As the crypto industry continues to grow, there is little doubt that there will always be individuals or organizations who try to make ill gains by counting on the ignorance of unsusceptible investor or new entrants.
In this article, we reveal the top five crime reports in crypto this week with Initial Coin Offerings and the hack of peer-to-peer crypto exchange, LocalBitcoins among the most prominent.
Country — Singapore
The Monetary Authority of Singapore (MAS) halted a crypto startup who was conducting a Security Token Offering (STO). The unnamed project had gone against laws binding the issuing of an STO in the country, by advertising their project to a LinkedIn Audience.
Under the MAS securities law, STOs that file for an exemption as a non-security offering is expected to advertise only to a selected audience. This audience was supposed to mainly consist of accredited investors who have a certain amount of assets in their portfolio, and not the global community.
Current Status — The project suspended its STO in the light of the warning by MAS but could have raised funds from the global community without authorization to do so.
Country — England
European authorities arrested a 36-year old man living in the U.K and charged him for masterminding a crypto theft worth up to $11 million in IOTA tokens.
In early 2018, the suspect created a fake website which claimed to help IOTA users generate the 81-digit security seeds required to safeguard their tokens. He then used the security seeds created by the users to log into their IOTA wallets and transfer their assets to his wallet address.
Up to 85 or more global users fell victim to the fraudulent IOTA website with the address (iotaseed.io)
It took the efforts of the German, U.K, and EU police authorities to apprehend the suspect in Oxford, England, perhaps outlining that international collaboration will be the key to minimizing crime rates in the crypto industry.
Current Status — Suspect awaiting court trial
Country - Israel
Famous Israeli cryptocurrency investor, Moshe Hogeg made the headlines this week for all the wrong reasons, as the legitimacy of an ICO that he conducted in 2017 was called into question by a Chinese investor.
Hogeg and his company, Stox Technologies allegedly promised investors that they were going to develop Stox, an online platform for crypto market predictions.
A $30 million benchmark was set for its ICO in August 2017 while the plaintiff, a Chinese investor, was among those who helped Stox raise $34 million at the end of the offering. The Chinese man, Zhewen Hu said he invested $3.8 million in the Stox ICO and received Stox tokens in exchange.
However, he sued Hogeg for mismanaging funds raised during the ICO. At least $30 million was supposed to go into the development of the Stox market place which would, in turn, pump the price of tokens held by investors and even lead to the listing of the token on popular exchanges.
But, Hogeg allegedly invested only $5 million of the raised funds in Stox and put the rest of the money into other ICOs. He also sold his Stox tokens without notifying other investors, thus leading to the fall in the value of their assets.
Current Status — Hogeg now faces a case before a Tel-Aviv District Court after pleading “not guilty” to the charges.
Country — Finland
At the weekend, unauthorized sources gained access to peer-to-peer bitcoin exchange LocalBitcoins, and made away with Bitcoins held in user accounts registered on the platform. LocalBitcoins subsequently reported the breach which it said was possible through a third-party service used to run the exchange.
The breach led to a temporary suspension of outgoing transactions on LocalBitcoins, as well as the shutdown of the exchange’s online community. The hackers likely made away with 7.95 BTC (equivalent to $25000 based on current market prices), while six users were reportedly affected.
Current Status — At the time of writing this report, LocalBitcoins confirmed that it had rectified the security challenges and activities are now back to normal.
Country - Taiwan
Back to the ICO scene, fifteen men were arrested by the Taiwanese Criminal Investigation Bureau (CIB) for duping investors of roughly $8 million through its IBCoin.
The leader of the group, Lin, reportedly bought IBCoin tokens for NT$1.5 (less than $0.05 per token) but asked his allies to sell it for NT$50-100 (approximately $1.63-$3.27) to investors. The thirty people who fell victim to the scheme were promised high returns on their investments if they held the tokens for an extended period.
However, the investors are yet to get any money on their investment which likely led to the filling of a fraud report with the authorities. The culprits were arrested on January 9 and 17 respectively while further investigations revealed that “there are currently no known companies that trade or deal in IBCoins.”
Current Status — A Taipei District Prosecutors office is expected to preside over the case involving the fifteen suspects behind the alleged IBCoin fraud.
Although the increasing number of crime rates in the crypto industry remains a source of worry to industry participants, it does not cast into doubt the potential of cryptocurrencies to revamp the financial landscape and innovate the fundraising process for companies.
Additionally, as more people get to understand what cryptocurrencies are and how to safeguard their assets, crime levels will decrease, thus, allowing the invention to realize its potential.
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