department of justice

Tether responds to US lawmakers’ calls for DOJ action

Tether has reacted to lawmakers’ requests for DOJ action over its stablecoin use, claiming it wants to be a “world class partner to the U.S.”

Tether, the company behind the stablecoin Tether (USDT), disclosed letters directed to U.S. legislators, addressing requests for intervention by the Department of Justice in relation to the illicit use of its stablecoin.

The communications were sent to members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs and the U.S. House Financial Services Committee on Nov. 16 and Dec. 15, detailing “Tether’s commitment to fighting illicit use of stablecoins.”

The letters aim to answer calls from Senator Cynthia Lummis and Representative French Hill from October, urging the DOJ “to carefully evaluate the extent to which Binance and Tether are providing material support and resources to support terrorism.”

Tether responds to US lawmakers’ calls for DOJ action, onboards FBI

Tether has reacted to lawmakers’ requests for DOJ action over its stablecoin use, claiming it wants to be a “world class partner to the U.S.”

Tether, the company behind the stablecoin Tether (USDT), disclosed letters directed to United States lawmakers addressing requests for intervention by the Department of Justice (DOJ) about the illicit use of its stablecoin.

DOJ unveils extensive monitorship over Binance operations

Binance’s new compliance obligations include cooperation to grant U.S. authorities access to all documents, records and resources upon request.

Binance compliance commitments with the United States Department of Justice (DOJ) were unsealed on Dec. 8, revealing a significant government oversight of the crypto exchange operation and business activities.

In an analysis shared on X (formerly Twitter), John Reed Stark, a former Securities and Exchange Commission (SEC) official, classified the “exhaustive list” of Binance’s new compliance commitments as a “consulting firm’s wish list” that will likely shut down the platform.

Binance’s new obligations are described in an 11-page document and include cooperation to grant authorities access to documents, records and resources at their request, including access to information related to its “former employees, agents, intermediaries, consultants, representatives, distributors, licenses, contractors, suppliers, and joint venture partners,” noted Stark.

US Justice Department announces charges in connection with ChipMixer takedown

Minh Quốc Nguyễn, a resident of Hanoi, Vietnam, has been charged in Philadelphia with a number of offenses as the operator of ChipMixer.

The United States Justice Department announced on March 15 that it was pressing charges against a resident of Hanoi, Vietnam, in connection to the operation of the ChipMixer. The announcement came shortly after it became known that a Europol action led by German law enforcement had closed down the Vietnam-based crypto mixer.

The U.S. Attorney’s Office of the Eastern District of Pennsylvania is charging Minh Quốc Nguyễn with money laundering, operating an unlicensed money-transmitting business and identity theft, it said. Those crimes carry a maximum penalty of 40 years in prison.

Nguyễn was identified as the creator and operator of the online infrastructure used by ChipMixer. Nguyễn allegedly promoted ChipMixer online and advised customers on how to avoid Know You Customer (KYC) and Anti-Money Laundering (AML) measures. In addition, ChipMixer serviced American customers without registering with the U.S. Treasury Department’s Financial Crimes Enforcement Network or collecting KYC/AML data.

Deputy Attorney General Lisa Monaco said:

“Cybercrime seeks to exploit boundaries, but the Department of Justice’s network of alliances transcends borders and enables disruption of the criminal activity that jeopardizes our global cybersecurity.”

The Justice Department linked ChipMixer to a number of illegal activities between August 2017 and March 2023, including facilitating the laundering of $17 million in Bitcoin (BTC) connected to ransomware attacks. It also helped launder over $700 million in Bitcoin connected to wallets flagged as containing stolen funds, including funds from the Axie Infinity Ronin Bridge and Harmony Horizon Bridge exploits, and over $200 million in Bitcoin associated with the darknet, as well as the Bitcoin used by the Russian General Staff Main Intelligence Directorate to buy malware.

3/ For those unfamiliar with CM here’s what it looks like when using the mixer. pic.twitter.com/hen8dRJI0F

— ZachXBT (@zachxbt) November 29, 2022

Elliptic said it had analyzed the mixer’s blockchain transactions and found, “ChipMixer has been used to launder over $844 million in Bitcoin that can be linked directly to illicit activity — including at least $666 million from thefts.”

ChipMixer was already known to international law enforcement. Its processing of stolen funds was noticed at least as early as 2019.

DOJ and SEC to probe SVB collapse and insider stock sales: Report

The investigations are separate from one another but will look into Silicon Valley Bank’s collapse and stocks sold by executives before its fall.

The United States Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) have reportedly launched inquiries into the sudden collapse of Silicon Valley Bank (SVB), which was shuttered by regulators last week amid a historic bank run.

According to “people familiar with the matter” — as cited in a March 14 report by The Wall Street Journal — the probes will look into events that led to the bank’s collapse, along with the stock sales that SVB financial officers undertook in the weeks leading up to the closure.

Securities filing show the bank’s CEO, Greg Becker, and chief financial officer, Daniel Beck, sold shares two weeks before the bank’s failure, sparking outrage from some observers.

Becker sold $3.6 million worth of shares on Feb. 27, while Beck sold $575,180 in stocks that same day, according to Newsweek. In total, SVB executives and directors cashed out $84 million worth of stock over the past two years, CNBC reported.

However, the probes are in the early stages and may not lead to charges or allegations of wrongdoing, the sources said.

Another person with direct knowledge of the situation, quoted by NPR, said a formal announcement from the DoJ is expected in the coming days.

Cointelegraph contacted the SEC and the DoJ but did not receive an immediate response.

We must get a full accounting of what happened and why so those responsible can be held accountable.

In my Administration, no one is above the law.

— President Biden (@POTUS) March 13, 2023

Only two days after the collapse of Silicon Valley Bank, SEC Chairman Gary Gensler made a stark warning that the regulator would be on the lookout for violators of U.S. securities laws.

“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” said Gensler.

The U.S. Federal Reserve is also looking into the bank’s collapse in its own way — namely, how it supervised and regulated the now-collapsed financial institution.

Meanwhile, on March 13, SVB Financial Group — SVB’s parent organization — and two executives were reportedly sued by shareholders accusing them of failing to disclose how rising interest rates would leave the bank “particularly susceptible” to a bank run.

The lawsuit seeks damages for SVB investors from June 16, 2021, to March 10, 2023.

Brit who consulted North Korea on crypto reportedly detained in Moscow

Earlier, Christopher Emms was released by Saudi authorities due to the lack of evidence against him.

The Moscow bureau of Interpol detained a British national charged by the United States Department of Justice (DoJ). The man is accused of conspiring to violate U.S. sanctions on North Korea.

According to local media, on Feb. 21, Christopher Emms was arrested in Moscow upon the “red notice” from Interpol. Th 31-year-old British citizen was detained in the hostel where he was staying.

In April 2022, alongside Spanish national Alejandro Cao De Benos, Emms allegedly provided instructions to North Korea on how it could use blockchain and cryptocurrency to launder money and evade sanctions. The two planned and organized the 2019 Pyongyang Blockchain and Cryptocurrency Conference.

The third participant in the conspiracy is Virgil Griffith, a former Ethereum developer. He was arrested by the Federal Bureau of Investigation in November 2019, pleaded guilty, and was sentenced to 63 months in prison. Emms could face up to 20 years in prison for one count of conspiring to violate the International Emergency Economic Powers Act.

Radha Stirling, the founder of Due Process International, a nongovernmental organization that helps to defend human rights in the face of international enforcement agencies, previously claimed that there was no strong evidence against Emms:

“Precisely because he did nothing wrong; he provided no information to North Korea that doesn’t already appear on the first page of Google.”

In September 2022, Saudi Arabia rejected the American extradition request for the lack of a legal basis and released Emms after an eight-month travel ban. He immediately left the country and fled to Russia. However, despite the country being targeted by the DoJ’s efforts to enforce the financial sanctions in the crypto sector, the local officials decided to help their American counterparts.

Bitzlato kept a low profile, but did not go entirely unnoticed before DOJ action

The Hong Kong crypto exchange with strong ties to Russia was a blip on Chainalysis’ radar last year, with its takedown seen as anticlimactic by many in the crypto community.

Noncustodial peer-to-peer crypto exchange Bitzlato was little known to some before the United States Department of Justice (DOJ) enforcement action against it on Jan. 18. It was co-founded in 2016 by recently arrested Russian national Anatoly Legkodymov.

According to a Russian source, Legkodymov is the owner of 73.4% of Bitzlato, which has an office on a high floor in the Federation Tower skyscraper in Moscow, where it accepted trades of $100,000 or more. Legkodymov and his main partner in Bitzlato are also reportedly involved in Russian crypto mining equipment distribution company A-HVT.

Legkodymov had a long and checkered history in the crypto industry going back more than a decade. His earliest post on the BitcoinTalk forum dates back to 2011, where he described the events that led to a loss of more than 50 BTC:

Legkodymov described the process of opening the Bitzlato exchange in an online forum in 2017:

“My team and I have analyzed numerous failure scenarios, including a simulation of a hacker attack by the exchange owners and operators, and we found a solution that allows us to operate a bitcoin exchange in a highly secure manner.”

While Bitzlato attracted little attention until the DOJ action on Jan. 18, Chainalysis stated in a report last February that the exchange had “received $206 million from darknet markets, $224.5 million from scams, and $9 million from ransomware attackers.”

Illicit and risky transactions made up 48% of the company’s business at that time, according to the report.

The DoJ had announced it would be holding a conference to discuss the charges early in the day, but did not indicate which companies would be involved. This led many, who were speculating about the involvement of much larger names, to react with a certain amount of irony:

Someone tell the DoJ that 7 figures crime in crypto is called a regular Wednesday. https://t.co/zpV6LcLrpW

— Dylan LeClair (@DylanLeClair_) January 18, 2023

You kinda understand how completely irrelevant Bizlato is when you realize that not a single ENS degen figured it was worth registering until 12 minutes ago pic.twitter.com/QpXqMy0HIs

— anon.eth (@player1_eth) January 18, 2023

One lawyer commenting online called the action against Bitzlato “the blueprint for future actions, possibly even the one highly anticipated today.”

Others saw darker forces at work in taking down this darknet actor:

Brooklyn charging Anatoly Legkodymov, a Russian national and senior executive of Bitzlato Ltd. (Bitzlato)

luke bitcoin core dev.

appears anatoly was an bitcoin og.

they were business partners since OG times…

luke was mysteriously "hacked" a few weeks ago for all his btc

— Sn/Fr-axgener 200x (@napgener) January 18, 2023

Bitzlato itself was clearly unsuspecting of the action about to overtake it. It tweeted the morning’s exchange rates to its 1,488 followers on Jan. 18.

Lol you are in jail

— UnsafeMedicine (@unsafemedicine) January 18, 2023

Bitzlato and its founder face enforcement actions from US authorities

The Department of Justice, Treasury Department and French law enforcement seized many of Bitzlato’s resources, alleging the firm helped launder $700 million in illicit funds.

The United States Department of Justice announced a “major international cryptocurrency enforcement action” against crypto firm Bitzlato and the arrest of its founder, Anatoly Legkodymov.

In a Jan. 18 announcement, U.S. Deputy Attorney General Lisa Monaco said that authorities had taken enforcement actions against Bizlato in coordination with France, seizing Bitzlato’s website and labeling the business as a “primary money laundering concern” connected to Russian illicit finance. According to Monaco, the Department of Justice worked with the Treasury Department and French law enforcement to take action against Bitzlato for “conducting a money transmitting business that transported and transmitted illicit funds and that failed to meet U.S. regulatory safeguards.”

As part of the case against Bitzlato, FBI officials arrested Legkodymov, a Russian national based in China, on Jan. 17 in Miami. He is scheduled to be arraigned in the U.S. District Court for the Southern District of Florida.

U.S. authorities said the criminal complaint against Bitzlato was based on the firm being a “crucial financial resource” for the Hydra darknet marketplace, allowing users to launder funds including those from ransomware attacks:

“Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shuttered by U.S. and German law enforcement in April 2022. Bitzlato also received more than $15 million in ransomware proceeds.”

*Screenshot of Bitzlato homepage on Jan. 18*

The enforcement action was a coordinated effort across Europe and the U.S. to seize many of Bitzlato’s resources — including the firm’s servers — as well as take the founder into custody. Monaco referred to the case as the “most significant enforcement effort” against an exchange since the National Cryptocurrency Enforcement Team was launched in October 2021.

Assistant Attorney General Kenneth Polite of the Department of Justice’s criminal division said that U.S. authorities were “just getting started” in cracking down on similar firms involved in facilitating money laundering. Though not commented directly on the ongoing case against crypto exchange FTX and its former CEO, Sam Bankman-Fried, Monaco warned against those committing crimes against the U.S. financial system “from a tropical island”.

US DOJ announces seizure of 55M Robinhood shares

The Justice Department said it had seized 55,273,469 shares of Robinhood and more than $20 million in U.S. currency as part of the criminal case against Sam Bankman-Fried.

The United States Department of Justice has officially notified the court handling the bankruptcy of BlockFi that it has seized assets as part of the criminal cases against crypto exchange FTX and its executives.

In a Jan. 6 court filing, the Justice Department said it had seized 55,273,469 shares of Robinhood — worth more than $450 million at the time of publication — to which former FTX CEO Sam Bankman-Fried, BlockFi and FTX creditor Yonathan Ben Shimon had previously made claims. The DOJ noted it had also taken control of more than $20 million in U.S. currency from the brokerage firm ED&F Man Capital Markets.

“The charges in the Indictment arise from an alleged wide-ranging scheme by the defendant to misappropriate billions of dollars of customer funds deposited onto FTX, the international cryptocurrency exchange founded by Bankman-Fried,” said the court filing. “The Indictment includes forfeiture allegations, seeking to forfeit property that constitutes or was derived from proceeds traceable to the conspiracy to commit wire fraud, wire fraud, and property involved in the conspiracy to commit money laundering.”

Reports from Jan. 4 had suggested the Justice Department was in the process of seizing the Robinhood shares as part of the case against FTX. Bankman-Fried’s legal team confirmed on Jan. 5 that the DOJ had moved forward with seizing the shares, but still argued the former FTX CEO had a claim to the assets “to pay for his criminal defense”.

Following his arrest in the Bahamas and extradition to the United States in December, Bankman-Fried pleaded not guilty to eight criminal charges including wire fraud and violations of campaign finance laws. Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang have already pleaded guilty to related charges. SBF’s criminal trial is scheduled to begin in October.

Bankruptcy proceedings for FTX separate from the criminal cases are also ongoing, with the next public hearing scheduled for Jan. 11. Parties representing FTX debtors have also pointed to assets connected to the crypto exchange and its former executives as many customers look to recover lost and missing funds.

Digital Currency Group under investigation by U.S. authorities: Report

U.S. authorities are reportedly investigating internal transfers from Digital Currency Group to its subsidiary Genesis.

Crypto conglomerate Digital Currency Group, or DCG, are under investigation by the United States Department of Justice’s Eastern District of New York (EDNY) and the Securities and Exchange Commission (SEC), according to a Bloomberg report.

The authorities are digging into internal transfers between DCG and its subsidiary crypto lending firm Genesis Global Capital, noted the report citing people familiar with the matter. Prosecutors have already requested interviews and documents from both the companies, while the SEC is running an early-stage similar inquiry.

As of yet, no indictment has been brought against DCG, nor have both U.S. authorities provided any information about the case. According to a spokesperson for DCG, the company was unaware of the investigation.

“DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge of or reason to believe that there is any Eastern District of New York investigation into DCG.”

Genesis is one of the companies affected by the contagious wave following the collapse of FTX in November. According to the firm’s disclosure on Nov. 10, it has $175 million locked up in an FTX trading account. Genesis halted withdrawals on Nov. 16 due to liquidity issues, and has engaged with investment bank Moelis & Company to assist with restructuring.

Genesis owes $900 million to the crypto exchange Gemini. They have operated together a product called Gemini Earn that allows crypto investors to earn 8% interest on their crypto loans. Gemini claims that DCG failed to repay Genesis, leading to the failure of payments to Gemini’s clients.

Among other DCG subsidiaries are Grayscale Investments, media outlet CoinDesk, crypto exchange Luno and Bitcoin mining company Foundry. Cointelegraph reported that most of Grayscale’s trust funds are trading at a discount, with Ethereum Classic Trust hitting the hardest discount at 77% on Jan. 4, followed by Litecoin Trust at 65% and Bitcoin Cash Trust at 57%.