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The Republican governor of Florida is calling for the resignation of FBI Director Christopher Wray in the wake of the FBI’s admission it ignored a warning about the man suspected of killing 17 people in Wednesdays’ school shooting in Parkland, CBS News reports. “Seventeen innocent people are dead and acknowledging…
Late 2017 will long be remembered as the time when bitcoin went mainstream. Prices were mooning, and the general atmosphere was one of fear of missing out. That sentiment was especially true in trading circles, and more traditional outlets were experimenting with cryptocurrency divisions in order to take advantage. One such experiment went sour, as a trader attempted to play upon relative company ignorance by shorting bitcoin and covering personal margin calls, with the affair ending in million dollar losses and a first of its kind federal prosecution.
Also read: Citibank India Bans Bitcoin
Bitcoin Trader Faces 20 Years in Prison
Consolidated Trading, LLC’s Joseph Kim, according to federal authorities, emailed, “Until the end I was perversely trying to fix what I had already done. I can’t believe I did not stop myself when I had the money to give back, and I will live with that for the rest of my life. You have every apology I have to give, I am sorry to betray you all like this.”
John R. Lausch Jr, United States Attorney for the Northern District of Illinois in conjunction with the Federal Bureau of Investigation (FBI), insists Mr. Kim “worked as an assistant trader for…a Chicago trading firm that recently formed a cryptocurrency group to engage in cryptocurrency trading…Over a two-month period in the Fall of last year, Kim misappropriated at least $ 2 million of the firm’s Bitcoin and Litecoin cryptocurrency for his own personal benefit, and he made false statements and representations to the company’s management in order to conceal the theft.”
According to reports, Mr. Kim had previous experience in cryptocurrency by way of working in South Korea for a time after graduating from the prestigious University of Chicago. He joined Consolidated in the Summer of 2016 as an assistant bond trader. Employees describe him as having gone by the online name “degen,” as in ‘degenerative gambler’.
It’s the first federal criminal prosecution of its kind in Chicago, and Mr. Kim, 24, is being charged with one count of wire fraud punishable by up to 20 years in prison. U.S. v. Kim, 18-cr-107, states “from September through November 2017, Kim transferred more than $ 2 million of the trading firm’s Bitcoin and Litecoin to personal accounts to cover his own trading losses, which had been incurred while trading cryptocurrency futures on foreign exchanges.”
Attempting to Cover Tracks
By Fall of 2017, Mr. Kim was made part of a cryptocurrency wing of Consolidated, moving from its bond division. That was a heady time for crypto, especially bitcoin, and price action steeped to unheard of highs. Mainstream trading outlets were itching to be part of the market. Shortly after, the complaint alleges, Mr. Kim moved nearly 1,000 litecoin from company coffers to his own, an “intermediary holding space” he reportedly offered as excuse for the unorthodox maneuver due to Bitfinex exchange issues. Something like that, according to prosecutors, was also done with bitcoin, to the tune of 3.2 million USD, as a way to cover personal losses (1.2 million USD was eventually returned).
When questioned at the time by company officials, Mr. Kim is reported to have claimed he returned at least the litecoin (his alleged dealings in bitcoin hadn’t been discovered). When Mr. Kim was suspected of mishandling bitcoin, he again offered excuses that the company increasingly worried were not adding up, though Mr. Kim seemed to assure all was well. By late November, 280 bitcoin were suspected missing.
What seems to be clear is Mr. Kim used bitcoin for personal trading, and Consolidated and federal authorities believe he stole over 280 bitcoin at one time or another. Though he did manage to transfer some back, inevitably losses began to add up. Mr. Kim reportedly admitted to the company he indeed transferred 55 bitcoin from the company to his personal wallet. He also allegedly came forward to explain he was trying to short bitcoin, at times converting litecoin for that purpose. There are also allegations he used company bitcoin accounts to help cover margin losses.
As it stands, Consolidated was able to recover some 144 bitcoin, but claims to have lost as much as 600,000 USD as a result of Mr. Kim’s doings. Mr. Kim and his attorney have not been made available for comment. He is expected to face a federal judge today, 16 February 2018, in order to enter a plea.
What are your thoughts on this federal case? Let us know in the comments section below.
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The post Trader at Chicago Firm Stole Millions in BTC – Faces 20 Year Sentence appeared first on Bitcoin News.
Israeli police on Tuesday recommended that Benjamin Netanyahu be indicted in a pair of corruption cases , a blow to the embattled prime minister that is likely to fuel calls for him to step down, per the AP . Netanyahu predicted the matter will “end in nothing.” The recommendations marked a dramatic…
Vice President Mike Pence, who will head the U.S. delegation at Friday’s opening ceremony of the Winter Olympics in South Korea, will also be competing in a difficult new event not on any Olympic program.
It was, by any reckoning, a huge haul. Between $ 400 million and $ 534 million dollars of NEM stolen, depending on whether you go on its value at the time or once the market had reacted to the news. At a press conference on Friday afternoon, the stunned Coincheck team painted forlorn figures as they came to terms with being on the receiving end of the greatest heist of all time. In the inevitable post-mortem, questions have been raised about the security practices of the Japanese exchange.
Gox II: Goxxed Harder
Japan thought its days of being the focal point for record-breaking cryptocurrency heists were behind it. Less than four years on from the Mt Gox hack, which heralded the end of Japan’s and the world’s largest exchange, the country is back in the spotlight. Over the past few years, Japan has earned praise for its measured approach to cryptocurrencies, having encouraged their use in a regulated environment. Only this week, the Bank of Japan gave crypto a mild endorsement. But on Friday January 26, the nation’s 127 million citizens awoke to the news that another seismic cryptocurrency hack had occurred on home soil. At around 3am local time, someone withdrew all of the NEM held by the exchange in a single transaction.
The identity and origin of the hacker is unknown at this time, but what few details have emerged suggest serious flaws in Coincheck’s security procedures. It appears that the 500 million NEM were stored in a hot wallet with no multi-sig. If so, the exchange has learned nothing from recent history, for it was a similar setup that resulted in Mt Gox losing around 850,000 bitcoins in 2014. At a press conference on Friday, when asked about Coincheck’s security practices, there was an awkward pause before president Wakata Koichi Yoshihiro batted the question away, electing to issue an apology instead.
The Coincheck Hack by Numbers
The magnitude of the Coincheck hack, a haul which exceeds any other, can be seen by comparing it alongside real world record-breakers.
Securitas Depot Robbery, $ 83 million: Disguised in wigs and prosthetics, a gang did over a security depot in Britain in 2006. They would have made off with more, only there was no more space for cash in the lorry. The Securitas robbery was worth one sixth of the NEM hack.
Knightsbridge Security Deposit Robbery, $ 97 million: A safety depot raid in London in 1987 netted a huge load of cash and jewelry but it was still only worth a fifth of the NEM cryptocurrency hack.
Baghdad Bank Heist, $ 282 million: Iraq’s Dar Es Salaam bank was relieved of hundreds of millions of dollars in 2007, with two guards alleged to be the instigators. The bumper robbery was worth around half the NEM stolen from Coincheck.
Mt Gox, $ 450 million: The tranche of bitcoins stolen from the world’s largest cryptocurrency exchange in 2014 was worth around $ 80 million less than the value of NEM that was taken.
An Irredeemable Fortune
In reality, the thief may find themselves struggling to shift their hot property. Within hours of the attack occurring, the NEM team had contacted cryptocurrency exchanges seeking to have the wallet address blacklisted. One thing NEM won’t be doing is emulating Ethereum and hard-forking. If the blockchain were to be rolled back and the stolen coins forked away, it would do Coincheck a favor, but would do little to demonstrate the immutability of blockchain ledgers.
Japan’s Financial Services Authority has confirmed it is “looking into the facts” surrounding the matter. Meanwhile, Coincheck has promised that it is seeking to compensate its customers who had their NEM stolen. Despite its hefty dollar value, the NEM hack is unlikely to put a discernible dent in the cryptocurrency markets. It raises serious questions though about Coincheck’s fitness to operate a cryptocurrency exchange.
The company had previously reported being approved by the Financial Services Agency, but it’s emerged that Coincheck was not registered with the FSA. The only way for Coincheck to pay back its customers may be for it to be allowed to continue trading. Whether regulators will allow the beleaguered exchange to stay in business – and whether customers will trust it again – is another matter entirely.
Do you think Coincheck should keep trading or wind up its operations? Let us know in the comments section below.
Images courtesy of Shutterstock, Twitter, and Coincheck.
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The post Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack appeared first on Bitcoin News.
Bitconnect is facing litigation from six individuals accusing the company of operating a Ponzi scheme in addition to numerous violations of securities laws. The six plaintiffs collectively invested approximately $ 771,000 USD into Bitconnect, and are seeking recourse following the sudden removal of the company’s lending platform that immediately led to a more than 90% loss in the value of Bitconnect tokens.
Bitconnect Receives Class-Action Lawsuit
The complaint has been filed by Charles Wildes, Francisco Doria, Aric Harod, Akiva Katz, James Gurry, and Ronald Nelson with the Southern District Court of Florida, and is made on behalf of all Bitconnect customers, in addition to the aforementioned plaintiffs individually.
The suit has been brought against all three corporate entities comprising the Bitconnect company, in addition to defendants “Glenn Arcaro, Trevon Brown a/k/a Trevon James, Ryan Hildreth, Craig Grant, and Cryptonick” – who are accused of aggressively recruiting new investors into the Ponzi scheme using social media.
Bitconnect Accused of Running “Wide-Reaching Ponzi Scheme”
The preliminary statement of the complaint describes Bitconnect as having raised “millions of dollars’ worth of cryptocurrency” through “a trading platform and lending program fraudulently promoted and operated by” the defendants.
The complaint states that “Bitconnect guaranteed investors up to a forty percent total return per month on their investments, following a four-tier investment system based on the sum of the initial deposit.” Investors were “promised a one percent return on investment on a daily basis, which Bitconnect purported would be generated by its own proprietary trading bot and volatility software,” which was to be paid out “regardless of market performance or the fluctuating price of cryptocurrency.” An investment of just one thousand dollars would grow to generate a $ 50 million return within three years of compounding daily interest, the company is reported to have shilled.
The plaintiffs state that Bitconnect’s former $ 2.5 billion market capitalization was “built through the use of fraudulent means,” in particular “a wide-reaching Ponzi scheme that defrauded investors, made a mockery of state and federal securities laws, and employed an army of social media mercenaries who were paid to bring more unsuspecting victims into the fraud.”
Bitconnect’s Lending and Exchange Platform Shuts Down
During early January, Bitconnect boasted a market capitalization of more than $ 2.5 billion. After receiving cease-and-desist notifications from regulators in Texas and North Carolina and an increase in accusations of comprising a Ponzi scam, Bitconnect suddenly announced that it would shut its lending and exchange platform – leaving many Bitconnect token-holders unable to liquidate their assets, the value of which rapidly depreciated by over $ 95%.
Despite the turmoil, BCC tokens are refusing to die, with many investors seeking to offload their BCC tokens in exchange for BCCX – a token soon to be launched by the company through an initial coin offering. As a consequence, somehow, BCC has a market capitalization of more than $ 100 million dollars, and has witnessed nearly $ 5.5 million worth of trading during the last 24 hours, according to Coinmarketcap.
Do you think that the plaintiffs will be successful in suing Bitconnect? Share your thoughts in the comment section below!
Images courtesy of Shutterstock
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The post Bitconnect Faces Lawsuit for Operating “Wide-Reaching Ponzi Scheme” appeared first on Bitcoin News.
Sixteen-month-old Aiden Dvash-Banks is a US citizen who can one day run for president. His twin brother, Ethan, is undocumented and thus at risk of being deported. It’s a case that highlights discrimination against LGBT families by the US government, according to the boys’ married male parents, who have filed…
From hundreds of thousands of fans to 100,000 victims. The Santa Barbara Independent reports a pop-punk bassist is facing fraud charges and more than 30 years in prison over an alleged real estate scam. Prosecutors say Michael Davenport of The Ataris defrauded approximately 100,000 people in all 50…
New Polish leader Mateusz Morawiecki has inherited one of the potentially most explosive situations in Europe: a two-year standoff with the European Union over his party’s controversial overhaul of the judicial system.
WSJ.com: What’s News Europe