Extortion

Russian Court Recognizes Cryptocurrency as Means of Payment, Prosecutors See Precedent

24/05/2022 by Idelto Editor

The City Court of St. Petersburg has recognized a large amount of cryptocurrency handed over by the victim in an extortion case as a means of payment, Russian media reported. The prosecutor’s office in Russia’s second-largest city describes the ruling as a precedent.

Two Men Sentenced for Cryptocurrency Extortion in Russia

Two Russian citizens have been sentenced to nine and seven years in prison under strict regime for extorting 5 million rubles (almost $90,000) in cash and 55 million rubles (close to $1 million) in digital assets from another man.

In the course of the trial, the St. Petersburg City Court has recognized the cryptocurrency as a means of payment, the crypto page of Russian business news portal RBC reported. Prosecutors consider the ruling a first, as the government in Moscow is yet to determine the legal status of bitcoin and the like.

Four years ago, one of the perpetrators, Pyotr Piron, introduced himself to the victim, G.A. Shemet, as an officer from the Federal Security Service (FSB). He threatened Shemet with criminal prosecution to extort money from him in the form of fiat and cryptocurrency, the article details.

As Shemet did not believe Piron was a security official and refused to give him the funds, the latter enlisted the services of an accomplice, Yevgeny Prigozhin, a former employee of the Russian Ministry of Internal Affairs (MVD).

The two told Shemet a criminal investigation will be launched against him for alleged illegal circulation of cryptocurrency. In the summer of 2018, they staged a fake arrest of the crypto owner who, under the threat of torture, handed over the fiat cash and his crypto stash.

The city court’s initial decision did not take into account the misappropriated crypto. It stated in the verdict that cryptocurrency “is not a means of payment on the territory of the Russian Federation, therefore it cannot be recognized as an object of civil rights and a subject of a crime.”

Following an appeal, a cassation court declared that the cryptocurrency can nevertheless be considered a means of payment and returned the case to the court of first instance. Without changing the prison terms of the defendants, the city court issued a new verdict, adding the digital cash.

The development comes after last month, a district court in St. Petersburg allowed law enforcement officials to confiscate stolen cryptocurrency in another criminal case. Investigators had demanded the seizure of two dozen crypto wallets of a suspect, holding 1 billion rubles in ethereum (ETH).

Do you expect to see more cases involving cryptocurrency in Russian courts? Tell us in the comments section below.

France Rejects Russian Request to Extradite BTC-e Operator Alexander Vinnik

22/05/2021 by Idelto Editor

Judicial authorities in France have refused to grant the extradition request filed by Russia for Alexander Vinnik. According to the Russian Ombudsman, Vinnik is now ready to start a new hunger strike despite his health deteriorating after spending almost four years in detention.

Court Case Against Vinnik Continues in France

The operator of the infamous BTC-e crypto exchange was recently sentenced to five years in prison and fined €100,000. Quoted by RIA Novosti, Russia’s Commissioner for Human Rights Tatyana Moskalkova said that Moscow’s request to extradite Alexander Vinnik has not been granted on Thursday and that the consideration of the case continues.

In December 2020, the Paris Correctional Court found Vinnik guilty of money laundering but dropped extortion charges against him as well as those related to his alleged involvement with the Locky ransomware.

Alexander Vinnik was arrested while on vacation with his family in Greece, in July 2017. He was detained on a warrant from the U.S. where he is accused of laundering up to $9 billion through the now-defunct cryptocurrency exchange BTC-e.

The Russian IT specialist spent 30 months in Greek custody without charges being filed, for which he went on a hunger strike that lasted almost three months. He is now ready to begin a new strike, Moskalkova revealed, quoted by TASS.

Alexander Vinnik’s Health Deteriorates

Referring to accounts from his defense and Russia’s consular service in France, the Ombudsman told Russian media that despite Vinnik’s “depressed health,” he is again ready to start protesting with a hunger strike. The human rights commissioner added that she was not aware of any suicide attempts by Vinnik but quoted his lawyer describing the prisoner’s psychological state as very poor. Moskalkova stated:

We hope that he will have the wits and courage to continue to fight for his rights in an active manner.

Tatyana Moskalkova also expressed regret that “the world which is calling for good, mercy, and justice, has heard neither the appeal of the Human Rights Commissioner of the Russian Federation, nor the calls from the Russian Foreign Ministry, the General Prosecutor’s Office, and other authorities.”

Vinnik’s case has become a source of international tension with Russia, France, and the United States simultaneously seeking his extradition. In December 2019, the Greek minister of justice Kostas Tsiaras decided to hand the Russian citizen over to France first, and then to the USA and Russia.

Alexander Vinnik faces criminal charges in his home country too. Russian prosecutors have accused him of stealing more than 600,000 rubles (over $8,000) and “fraud in the field of computer information” for an estimated 750 million rubles (around $10 million). During his detention in Greece, the Russian national declared he was ready to return to the Russian Federation and appear before a Russian court.

What are your thoughts on Alexander Vinnik’s case? Tell us in the comments section below.

Silk Road Mentor’s Arrest Rekindles Tales of Rogue Agents and Pirate’s Treasure

03/02/2020 by Idelto Editor

Silk Road Mentor Arrest Rehashes Tales of Rogue Agents and Pirate's Treasure

On January 30, the United States Attorney for the Southern District of New York (SDNY) revealed that Roger Clark, the alleged senior advisor to the Silk Road marketplace, pleaded guilty to conspiring to distribute massive quantities of narcotics. Clark, otherwise known as ‘Variety Jones,’ was a unique character within the Silk Road saga who claimed a rogue member of the FBI was on the run extorting him and other darknet market admins and vendors.

Also read: The Darknet Just Had One of Its Wildest Months Yet

Former Silk Road Admin Roger Clark aka ‘Variety Jones’ Pleads Guilty to Narcotics Distribution

SDNY has announced that Roger Clark, who was also known as “Plural of Mongoose” or “Variety Jones,” pled guilty on Thursday for conspiring to distribute illicit narcotics in mass quantities. The law enforcement press release notes that Clark was the senior advisor to the owner and operator of the Silk Road marketplace. According to court filings, Clark also used the online nicknames “Captain Sergeant,” “Plural of Mongoose,” “VJ,” and “Cimon” during his tenure with the darknet market (DNM). Clark is described as the “real mentor” who advised the Silk Road leader, Dread Pirate Roberts (DPR) about “security vulnerabilities in the Silk Road site, technical infrastructure, [and] the rules that governed Silk Road users and vendors. SDNY disclosed that they believe Clark also assisted with hiring programmers in order to improve the overall infrastructure of the DNM. Additionally, the agency detailed that Clark gathered intelligence on law enforcement’s efforts to investigate Silk Road.

Silk Road Mentor's Arrest Rekindles Tales of Rogue Agents and Pirate Treasure — Roger Clark, otherwise known as Variety Jones, pled guilty for conspiring to distribute illicit narcotics in mass quantities using the original Silk Road marketplace.

Before Clark pled guilty and was arrested and even before he was extradited to the United States from Thailand, Variety Jones and his other aliases were well known pseudonyms online. When Clark played the role of Variety Jones he allegedly found significant security vulnerabilities with the Silk Road’s (SR) platform and told DPR about the issues.

Allegedly, Clark also rewrote the SR website and changed the look of the marketplace entirely. Reports say that there are more than “1,400 pages” of chat logs between DPR and Variety Jones which is 4x the number of chats DPR had with other senior SR admins. Just before the SR was seized by law enforcement, Variety Jones changed his online pseudonym to Cimon. The 56-year old Clark faces 20 years in prison for his charges and he is scheduled to be sentenced by an SDNY Judge on May 29, 2020.

A Rogue Federal Agent and the Darknet’s Pirate Treasure

Prior to Clark’s arrest, in September 2015, the alleged SR senior advisor wrote the public from Thailand using the monicker “Plural of Mongoose.” The post was found in a DNM forum called Ganja forums and Clark explained he was on the run from global law enforcement. After the SR site was seized, Clark found himself on a “nice secluded beach area in Thailand” and wound up “drinking heavily and living within the solitude of the beach” confines. In April, roughly around the Thai New Year, Clark got a message from an FBI agent who called himself ‘Chrysippus’ or ‘Diamond.’ Clark said that Diamond knew that he was on the run and the agent had a swathe of information in regard to the current status of a few specific DNMs. The former SR senior advisor stressed that Diamond told him about the fall of Atlantis prior to the website’s demise.

According to Clark, the FBI agent was also well connected with the two rogue agents Carl Mark Force and Shaun Bridges. Diamond called the agents out for how “stupid they were to do anything but hold onto their ill-gotten gains,” Clark’s Ganja forums post explained. Diamond believed that DPR had a bitcoin wallet that held 300,000 BTC and he thought Clark could extract information on how to obtain the wallet. He promised Clark he would keep him safe and free from authorities if he helped and he told Clark eventually he planned to retire as a federal officer in a “tax-friendly jurisdiction.”

Silk Road Investigation Shows Prominent Double Agent Manipulation and Poor Ethics by Law Enforcement

Diamond also informed Clark that he was extorting existing DNM admins and vendors and he acquired $4 million dollars from his “extra-curricular activities.” After these chats, Clark noticed the fall of the DNM Evolution and he found out law enforcement officials were searching Thailand for his whereabouts. Clark believed Diamond set him up and Thai police had told him he had a bounty on his head for 20,000 Thai bahts. Over a bottle of Sangsom, he left the police with 50,000 bahts and informed Diamond that his trap had failed.

After the post was published in 2015, Clark wasn’t heard from again for quite some time and he was eventually arrested in Thailand. Police filings state that Clark was an SR admin between January 2011 through October 2013 and he fled just before SR was seized. U.S. officials thanked the Royal Thai Police for their support and assistance with apprehending Clark. If the story Clark told in 2015 holds weight, then it’s possible other rogue law enforcement officials besides Force and Bridges are still at liberty. During an interview with CNBC, Kathryn Haun, a former prosecutor for the Attorney General’s office, explained how the SR investigation was riddled with patterns of bad behavior and double agents. The interview highlights how the majority of the SR investigation evidence was based on the shameful ethics of rogue law enforcement officials. Circumstantial evidence shows Clark’s tale of a perfidious agent extorting darknet markets is likely true.

According to Clark’s story, Diamond was planning to extort Agora admins too, but the marketplace owners caught on and silently shut the market down. Over the last year and a half, DNM markets and associated forums like Dread have been attacked regularly by distributed denial-of-service (DDoS) attacks. Throughout 2019-2020, there have been at least three major DNM exit scams since the start of the heavy DDoS assaults against these markets. Moreover, since 2017, three of the largest DNMs created after SR — Alphabay, Hansa, and Dream market – are gone now as well.

What do you think about Roger Clark pleading guilty to conspiring to distribute massive quantities of narcotics? What do you think about Clark’s tale he told in 2015 about the rogue federal agents dubbed Diamond? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Fair Use, Pixabay, Justice.gov, and Wiki Commons.

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Taxation Isn’t Just Theft – It’s Bad for Crypto Adoption

18/09/2019 by Idelto Editor

Taxation Is Not Only Theft, It’s Also Bad for Crypto Adoption

Crypto awareness is reaching levels almost unimaginable just years ago, with telecommunications giants, big banks, mainstream media, and even professional sports teams now discussing and flouting digital assets. AT&T now allows customers to pay their phone bills in bitcoin, Japanese SMS giant Line is adding an FSA-approved crypto exchange to its hugely popular chat app, and the NFL’s Miami Dolphins have named litecoin their “official cryptocurrency.” Still, with all its wonderful attributes, it’s puzzling to some why crypto isn’t even bigger than it already is, and the answer may lie in one buzzkill of a word: taxes.

Also Read: At Least 19 Central Banks Give Way to Monetary Easing As Economy Slows

Breaking Into Pop Culture

Five years ago it might have been hard to imagine regular crypto-focused segments on popular MSM news outlets. That’s a normal thing now. The Miami Dolphins football team having an official cryptocurrency might have been a silly conversation at a house party with friends, but that’s the reality these days. How about a whole “Bitcoin Cash City” in Australia? Thinking of giants like AT&T, Microsoft, Rakuten, and Naver’s Line chat app (which just announced its Bitmax exchange launch on September 17) accepting and trading crypto almost boggles the mind, at least for those who’ve been in the space since less sensational times.

Taxation Isn't Just Theft – It’s Bad for Crypto Adoption — Tokyo-based messaging giant Line now has its own cryptocurrency exchange called Bitmax.

There’s no question that cryptocurrencies are generally easy to use. There’s no question that P2P transactions and international transfers are generally much easier and cheaper than those facilitated by legacy banking institutions. There’s also little doubt surrounding the fact that sound, decentralized digital assets can provide a level of autonomy and privacy hard to come by in the fiat world of government-issued money. Sure, there’s the volatility factor to consider, but that also provides holders a chance to reap handsome gains from favorable price fluctuations. As sending money via coins like BCH is so easy, and so many seem to be genuinely hungry for crypto ubiquity, it stands to ask why adoption and use have not skyrocketed more massively by now.

Taxation: Crypto’s Wet Blanket

You can’t steal from your neighbors at gunpoint to make them pay for things you want, even if those things you want are good, positive things. Should the whole town agree with you that your neighbor ought to pay for these things, forcing a non-violent person to give up their money under threat of violence is nonetheless unethical. And sociopathic, really. There’s a cognitive dissonance, though, when it comes to a group of people called “government.” They get a magical mystery pass on morals. “Taxation is theft,” as the old libertarian trope goes, is no lie. But it’s not only theft; it’s also a huge deterrent for already flourishing crypto adoption worldwide.

Extortion carries with it a high level of fear for its victims. Since crypto tax regulations in many jurisdictions are still so painfully unclear, it’s understandable when merchants, friends and family are reticent to touch “that bitcoin stuff.” The IRS has been sending out thousands of ominous warning letters for months now, and still has not delivered updated tax guidelines for crypto, promised in May to be soon forthcoming.

These guys aren’t kidding, either. Targeted individuals have found out the hard way. If you trade crypto in a way the local tax authorities don’t like, you could be facing years of prison time. Running afoul of FATF-backed regulatory bodies when it comes to crypto taxation could result in revoked passports, exorbitant legal fees, and the destruction of one’s livelihood. All this against a backdrop of increasing global debt and march toward a new worldwide recession means that, more than ever, underfunded and understaffed government agencies like the IRS are desperately pressuring mainstream crypto exchanges to surrender customer info, or risk being penalized.

A Forked Crypto Culture and the Need for Decentralized Governance

Apart from a remarkable polarization occurring in the crypto space since Bitcoin Cash forked from Bitcoin Core in August 2017, another arguably deeper divide has formed. This is the rift between large, state-compliant crypto interests and staunch advocates for a free market. Not all in the latter group are libertarians or “taxation is theft” philosophical purists, either. Some are everyday merchants who simply see the utility of crypto, and wish to grow their businesses while serving their customers more efficiently with crypto. Cafe owner Donna Kilpatrick, for example, spoke at the recent Bitcoin Cash City conference in Townsville, Australia, saying of BCH:

We work in hospitality … we’re not brain surgeons and we can all do it … It’s so easy, It really is so easy. That’s not to say that I think it’s perfection. I think there are issues with it in a retail environment … and that’s around the accounting side of things, because, you know, I don’t want to be running afoul of the ATO.

Interesting that the biggest flaw Kilpatrick can find with crypto is the unreasonable requirements of an obtuse Australian Taxation Office. Her observations and those of others at the conference shine a piercing light on a critical problem: the tech is decentralized, but the governments trying to regulate it are not. It’s like trying to force a square peg into a round hole.

If a new money can work with nothing more than math, a market, and decentralized network, why not society as a whole? Arguments for warlords taking over, or evil individuals running amok and dominating these consensual, permissionless proposals for a new order are ultimately self-detonating. Looking around, warlords are already in power. Bad actors are already running amok. Why? The network model for society is now totally centralized.

“Denial of service attacks” on those not toeing the party lines are all too common. With Bitcoin, the model is mathematical. With violence-based, centralized governance, the model is whimsical. Whatever the ruling class feels like doing, they do. Imagine the developers of any respectable cryptocurrency behaving the same way. It would be laughable. There is no “divine right to rule” inherent to the mathematics governing crypto, so why society at large should be any different is a valid, if habitually ignored, question.

The electrified air of the cryptoverse is now bristling with adoption possibilities, and the next step is to ask how crypto can be leveraged for the benefit of individuals everywhere. Attempts to smash and shame economic autonomy back into the rusty cages of plantation finance are not only ill-advised – they are also immoral. The more decentralized societal governance becomes, the faster adoption will spread. Perhaps even until a day when kids will look at their history books marveling at times past, stunned that humankind actually believed systematic financial slavery was necessary for peace. They’ll close their dusty books, send a crypto tip to their friends on some augmented reality chat app, and head out into the sun to catch the Dolphins game.

What do you think about the recent developments in crypto adoption worldwide? Let us know in the comments section below.

Op-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

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India Bitcoin Caper: 10 Cops Busted Over Kidnapping and Extortion

11/04/2018 by Idelto Editor

According to Indian media, eleven people were involved in a kidnapping and bitcoin extortion ring, and of the accused ten are police officers, including an Inspector. Three victims were abducted and beaten until they allegedly gave up 200 bitcoin worth over one million dollars USD.

Also read: Bitgrail’s $170M Hack Continues to Provide Drama

Police Arrested in India Bitcoin Extortion Conspiracy

Director of India’s Crime Investigation Department (CID), Ashish Bhatia, announced, “Two policemen — constables Babu Der and Vijay Vadher — were arrested on Sunday. All other accused have gone underground. Efforts are on to nab them.” Mr. Bhatia was referring to a scheme involving upwards of nearly a dozen police officers, including an Inspector, in a violent extortion and kidnapping plot that might have ended in 200 bitcoin (over one million dollars) being stolen.

This has become rather commonplace in India over the past few months, especially as bitcoin’s price began to rise. In fact, “This is the second such incident in [same part of India] in the last one month. On March 11, two policemen — Anisuddin Saiyed and Chintan Shah were arrested for abducting a businessman and demanding ransom from him in bitcoins. Last June, a group of six people [were] arrested on the charge of abducting and demanding ransom in bitcoins from a businessman in the northern city of Mohali. In September, police had arrested six other persons for kidnapping, beating and robbing a New Delhi businessman who had gone to meet them in order to pay for Bitcoin in cash,” Sputnik News explained.

Plot Twist?

Officials are accused of kidnapping three victims, one of whom is a prominent businessman, Shailesh Bhatt. They were driven to a farm, beaten, and forced to transfer 200 bitcoin. Mr. Bhatia continued, “We checked the records and learnt that the use of police vehicles was unauthorized. The team did not follow the procedure of informing Amreli or Gandhinagar Police. The trio was released after an alleged deal. Ketan Patel, a resident of Surat, had come to Magodi at the behest of Anant Patel and played an important role in the deal,” Times of India reports. Mr. Anant Patel is the force’s Inspector who is also reportedly in hiding.

An equivalent to an indictment, called a First Information Report (FIR), was filed by the CID “on the basis of evidence found by the team so far. In his application, Shailesh Bhatt had mentioned the transfer of 200 Bitcoins worth Rs 12 crore from the digital wallet of his business partner, Kirit Paladiya. Another Rs 32 crore were allegedly paid for their release from a farmhouse. Later, Rs 78.5 lakh were allegedly paid to get the Bitcoins back. All these transactions mentioned in the application could not be proven,” Mr. Bhatia noted.

“At the moment, three persons including two from Amreli police and a private individual from Surat have been apprehended in the case as a special investigation team has been formed for further probe. Digital wallets of [the victims] will also be scrutinized,” the Times quotes an investigator.

Do you think extortions for bitcoin are on the rise? Let us know in the comments section below.

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