KuCoin Breach
KuCoin, an Asian-based cryptocurrency, suffered a security breach on September 25, 2019. Due to recent crypto hacking, the cryptocurrency lost over $150M. The cryptocurrency digital asset exchange based in Singapore disclosed that a major hack had hit KuCoin. The exchange’s statement revealed that their systems detected massive traffic with large sums of Bitcoin (BTC) and Etherium (ETH). It was determined that massive traffic came from withdrawal to an unknown wallet.
This was confirmed by a statement posted on KuCoin company’s website. This establishes that they had indeed suffered a breach on their systems, draining all the money they had on their hot digital wallets. The CEO of KuCoin, Johnny Lyu, revealed that numerous hackers gained access to private keys used to breach the hot wallets. In an attempt to manage the situation, KuCoin moved the remaining funds to a new hot wallet. Temporarily, they have frozen customer deposits and withdrawals as they investigate the incident.
KuCoin CEO Lyu stated that their cold wallets weren’t affected by the security hack. Cold wallets are not connected to the internet and are offline. But hot wallets are available online since they are cryptocurrency management applications.
Hot wallets are used by most cryptocurrency exchanges like KuCoin to store assets currently being exchanged across their platforms. They are used to power conversion operations and funds transfers.
The loss has been estimated to be at least $150 million from an audit conducted by the company, which discovered the Etherium wallet transfer addresses. KuCoin CEO Lyu has assured that they will reimburse all their user’s losses using the funds from their cold wallets.
The Venezuelan Government Legalize Bitcoin Mining
The National Superintendency of Crypto Assets and Related Activities (SUNACRIP) of Venezuela has legalized Bitcoin (BTC) mining. This is the government department that regulates cryptocurrencies in the country. In connection with this, a decree was published in the Official Gazette on September 21, 2019. This is to give any local entity that wishes to mine cryptos to apply for a license and be listed on the government’s register. Applicants will be required to provide information to the authorities on the nature of their mining. They were also required to keep their mining records for up to 10 years.
And thus the creation of a National Digital Mining Pool (NDMP), a body that “seeks to bring together all the miners operating on the Venezuelan territory.” It will oversee that all mining activities to be carried out within the NDMP and failure to which will attract penalties. The NDMP will allow the government to regulate and control the income that will come from the mining pool rewards and pay contributors. Miners that will be operating outside the pool will be subject “to the measures, infractions, and sanctions as set forth in the decree document.”
The report aims to ensure that miners adhere to the new guidelines. The authorities will oversee the creation and importation of mining equipment. Also, the mining of Bitcoin and other cryptocurrencies will only continue to be operational with the State’s’ support if it is inspected by SUNACRIP.
The report further explains that since the authorities will control and manage the NDMP, they will be in charge of distributing rewards to miners. This creates risks for miners since the pool operator can freeze funds or delay payments indiscriminately.
Venezuela has a total hash rate of about 0.42%. This could increase due to the government legalizing the mining of Bitcoins and other cryptocurrencies.
Russia Blacklist Binance
Binance blacklisted in Russia
The adoption of cryptocurrencies has once again taken a big hit. This is after Roskomnadzor, Russia’s telecom regulator, blacklisted Binance website crypto exchange back on June 2, 2020. Roskomnadzor had in the past also blacklisted Bestchange.ru, which was one of the major local crypto data collectors. This is because digital assets haven’t received proper acceptance and recognition in Russia for a long time since the cryptocurrencies. Cryptocurrencies cannot be used to pay for goods and services in the country.
Binance only realized this on September 24, 2020, after they received a communication from Roskomnadzor. It was revealed that it had not received any prior warning from Russian authorities about any violations. They were included in the blacklisted domains because their website provides information about the purchase and sale of crypto assets like Bitcoin. Their statement on the matter was posted on their Russian Telegram channel.
“We were not previously notified of any claims by law enforcement agencies, civil government services, or courts prior to receiving the above notification. We have now engaged our legal counsels for further advice and would like to assure all of our Russian users that there will be no disruption to their services in the interim and that their funds are safe.”
But according to Roskomnadzor, the distribution of such data is restricted in the country. However, Russians can gain access to the exchange without having to use privacy tools such as a virtual private network (VPN).
Binance insists that crypto users’ funds stored on their platform are safe. They also conclude that they are taking legal advice to determine the way forward for their company.
Russia’s finance ministry has imposed several bills related to crypto to criminalize crypto transactions. They have also updated the proposed laws, ensuring hefty fines and jail terms on any Russian users who will fail to declare their crypto earnings to the country’s tax agency.
Jury Convict Owner of Cryptocurrency Exchange RGCoins
Rosen Iossifov, owner of RGCoins convicted by a jury
Rosen Iossifov, the owner of cryptocurrency exchange RGCoins, was recently convicted by a federal jury in Kentucky on charges of two counts of conspiracy to commit racketeering and money laundering. This conviction resulted from a two-week trial where Iossifov was accused of engineering a scheme to steal money from unsuspecting victims in America and then launder these funds using cryptocurrency.
Rosen, who was arrested in Bulgaria back in 2018. He was then extradited to the United States in 2019 and founded a Bulgarian exchange. The exchange was mainly focused on local Eastern European clients. This small-scale exchange’s operations attracted the attention of the US investigators last year. This is due to suspicions that it was helping a Romanian gang to launder money.
Iossifov is facing jail time of up to twenty years, three years of supervision upon release, and a fine of up to $250,000. The sentencing will be passed on January 12, 2021.
According to documents presented in court, Iossifov and his co-conspirators had at least defrauded 900 Americans through phishing attacks through 2014 and 2015. They accomplished this by posting fake advertisements to online auction and sales websites, including Craigslist and eBay, for high-cost goods that did not exist. These products which were sold during the auctions were never delivered or received by the buyers. The money obtained from the sale of these items ended up in the pockets of a group of 14 Romanian citizens through the use of RGCoins to launder it by buying Bitcoin
Iossifov claims that he was not aware of the fact that the Romanians were involved in criminal activities. He says that he only used RGCoins service to launder their earnings.
But US authorities claim that Iossifov was aware of the criminal operation conducted by the Romanians. According to them, Iossifov had exchanged Bitcoin worth more than $4.9 million for four of the Romanians without following the Know-Your-Customer procedure.
The Us Prosecutor states that “once victims were convinced to send payment, the conspiracy participants engaged in a complicated money laundering scheme wherein domestic associates would accept victim funds, convert these funds to cryptocurrency, and transfer proceeds in the form of cryptocurrency to foreign-based money launderers.”
The arrest of Iossifov is related to an earlier arrest of Vlad Nistor, who was the CEO of Coinflux, a top crypto exchange that operated in Romania. Nistor’s and Iossifov’s arrests came as a result of a series of US operations against crypto criminals.
