoned $106 million from a hedge fund he co-founded in Toronto. It was reported the Canadian fund was managing $800 million in assets from 26,000 investors. SEC sent on January 14 a warning through its Investor Education and Advocacy subsidiary, saying people should keep their eyes open when being presented initial coin offerings.

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Author: Oana Ularu

Phoenix Fund Investments Linked to The OneCoin Money Laundering Scheme, Stole $110 Million

OneCoin was recently charged with fraud and money laundering. The founder’s brother, Dr. Rija Ignatova, admitted guilt to the charges and also accused Phoenix Thoroughbreds of being funded using the money laundered through OneCoin. Ignatova claims that the racehorse investment company Phoenix received $110 million from the OneCoin scam.

Phoenix Thoroughbred’s founder Amer Abudlaziz, however, denied the allegations against his company, saying it was not funded using money stolen through the OneCoin scheme. Contrary to Abdulaziz’s claims, the federal government has reported that Phoenix Thoroughbred received $110 million through an unnamed account with an Irish bank from OneCoin back in 2017.

It was also confirmed that the said account was used by Mark Scott, a former advocate, to launder money for OneCoin. The lawyer was found guilty and convicted for fraud and money laundering last week and stands to serve 50 years in federal prison.

According to a statement report released recently, Phoenix Fund Investments has denied the allegations brought against it and the founder Mr. Abdulaziz during the criminal proceedings against OneCoin. The company is determined to defend itself in a court of law and prove it was not linked to the fraud scam in any manner. The fund claims that Abdulaziz and his company have always acted in accordance with the stipulates of the law and is ready to contest the allegations.

There have also been allegations that the company misrepresented itself by saying it is a regulated thoroughbred fund while it is actually not regulated according to Racing Post. It is also held that the firm has not been operating as an investment fund despite it claiming to be one.

Recently, Phoenix Fund Investments entered into voluntary liquidation. It is not clear yet whether the liquidation decision is due to the recent allegations of money laundering in connection to the OneCoin scheme or otherwise.

The British Horseracing Authority has issued a statement to the Irish authorities confirming that it is aware of the case and already working on it with the aid of relevant authorities.

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Author: Denis Miriti

China Authorities Arrest 6 People Related to GGP Crypto Scam (Global win-win Token)

Six people were recently charged by the Chinese police for their connection to a crypto scam. According to the reports from local media outlets, the police of the Jiangsu Province believes that these six fraudsters conned around 10,900 investors. They were able to get around $45 million USD from them.

The investors were led to believe that they were making a significant profit from their activities, but the money never appeared. The scam started around 2015 when the victims were told to invest in GGP “Global Win-win Token”. They would then use these digital investments in an online trading platform.

This scam was successful because it fooled the investors into making a trial investment and then promised to give them high returns after they invested more in it. The scammers even created a fake site that would show their returns.

Everything was fake, though. The company, the site, the tools, even the coin. One of the reasons why they managed to be able to do it was because they had actual experts in the financial industry as part of the team. The operation was very professional and well done.

They also used the blockchain buzzword. Not everybody in China is familiar with the term, so they made it seem like something revolutionary and used forums and propaganda to get the attention of people.

Now, however, the police were finally able to arrest the scammers and they will be charged for organizing a Ponzi scheme and for fraud. With the high number of people that were scammed, they will very likely be condemned for the crime.

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Author: Hank Klinger

Australian Authorities Charge Exmount Holdings Group Members for $1.8 Million Crypto Scam

Australian-Authorities-Charge-Five-People-Over-1-8-Million-Crypto-Scam

The law enforcement of Australia has recently charged five people for a cryptocurrency-related scam that involved $2.7 million AUD ($1.8 million USD). The investigation, which was made by the cybercrime division of the country, discovered that the criminals fooled over 100 investors.

According to the police, the criminals persuaded several people to invest in a company called Exmount Holdings Group. Initially, everything with the company seemed legitimate and investors could use the site in order to monitor their investments.

They were promised a quick return on investment, but when they tried to withdraw the money later, they discovered that they could not because there was no actual money to withdraw. They tried to contact the company but discovered that it did not exist.

The scheme was quite complex and it involved several other fake companies, including over eight other names that were used for the fraud.

After they were arrested, the five scammers, three men, and two women were charged with money laundering and fraud. They are now awaiting judgment. At the moment, the police are behind other people who might have been scammed by the criminals, so if you believe that you are one of them, you should contact Australia’s law enforcement soon for assistance.

The detective in charge of the operation, Terry Lawrence, affirmed that people should be aware that there is a huge risk in accepting any investment opportunities with companies which are not properly registered with a regulator. According to him, the best idea is to never accept deals over the phone, online and seek financial advisors and the authorities before investing.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Gabriel Machado