Blockchain & Cryptocurrency
Every week, Information Security Media Group compiles notable cybersecurity events related to digital currencies. This week, significant prison sentences were handed down to the former CEO of Celsius Network, an Irish crypto money launderer, and an individual supporting ISIS. Additional incidents included the closure of eXch and Haowang, an attempted kidnapping of a crypto CEO’s family in Paris, and charges against leaders of the Sinaloa Cartel in U.S. federal court.
Celsius CEO Gets 12-Year Prison Sentence
Alexander Mashinsky, the former CEO of Celsius Network, has been sentenced to 12 years in federal prison after admitting guilt to charges of commodities fraud and manipulating the Celsius token. In December, he acknowledged deceiving investors with false assurances about the safety and profitability of the Celsius platform while covertly liquidating millions in personal assets. His legal challenges began in 2023 when Celsius reached a $4.7 billion settlement with the Federal Trade Commission. He also faced lawsuits from regulatory bodies like the Securities and Exchange Commission and the Commodity Futures Trading Commission for fraudulent activities.
German Police Shutter eXch
The German federal authorities have closed down the eXch cryptocurrency exchange and confiscated its servers due to allegations of money laundering associated with cybercriminal activities. This operation led to the seizure of eight terabytes of data and digital assets valued at $38 million, marking it as the third-largest cryptocurrency seizure in the history of the BKA. The exchange is accused of circumventing Know Your Customer (KYC) regulations, facilitating the movement of approximately $1.9 billion in cryptocurrency, which is suspected to have connections to criminal enterprises. Investigators revealed that North Korean operatives allegedly funneled a portion of the $1.5 billion stolen in the Bybit hack through eXch. The exchange, which denied the allegations, ceased operations on May 1 and its operators are currently under investigation for commercial money laundering and managing a criminal trading platform.
Haowang Guarantee Shuttered
Haowang Guarantee, previously regarded as the largest illicit online marketplace, has ceased operations following the blocking of its channels and NFT groups on Telegram. This platform was known for facilitating the sale of personal data, money laundering services, and technology for crypto scams targeting Southeast Asia. Elliptic had reported that Haowang was responsible for processing over $27 billion in USDT transactions, partially aided by USDH, a stablecoin linked to Cambodia’s Huione Group. The U.S. Department of Treasury has accused Huione of laundering $4 billion, some of which is believed to be connected to cyberattacks originating from North Korea.
Kidnapping Attempt on Crypto CEO’s Family
Authorities in Paris are probing an attempted kidnapping involving the daughter of a cryptocurrency CEO and her toddler. The incident, which occurred in broad daylight and was recorded by nearby surveillance cameras, involved three masked assailants attempting to abduct the victims. Fortunately, the woman’s husband intervened, prompting the attackers to flee and abandon their vehicle. This incident is part of a troubling trend of “wrench attacks,” where criminals resort to threats to steal cryptocurrency assets. France has reported at least five such incidents this year, including a harrowing case involving Ledger co-founder David Balland, who was tortured and held for ransom.
ISIS Supporter Sentenced to 30 Years in Prison
Mohammed Azharuddin Chhipa, aged 35, has been sentenced to over 30 years in a U.S. federal prison following his conviction for conspiracy and multiple counts of providing material assistance to a foreign terrorist organization. Between 2019 and 2022, Chhipa raised more than $185,000 through online and in-person donations, which he converted into cryptocurrency and transferred to recipients in Turkey. Evidence indicated that these funds ultimately supported ISIS operatives in Syria, aiding in logistics, prison breaks, and the welfare of fighters.
Irish Man Gets 2 Years in Jail for Cybercrime, Crypto Laundering
Suleman Mazhar, 43, has received a two-year prison sentence in Ireland after pleading guilty to multiple cybercrime charges. This case resulted from a collaborative investigation by the Garda National Cybercrime Bureau and the FBI. Mazhar was involved in selling fake bank accounts, credit cards, malware, and ransomware through a website. During the investigation, authorities discovered he had laundered cryptocurrency valued at 80,000 euros at the time of his arrest in 2022, an amount that has since appreciated to 200,000 euros and was subsequently forfeited to the state.
Charges Against Sinaloa Cartel Leaders
Leaders of the Sinaloa Cartel, Pedro Inzunza Noriega and his son Pedro Inzunza Coronel, are facing charges in U.S. federal court for orchestrating a significant drug trafficking operation. Both men are affiliated with the Beltran Leyva Organization, a faction of the Sinaloa Cartel that was once led by Joaquin “El Chapo” Guzmán, who is currently serving a life sentence in the U.S. The charges involve the trafficking of fentanyl, cocaine, methamphetamine, and heroin into the United States. Blockchain analysis firms have identified millions of dollars in cryptocurrency transactions linked to fentanyl production and cartel activities, with Chainalysis tracing $5.5 million in stablecoins used to settle payments with Chinese suppliers of fentanyl, while TRM Labs and Elliptic have reported widespread cryptocurrency usage among chemical vendors and drug manufacturers.
