Crypto Crime Surge: $65M Lost in Two Months, Legal Battles Loom

Cryptocurrency users have been warned of a potential surge in scams and fraudulent activities, raising concerns about a "wildly profitable crime season" in the crypto world. According to crypto researcher ZachXBT, Coinbase users have lost over $65 million to social engineering attacks in the past two months, with an estimated $300 million lost annually due to such attacks. Scammers are exploiting stolen personal data to send fake emails, tricking users into transferring funds to scammer-controlled wallets.

Meanwhile, digital asset lawyer and advocate John Deaton has highlighted ongoing legal battles against crypto developers, suggesting that the "war against crypto" is far from over. Despite the change in US presidential administrations, important cases are still ongoing. Roman Storm, one of the founders of Tornado Cash, an Ethereum-based coin mixing system, is facing charges related to allegedly laundering $1 billion in criminal proceeds, including hundreds of millions of dollars for the Lazarus Group, a sanctioned North Korean cybercriminal outfit. Storm's trial is scheduled for April.

In another case, Keonne Rodriguez and William Lonergan Hill, the co-founders of the crypto mixer Samourai Wallet, were arrested last April for allegedly operating an unlicensed money-transmitting business that executed more than $2 billion in unlawful transactions. The U.S. Department of Justice (DOJ) also alleges that Samourai laundered more than $100 million worth of criminal proceeds.

Both cases involve Section 1960 of Title 18 of the United States Code, which prohibits the operation of unlicensed money-transmitting businesses. Federal prosecutors at the DOJ argue that developers could be considered money transmitters under Section 1960 even if they never took or assumed control of any of the software's users' funds. Deaton warns that these cases pose an "existential threat" to the decentralized finance (DeFi) sector, as a guilty verdict for Roman Storm could have a chilling effect on the industry.

The increasing number of scams and ongoing legal battles against crypto developers raise concerns about the future of the crypto industry. As the crypto market continues to grow, so does the potential for criminal activities and regulatory challenges. Industry players and users must remain vigilant and adapt to the evolving landscape to protect their investments and ensure the long-term success of the crypto ecosystem.