Crime In Crosshairs 🎯
Crime In Crosshairs 🎯
Big numbers in crypto crimes this week. Pink drainer retires. Thomas John Sfraga pleads guilty. Pump.fun exploiter arrested in UK? Venezuela bans crypto mining. Crypto fundraising is booming again.
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Skylit headlines about crypto crimes, eh?
We've got China cracking down on underground banks, a massive scam busted in the US, and a plot twist in a recent hack.
The down-low in 3 quick numbers
1.9 Billion
A recent police raid in China on a massive underground bank that processed up to $1.9 billion in funds, some likely involving crypto.
Authorities arrested 193 suspect and froze just under $21 million linked to the investigation.
Police in China also shut down an illegal bank bank in Panshi using crypto to transfer money between China and North Korea.
This reignited concerns about a wider Asian crypto clampdown.
Why?
China Targets Capital Flight: Moving money out of China is strictly controlled - $50,000 annual limit. This has fuelled a black market for financial services, including underground banks that exploit crypto's borderless nature.
Underground Banks Go Crypto: Many underground banks are shifting to crypto for cross-border transfers, making them harder to track compared to physical cash or goods.
Wider Scrutiny in Asia: This raid, coupled with a recent $64 billion online gambling bust in Southeast Asia involving crypto, raises concerns about a wider Asian crypto clampdown.
Beyond China
South Korea: Authorities busted a drug ring that used crypto to sell crystal meth, synthetic marijuana, and ketamine online. President Yoon called for an "all-out war" against crypto-fuelled drug trafficking.
South Korea: Two police officers are on trial for taking bribes from an alleged crypto scammer who ran a $2.1 million altcoin scam.
Hong Kong: Police arrested exchange staff who tricked a customer into sending $128,000 USDT using fake money.
North Korea's Crypto Laundering: North Korea is accused of laundering $147.5 million through Tornado Cash (a crypto mixer) in just one month. The UN is investigating almost $3.6 billion in crypto hacks linked to North Korea.
Chainalysis reports link crypto use in China to money laundering for North Korea and the fentanyl trade.
But in 2023, total crypto received by illicit addresses fell 48% to $24.2 billion.
$73 Million
The amount US authorities seized in a major crypto scam, arresting two individuals.
Daren Li and Yicheng Zhang were apprehended in Atlanta and Los Angeles, respectively.
The accused masterminded a scheme involving
They allegedly ran a transnational network, using shell companies and fake bank accounts to launder the stolen funds.
Over $341 million in virtual assets reportedly flowed through a single cryptocurrency wallet linked to the scheme.
The Charges: Li and Zhang face conspiracy to launder money and six counts of international money laundering. Each count carries a potential 20-year sentence, totalling a possible 140 years behind bars if convicted.
$3.9 Million
Alexa Labs recovery in hacked funds.
Alex Labs, a developer of Bitcoin layer-2 solutions, has clawed back a significant portion of crypto stolen in a recent hack.
Sending stolen funds to exchanges allowed Alex Labs to freeze them.
Exploited Amount: A total of $13.7 million worth of Stacks (STX) tokens were stolen, with $3 million recovered from CEXs.
Recovered Funds: Over $3.9 million worth of crypto across 17 different tokens were frozen with the help of centralised exchanges (CEXs).
The Attack: The attacker gained access to a bridge vault's private key, enabling them to withdraw funds.
Alex Labs offered a 10% bounty and no legal action if the attacker returns 90% of the stolen funds. They are considering using reserves to compensate affected users.
Block That Quote 🎙️
Pink Drainer, a hacker tool.
“After this message’s publication, we will begin winding down all of our infrastructure. All stored information will be wiped and securely destroyed."
Crypto wallet drainer Pink Drainer announced its retirement via Telegram, boasting over $85 million in stolen crypto.
The service will shut down entirely, wiping all data to avoid future trouble.
This follows a trend of similar "drainer" services retiring after reaching their targets.
Over 21,000 victims fell prey to Pink Drainer's scams since July 2023. While this specific service is gone, the threat remains. Other malicious actors like "Angel Drainer" are still active.
Crypto Guru "TJ Stone" Pleads Guilty
A Brooklyn federal court heard the case of Thomas John Sfraga, known online as "TJ Stone," who pleaded guilty to wire fraud charges.
Sfraga allegedly swindled over $1.3 million from investors through a series of crypto scams.
Fake Digital Wallet: Sfraga promised investors up to 60% returns in just 3 months through a fabricated crypto digital wallet. Instead, he pocketed the funds or used them to appease previous victims in a Ponzi scheme-like fashion.
Misrepresenting Staking: Sfraga allegedly misled investors about crypto staking, portraying it as a risk-free "ironclad situation" that guaranteed returns regardless of market fluctuations.
Fictitious Companies: Sfraga used the names of fake companies, including "Vandelay Contracting Corp" (a reference to Seinfeld) to convince investors to fund non-existent construction projects.
The Charges: Faces a maximum sentence of 20 years in prison and is ordered to pay $1.33 million in restitution to his victims.
In the Numbers 🔢
$2.4 billion
That’s how much startups raised across 518 deals in Q1 2024, according to PitchBook.
Despite all the crime thrillers, we’ve been seeing, there’s a boom in crypto fundraising.
A 40% jump in investment and a 44% increase in deal volume compared to the previous quarter.
PitchBook expects this trend to continue throughout the year.
Who's winning big?
Infrastructure startups: Leading the pack are Ethereum restaking platform EigenLayer ($100 million) and fully homomorphic encryption (FHE) platform Zama ($73 million).
Together AI: This decentralised cloud platform for AI models raised a massive $106 million Series B round, valuing them at a staggering $1.1 billion.
Valuations Up Across Stages
Median pre-money valuation (YoY increase)
Pre-seed/Seed: $21.8 million (85.5%)
Early Stage: $72.0 million (148.3%)
Late Stage: $51.1 million (7.6%)
Pump.fun Exploiter Claims Arrest and Bail in UK
Jarett Dunn, the alleged mastermind behind a $1.9 million exploit on memecoin platform Pump.fun, claims he was arrested in the UK and is now on bail.
Dunn, who goes by "STACCoverflow" online, is a former Pump.fun employee accused of using his access to steal funds.
On May 18th, Dunn claimed via social media that he was arrested and charged with theft and conspiracy.
He also stated he was released on bail with mental health restrictions, currently residing in a hospital.
Uncertainties Remain
Pump.fun hasn't commented on the situation. And London police declined to confirm or deny any arrests related to Dunn.
Also👇🏻
The Surfer 🏄
Kraken says USDT stays in Europe (for now). Despite earlier reports of a review, Kraken confirms Tether (USDT) remains listed on their European exchange. They'll comply with regulations, even if they disagree, to keep offering stablecoins to European users.
Research firm 10x suggests Bitcoin holders use a "covered strangle" options strategy to earn an extra 17% yield on their holdings. This involves selling out-of-the-money call and put options while keeping the Bitcoin itself.
Venezuela cracks down on crypto mining to save power. Facing unreliable electricity for years, they're disconnecting mining rigs to free up energy for the country and stabilise the power grid.
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