Crypto Quill

This week in the cryptocurrency world, the spotlight is on several significant cybersecurity and regulatory incidents. A phishing campaign targeting Web3 professionals, a hefty fine for Kraken’s Australian operator, a major crypto fraud case, and international legal developments underscore the challenges facing the digital asset industry.

Web3 Workers Targeted by Fake Meeting Apps Stealing Crypto and Credentials

Web3 professionals have fallen victim to a phishing campaign using fake meeting apps designed to steal sensitive data, including cryptocurrency credentials. Cado Security Labs uncovered the scheme, where scammers use AI-generated websites, blogs, and social media profiles to impersonate trusted colleagues or companies. The malware, Realst info-stealer, can operate on both macOS and Windows, discreetly stealing browser cookies, banking information, and crypto wallet details.

The attack involves malware-laced meeting apps that appear legitimate but are designed to extract sensitive data once installed. These apps target popular wallets and browsers, including Ledger and Binance. Even before installation, malicious websites use JavaScript to drain cryptocurrency stored in browsers.

Kraken Operator Fined AU$8 Million for Breaches

Bit Trade Pty Ltd, the Australian operator of the Kraken crypto exchange, has been fined AU$8 million for offering unlawful margin extension products. The Australian Securities and Investments Commission (ASIC) ruled that from October 2021, Bit Trade provided margin extensions to over 1,100 customers without a necessary target market determination. The court found that Kraken’s product breached design and distribution obligations, underscoring significant compliance failures.

The fine comes after customers incurred over $5 million in losses, with one individual losing nearly $4 million. This penalty marks ASIC’s first enforcement action for a breach of target market determination obligations.

Five Ordered to Pay $5 Million for Crypto Fraud

A Los Angeles federal court has ordered five individuals involved in a crypto fraud scheme to pay over $5 million in restitution. The group, operating as Icomtech, defrauded 190 victims through false promises of profitable Bitcoin trading between 2018 and 2019. Instead of generating profits, the individuals misappropriated investor funds, leaving victims without their investments. The Commodity Futures Trading Commission (CFTC) announced the decision to hold the perpetrators accountable.

Polish Police Detain Russian Crypto Boss

Polish authorities have arrested Dmitry V., a former Russian cryptocurrency exchange operator, on charges related to fraud and money laundering. Wanted in the U.S., Dmitry V. is linked to the defunct WEX exchange, once the largest crypto exchange in Russia before its collapse in 2018. He faces up to 20 years in prison if convicted. The arrest follows a U.S. extradition request for his involvement in financial crimes tied to one of the world’s largest crypto platforms.

FTX Debtors Recover Millions in Political Donations Amid Bankruptcy Efforts

In ongoing bankruptcy proceedings, FTX debtors have successfully clawed back over $14 million in political donations made by former CEO Sam Bankman-Fried prior to the exchange’s collapse. Funds have been recovered from major Democratic PACs and state parties, including $6 million from the Democratic House Majority PAC and $3 million from the Senate Majority PAC. These donations were allegedly funded by misappropriated customer funds.

FTX’s bankruptcy proceedings are part of an effort to repay users, with a plan in place to return 98% of user claims, totaling 119% of account values. Bankman-Fried, who was convicted of fraud and money laundering in November, is currently serving a 25-year prison sentence.