The US Attorney for the Southern District of New York has charged two people in connection with running an unlicensed money transfer business used to make deposits for cryptocurrency exchanges.
Reginald Fowler and Ravid Yosef allegedly ran a shadow banking service that “processed hundreds of millions of dollars of unregulated transactions on behalf of cryptocurrency exchanges,” US Attorney Geoffrey Berman said in the announcement . Exactly how much they processed has not been disclosed.
According to court documents , Fowler and Yosef’s business, called Crypto Companies, reportedly misled banks, claiming it was using the accounts for real estate investments. The company was active between February and October last year.
Fowler, of Arizona, and Yosef of Tel Aviv, Israel are both charged with one count of bank fraud and one count of conspiracy to commit bank fraud. Fowler is also charged with operating an unlicensed money exchange.
While Fowler has already been arrested, Yosef remains at large. The pair face a maximum of 30 years in prison if found guilty.
Last year, an American man admitted guilt to running an unlicensed money transmitting business which he used to trade over $3.2 million worth of Bitcoin. He was sentenced to two years in prison earlier this year .
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North Korea amassed small cryptocurrency fortune through hacking, says UN panel
North Korea has obtained some $670 million in virtual and fiat currency in a bid to bypass economic sanctions put in place as a result of its nuclear and missile programs.
The country amassed the funds through cyber attacks, Nikkei says citing an expert panel reporting to the UN Security Council.
In its report, the panel recommended that UN member states “enhance their ability to facilitate robust information exchange on the cyber attacks by the Democratic People’s Republic of Korea with other governments and with their own financial institutions.”
The details
The country is thought to have carried out the attacks on foreign financial institutions over three years, from 2015 to 2018 .
North Korea is thought to have successfully targeted Asian cryptocurrency exchanges at least five times from January 2017 to September 2018 – losses were estimated at $571 million .
Virtual currencies, the panel said, “provide the Democratic People’s Republic of Korea with more ways to evade sanctions, given that they are harder to trace, can be laundered many times and are independent from government regulation.”
According to the panel’s report, the attacks were mostly carried out by specialized corps within the country’s military.
The now-defunct Marine Chain, a Hong Kong-based company in the business of buying and selling ships around the world using blockchain technology is also suspected of supplying cryptocurrencies to the North Korean government.
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Blockchain startup agrees to $23M settlement over allegedly fraudulent tokens
The US’ top financial watchdog has settled with Dallas-based blockchain startup Bitqyck Inc. over allegations it fraudulently sold shares of company stock to more than 13,000 buyers of its Bitqy cryptographic token.
In a statement released yesterday, the US Securities Exchange Commission (SEC) also alleged the firm and its founders Bruce Bise and Sam Mendez fraudulently promised investors interest in a cryptocurrency mining facility through sales of a secondary token, BitqyM, and its related blockchain-powered smart contract.
That facility was supposed to be powered by below-market rate electricity. As it turns out, there was no such deal, and no such facility – the entire mining operation was a fake.
“Bitqyck, aided and abetted by its founders, also is alleged to have illegally operated TradeBQ, an unregistered national security exchange offering trading in a single security, Bitqy,” said the SEC.
Although Bitqyck’s founders did not confirm or deny the allegations, the pair agreed to return all money raised (more than $13 million) with interest.
Bise and Mendez will also need to pay a civil penalty of $8,375,617, as well as $890,254 and $850,022 respectively.
This continues a veritable trend of judgements against (allegedly) fraudulent cryptocurrency startups across the US and beyond.
Earlier this month, the SEC moved against a “ self-described financial guru ” that raised $14.8 million with an allegedly fraudulent ICO, while last week saw the SEC reach a settlement with a Russian firm that advertised initial coin offerings without disclosing that it had been paid to shill the coins.
Whoops.
