Articles Tagged with cryptocurrency fraud

blockchain hacking In January of 2019, it was discovered that an online attacker had hacked Coinbase and processed over $1.1 million in what the cryptocurrency industry refers to as “double spends”. However, this is not the only incidence of blockchains being hacked since its increasing popularity on the market. In fact, since 2017 it is estimated that over $2 billion worth of cryptocurrency has been stolen by hackers. But, how have blockchains, which were once deemed as unhackable, become the latest source of fraudulent activity?

Two Documented Years of Hacking Activity

Since 2017, authorities have uncovered billions of dollars worth of stolen cryptocurrency due to online attackers. However, it is estimated that even more funds have been taken during this time. Two groups alone are suspected of profiting over $1 billion combined, but the extent of their reach, as well as others, is largely unknown. As the market for blockchain encryptions becomes larger and larger, it appears as though its vulnerability to hackers is also increasing. This could mean that the fraudulent activity associated with blockchain hacking is just beginning.

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Bitcoins exchange operator  Jon E. Montroll has been charged by The Securities and Exchange Commission with fraud for running the operation as an “unregistered securities exchange.”   The operator of  the cryptocurrency investment platform was charged with lying to U.S. regulators to hide the fact that hackers stole more than 6,000 of his customers’ Bitcoins.In its lawsuit, the SEC also accused Montroll of  defrauding users and making false and misleading statements. In addition to failing to disclose the cyberattack on BitFunder, he also sold unregistered securities that purported to be investments in the exchange and misappropriated funds from those investors, the SEC said.

Before the cryptocurrency began to develop, Montroll operated two online Bitcoin services,. BitFunder.com facilitated the buying and trading of virtual shares of businesses listed on its platform, while WeExchange Australia Pty. Ltd. functioned as a Bitcoin depository and currency exchange. All WeExchange and BitFunder users’ Bitcoins were held in a common account, according to federal investigators. “Platforms that engage in the activity of a national securities exchange, regardless of whether that activity involves digital assets, tokens, or coins, must register with the SEC or operate pursuant to an exemption,” Marc Berger, director of the SEC’s New York Regional Office, said in a statement.

The U.S. Attorney’s Office for the Southern District of New York also filed a complaint against Montroll Wednesday for “perjury and obstruction of justice during the SEC’s investigation,” according to the statement. Obstruction of justice can carry a penalty as high as 20 years in prison.