Money Laundering

Indian Crypto Trader Arrested for Allegedly Using USDT to Launder Money on Behalf of Chinese Online Betting Scammers

14/12/2020 by Idelto Editor

An Indian law enforcement agency has arrested Naisar Kothari, a cryptocurrency trader, for his role in a money-laundering scheme linked to online Chinese betting scams. The arrest was made after the country’s Enforcement Directorate (ED) detected large amounts of money “being inexplicably transferred to some cryptocurrency traders.”

In addition to Kothari’s arrest, the ED conducted multiple raids on companies and individuals thought to be running illegal online betting apps. The ED believes the online apps, which are hosted outside India, are being operated by Chinese nationals.

In its report detailing the action against Kothari, one Indian media outlet states that the crypto trader allegedly purchased the USDT stablecoin on behalf of one company that is under probe. Kothari then transferred the digital currency to unknown wallets. According to Indian law enforcement:

Kothari had knowingly and actively involved himself in layering the proceeds of crime and hence he was arrested.

Following the arrest, an Indian court has since ruled that Kothari, who faces charges of breaching the country’s Prevention of Money Laundering Act (PMLA), be placed in custody until Dec. 22.

Meanwhile, the same report reveals that the ED has taken action against three other unnamed individuals, including one Chinese national. Additionally, action has been taken against two companies namely, Dokypay Technology and Linkyun Technolgy. The trio and the two companies are also accused of violating the PMLA according to a police file that was opened following a complaint.

Prompted by the complaint, the country’s law enforcement launched an investigation which subsequently revealed that “apart from providing payment aggregator re-seller services to banned apps in India, the Chinese-owned companies were indulging in international hawala and illegal activities.”

Furthermore, Indian law enforcement insists that criminals are exploiting the “lax due diligence mechanisms” associated with online wallets to “launch pan-India operations.”

What do you think of Kothari’s arrest? Share your views in the comments section below.

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Former Microsoft Engineer to Serve 9 Years in Prison in a Case That Involves Use of Bitcoin Mixers

10/11/2020 by Idelto Editor

A U.S. court in Seattle has sentenced a former Microsoft engineer to 9 years in prison after finding him guilty of 18 federal felonies relating to his elaborate scheme to defraud the tech giant $10 million. In passing the judgment, the court blasts Volodymyr Kvashuk, a software engineer and citizen of Ukraine, for attempting to mask digital evidence through the use of bitcoin mixers and the illegal use of accounts and passwords of fellow employees to aid this scheme.

Sophisticated case

According to court records, Kvashuk, a citizen of Ukraine, had been convicted in February 2020 on several counts of wire fraud, money laundering, identity theft as well the filing of false tax returns.

In his reaction to the sentencing, U.S. Attorney Brian T Moran pays homage to “law enforcement partners and the U.S. Attorney’s Office” for prevailing in the case that “required sophisticated, technological skills to investigate and prosecute.” Commenting on the severity of the punishment, the U.S. Attorney says:

“Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents.”

According to documents filed with the court, Kvashuk, who was involved in the testing of Microsoft’s online retail sales platform, is accused of “using that testing access to steal ‘currency stored value’ (CSV) such as digital gift cards.”

Lavish lifestyle

Using proceeds from the gift card sales, Kvashuk “purchased a $1.6 million dollar lakefront home and a $160,000 Tesla vehicle.” As the thefts escalated, Kvashuk started “using test email accounts associated with other employees” to cover his tracks. The document adds:

He used a bitcoin ‘mixing’ service in an attempt to hide the source of the funds ultimately passing into his bank account. In all, over the seven months of Kvashuk’s illegal activity, approximately $2.8 million in bitcoin were transferred to his bank and investment accounts. Kvashuk then filed fake tax return forms, claiming the bitcoin had been a gift from a relative.

Meanwhile, in their sentencing memo, the prosecutors pan Kvashuk for the brazen acts which “cast other Microsoft employees under the glare of suspicion.” They also accuse Kvashuk of failing to take responsibility after he told the court a “series of outrageous lies” while failing to show “any remorse or regret for his crimes.”

As part of his punishment, Kvashuk “was ordered to pay $8,344,586 in restitution” while he faces the possibility of being “deported following his prison term.”

What are your thoughts on Kvashuk’s conviction and sentencing? Share your views in the comments section below.

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$200 Million Brazilian Crypto Fraud Scam: The US Seizes $24 Million Worth of Digital Currencies

05/11/2020 by Idelto Editor

The United States Department of Justice (DOJ) says it has seized cryptocurrencies worth $24 million after receiving an official request from the government of Brazil. The seizure stems from an ongoing investigation into the $200 million cryptocurrency scam that may have defrauded tens of thousands of Brazilians. The authorities in Brazil say the scammers duped people by typically promising exaggerated returns and falsifying where the funds were invested.

Criminal violations

In a statement, the DOJ says the U.S. acceded to Brazil’s request in line with the cooperation treaty signed between the two countries with respect to “Mutual Legal Assistance in Criminal Matters.”

Meanwhile, according to the DOJ statement, “the U.S. seizures were tied to Brazilian Marcos Antonio Fagundes’ alleged role in the scheme.” Fagundes and several unnamed accomplices have been “charged with several criminal violations of Brazilian law, including, among other offences, the operation of a financial institution without legal authorization.”

The statement adds that the accused also faces charges of “fraudulent management of a financial institution, misappropriation, and money laundering, as well as securities law violations.”

The DOJ statement provides a short summary of a Brazilian court’s findings against Fagundes and his accomplices. The statement says:

During August 2017 to May 2019, Fagundes and other defendants solicited funds from prospective investors over the internet, sometimes in combination with telephone and other means, and held the funds received in a manner that subjected it to regulation as a financial institution under Brazilian law, with which Fagundes and the other defendants failed to comply.

The statement reveals that the “defendants solicited investors to give money to corporations they controlled, in the form of Brazilian currency or cryptocurrency, which the companies would then invest in a variety of virtual currency types.”

False claims

However, as the Brazilian court found, “only a very small amount of funds were invested in cryptocurrencies as promised, and very little was returned to the investors.”

Meanwhile, the DOJ says U.S. authorities are now working in close cooperation with the Brazilian authorities and others to “restrain the virtual currency and preserve it for forfeiture proceedings pending in Brazil to compensate the investors victimized in this fraudulent investment scheme.”

The statement concludes that “the cryptocurrency firm holding the accounts cooperated with law enforcement authorities in executing this seizure.” Still, the statement does not give the name of the cooperating crypto firm.

What do you think of this cooperation between the two countries? Share your thoughts in the comments section below.

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Dutch Police Seize $33 Million in Bitcoin from Couple Accused of Money Laundering

30/10/2020 by Idelto Editor

Prosecutors from the Netherlands have seized 2,532 bitcoins worth $33 million after a couple was convicted of money laundering by the Rotterdam District Court. The man and his wife were sentenced to two years for illegal money transmission and the court claims the couple’s bitcoin stash was used on the deep web.

Dutch officials recently arrested and charged a man and his wife for illegal money transmission and money laundering. According to the Dutch Public Prosecution Service from the Rotterdam District Court, the two suspects laundered close to $19 million using bitcoin during the last two years. Most of the couple’s illegal earnings were stored in bitcoin and the Rotterdam police confiscated the stash.

The man and woman were residents of North Holland’s Hilversum and the couple will face two and a half years in prison for their crimes. Dutch prosecutors noted during the trial that the traders did not leverage proper KYC/AML guidelines while operating the business.

“Traders did not ask customers for identity papers, while large amounts were often exchanged,” the Rotterdam court filing notes. “The suspects, a man, and his wife, came into contact with customers through advertisements on the Internet and a marketplace on the dark web. Much of the bitcoins traded bore traces of the dark web. The court has established that the suspects laundered more than 16 million euros in two and a half years.”

Netherlands: Court seizes 25 million euros in bitcoins from two money launderers |#kortomnews #Netherlands #Bitcoin https://t.co/nr6oEJdqwd

— Kortom News (@VisionaryBv) October 26, 2020

Court documents show that the police confiscated two different bitcoin stashes with one cache holding 1,488 BTC and the other wallet held 1,044 BTC. In addition to the $33 million worth of bitcoins seized, Dutch police also took $295,256 in cash reserves. Court prosecutors said that the couple purchased bitcoins in order to exchange for cash. Police said that the couple leveraged methods to keep their customers unknown.

On a regular basis, the couple met people and businesses at fast food restaurant chains in order to execute the cash for bitcoin exchanges. Prosecutors believe a great number of these coins sold by the Hilversum made it to the deep web and were used on darknet marketplaces (DNM).

The Dutch police are well known for many bitcoin seizures and crackdowns against DNM operators. Four years ago, Dutch police arrested 10 individuals from the Netherlands for laundering large sums of bitcoins. The Netherlands law enforcement officials are also responsible for the great Hansa takedown, where undercover agents operated the DNM for over a month without customers knowing.

In addition to the $33 million in bitcoins seized and the two and a half year prison sentence, the couple must also pay fines individually. The couple will pay $53,137 for one levy and $162,955 for the forfeiture operations.

What do you think about the Dutch police confiscating $33 million worth of bitcoin? Let us know what you think in the comments section below.

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Mastermind of Alleged Billion Dollar Spanish Pyramid Scheme Arrested, Faces 16 Year Prison Sentence

23/10/2020 by Idelto Editor

The CEO of Arbistar the Spanish investment company, Santiago Fuentes, has been arrested and arraigned on charges of fraud, belonging to a criminal organization and money laundering. Fuentes, who has been in hiding since September, was arrested at one of his properties in the south of Tenerife.

The Arbistar Pyramid Scheme

Fuentes’ arrest stems from lawsuits filed by Arbistar clients who allege pyramid fraud after the bitcoin trading company abruptly froze accounts leaving 32,000 families affected.

During a hearing, the Investigating Court Number 3 of Arona (Tenerife) described operations of Fuentes’ Arbistar as a “potential pyramid scheme.” The court released the CEO “on provisional liberty without bail” but ordered the withdrawal of his passport. In addition, Fuentes must report to the Arona Courts every 15 days.

Meanwhile, despite the widespread Spanish media speculation that $1 billion is missing, Judge Javier García Ramila cautions that “at this moment it is premature to estimate the amount of possible fraud, given that the exact number of customers who contracted the product offered is unknown.”

The Spanish court clarifies that it is only proceeding with the case against Fuentes based on 21 complaints that have been filed at “Police stations and Civil Guard barracks in Tenerife, La Palma, Málaga, Huelva, Granada Mallorca, and Lugo.” The total value of missing funds from the 21 reported cases is approximately $367,000.

In the meantime, describing the operations of Fuentes’ organization, court documents say:

Arbistar offered its clients computer tools (“bots”) that automatically executed buy and sell orders in the cryptocurrency brokerage markets thus guaranteeing them a revaluation of their savings of between 8% and 15%.

However, the documents say that the bitcoin investment company’s offer is on the condition that “during a reasonable grace period of two months customers would not be able to cash out their money.”

Consequently, in conclusions based on their findings, investigators say “it has been possible to attest that the aforementioned product could really be a pyramid scam.” Investigators add that “instead of executing the investment committed in the various virtual markets and rewarding the old clients with profits obtained” Arbistar appears to have been funding profit payouts with deposits brought in by new customers.

Possible Money Laundering Uncovered

Investigators also say they unearthed possible money laundering activity involving Venus Capital Trade SL, a shell company that reportedly received $1.32 million from Arbistar.

Meanwhile, Judge Ramila, who refuses to impose more punitive restrictions on Fuentes, says he now “needs to scrutinize countless documents and electronic devices and work with banks to trace diverted customers funds.” Nevertheless, the judge says he is open to “more burdensome measures” being imposed against Fuentes.

Fuentes faces up to 16 years in prison if found guilty.

What are thoughts about Fuentes’ release on provisional liberty without bail? Share your thoughts in the comments section below.

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