Many prominent and colorful crypto personalities have been arrested and arrested over the past year. From the arrest of antivirus pioneer John McAfee to indictments against executives at one of the world’s largest exchanges, 2020 didn’t exactly shake Crypto’s reputation as a honeypot for criminals.
In the first ten months of 2020, blockchain forensics company CipherTrace estimates that losses from theft, hacking, and fraud were a whopping $ 1.8 billion, partly due to the rise of various DeFi platforms.
The report suggests 2020 is on track to record the second highest level of losses related to cryptocurrency crimes, after 2019, when proceeds from these crimes exceeded $ 4.5 billion.
Let’s take a look at some of the most famous people involved in legal issues this year.
Arthur Hayes goes missing on DoJ indictment
On October 1, the US Department of Justice (DoJ) filed a criminal complaint against BitMEX founder Arthur Hayes and three of his employees for violating the banking secrecy law. To compound their problems, the U.S. Commodity Futures Trading (CFTC) filed a criminal prosecution lawsuit against Hayes and his company for violating AML regulations.
The Hong Kong-based man has been MIA in public since then and has yet to emerge. But in a godsend for Hayes, he might not be forced to face music anytime soon as the United States and Hong Kong have suspended their extradition deals amid recent political turmoil there.
The DoJ claimed BitMEX was involved in a number of shady activities and had weak anti-money laundering (AML) and Know Your Customer (KYC) policies that could easily be misused by third party actors.
BitMEX has also been accused of operating a complex international corporate structure with offices in premium international destinations such as New York, Hong Kong, while claiming to be registered and based in the Seychelles.
After the news broke, BitMEX announced the resignation of Hayes as CEO of the company along with technical director Samuel Reed and head of business development Greg Dwyer.
‘Star’ explains Xu’s mysterious absence
Prominent cryptocurrency exchange OKEx suspended a lot of flak after suspending crypto withdrawals on October 16, effectively preventing customers from taking out their crypto holdings.
Reports surfaced that the suspension was related to the fact that the Chinese co-founder of the exchange, Mingxing “Star” Xu, was arrested by local authorities – although the exchange strongly denied it.
After being unavailable for more than thirty days, Xu finally appeared in the media on WeChat on November 19th. He announced that he had assisted the relevant authorities in investigating the OK Group’s “2017 backdoor listing”, which the exchange sought to partner with an “undisclosed third party” to bring its offerings to customers around the world To make available. Xu said that after reviewing his previous business obligations, investigators finally resolved the matter and gave him the all-clear.
After a month, OKEx finally re-enabled crypto withdrawals on November 27th.
John McAfee’s Spanish cruise ends abruptly
Tech-savvy crypto evangelist and eccentric millionaire John McAfee has always been leading the crypto hype train. In 2017, he famously announced that Bitcoin would reach a price of $ 1 million or “eat my money on national television” within 36 months. He withdrew his testimony earlier this year, to the relief of most people.
McAfee was arrested by local authorities in Barcelona in October for tax evasion brought against him by the US government. He was also accused of fraudulently promoting a number of questionable cryptocurrency projects that allegedly profited millions of dollars.
Prosecutors claim that McAfee failed to file its tax returns in four years despite collecting millions of dollars from consulting, lecturing, investing in digital currencies, and so on. According to a statement released by the U.S. Department of Justice, McAfee did so illegally and withdrew his earnings from various bank and cryptocurrency accounts on behalf of various candidates. He is also accused of failing to declare a number of expensive assets, including a yacht and real estate.
This isn’t the first time McAfee has come into conflict with the law. He was questioned by police back in 2012 after his name was linked to the death of his neighbor, Florida businessman Gregory Faull. In 2019, he was convicted of unlawful death in a lawsuit filed by the Estate for unlawful death, but denied it, saying:
“I haven’t responded to any of my 37 complaints in the past 11 years.”
If convicted on the new charges, he faces up to 30 years in prison.
Santiago Fuentes’ billion dollar program collapses
A Spanish citizen, Santiago Fuentes, ran a cryptocurrency arbitrage firm called Arbistar, where tens of thousands of users invested bitcoin in their arbitrage trading bot. Blockchain investigative firm Tulip Research reported that the company had raised more than $ 1 billion in Bitcoin since its inception.
The suspicion arose in September when Fuentes alleged that due to a “digital bug”, Arbistar’s native trading module had somehow been disabled and more than a quarter of the company’s funds were wiped out overnight.
In the course of their investigation, the Spanish authorities discovered that Fuentes had used his crypto outfit to allegedly facilitate various financial fraud cases and launder money. Tulip Research has traced some of Arbistar’s withdrawal activity back to a deep web marketplace called “Hydra”.
Fuentes was arrested in October and charged with financial fraud and money laundering. On December 13, attorneys representing 130 former clients said they lost 4 million euros ($ 4.86 million) between them. Spanish media said a total of 32,000 people lost 93.4 million euros ($ 113.5 million).
Matthew Piercey’s daring escape by sea scooter
The 44-year-old man from Shasta County, California, was arrested by the FBI on November 16 while attempting to flee the authorities on a marine scooter.
Local media reported that Piercey was able to evade agents for over an hour by first driving away in a truck and then parking the vehicle on the edge of Shasta Lake, where he used a marine scooter – an underwater mobile device that can usually reach maximum speed from 8 km / h – to avoid the police underwater for 25 minutes. He was arrested when he showed up.
Police claim Piercey has requested $ 35 million for crypto mining and other investments through Family Wealth Legacy LLC and Zolla Financial LLC.
The two companies reportedly targeted high net worth investors and received at least $ 50,000 from each client. Piercey reportedly admitted, however, that he had little to no understanding of cryptocurrencies.
He reportedly spent $ 2.5 million received through his plans to renovate two of his homes and pay his credit card bills. He is currently charged with multiple charges of cable fraud, postal fraud, money laundering and witness manipulation. If found guilty, Matthew could face life in prison.
Indian troubles overthrow Harpreet Singh Sahni
Over the years, Sydney-based celebrity and concert organizer Harpreet Sahni has built a reputation as a man who regularly engages with Australian elites such as ex-Prime Ministers like Tony Abbott and Julia Gillard, former New South Wales Prime Minister Mike Baird, and Former cricketer Glenn McGrath rubbed his shoulders.
In October, Indian police authorities alleged that Sahni and his close associates had allegedly defrauded around $ 50 million from customers. He sponsored a program called Plus Gold Union Coin (PGUC) that promised to bring backers profits between $ 5,000 and $ 8,000 per day.
Investors who tipped around $ 7,000 into PGUC have been advised that they could raise potentially more than $ 100,000 within a year. Investors had to sign a 12 month contract that prevented them from cashing out their crypto holdings. However, as PGUC grew in popularity, token holders became suspicious.
The PGUC website went offline for weeks, and when the currency collapsed, there was no way for investors to minimize their losses or withdraw their wealth. The money invested – estimated at around $ 50 million – disappeared and all correspondence with customers was suspended.
Sanhi has been in prison for about 24 years now, awaiting sentencing.
Conor Freeman’s million dollar Bitcoin trick
The U.S. Department of Homeland Security identified Dublin-based IT expert Conor Freeman as the man behind a more than $ 2 million crypto theft. He was arrested by Homeland Security officials on November 16 and forced to hand over more than 142 bitcoin.
Freeman reportedly worked with a group that had access to victims’ email addresses and phone numbers through various social media platforms. They also had contacts within the telecommunications industry so they could initiate sophisticated SIM swap attacks.
This is where a scammer can get a SIM card tied directly to their victim’s cell phone number, giving them access to a person’s 2FA messages and one-time passwords used to verify identities and approve larger financial transactions.
Freeman pleaded guilty to stealing $ 1.92 million worth of cryptocurrencies from Emmy Award winner Seth Shapiro – producer of The Game Changers, The Chosen One – and illegally more from two other victims, Michael Templeman and Darran Marble Receiving $ 250,000.
The entire Plustoken team
In early July this year, the Chinese police detained 109 people in connection with the Plustoken Ponzi program. Twenty-seven of them – including Chen Bo, Luu Jianghua, Lu Jianghua, Lu Qinghai, Jin Xinghai, Wang Yin, and Zhang Qin – were allegedly the masterminds of the program, while the remaining 82 arrested held minor roles within the organization.
The Plustoken scam raised an estimated $ 5.7 billion from more than two million investors. Hailing from China, the project presented itself as a cryptocurrency wallet that generated high returns when users bought PLUS tokens from either BTC or ETH.
In 2019, key members removed large amounts of crypto from the platform. Between February and March, 25,000 BTC was sent to various addresses including bitcoin mixers, and in June 789,534 ETH were transferred from the company’s coffers. However, by the end of the year the entire program had been exposed, and by July 2020 the project had been stopped by the Chinese police.
In November, the Jiangsu Yancheng Intermediate People’s Court announced that authorities had seized 194,775 BTC, 833,083 ETH, 487 million XRP, 79,581 BCH, 1.4 million LTC, 27.6 million EOS, 74,167 DASH, 6 billion DOGE, and 213,724 USDT – an estimated value of $ 4 billion. Earlier this month, Chen Bo and 13 of his co-conspirators were sentenced to between two and eleven years in prison.