Drug dealers create their own cryptocurrency to launder dirty money
A criminal gang involved in the drug trade has created its own cryptocurrency to launder dirty money in what may be the first known case of its kind.
Organized crime syndicates have long exploited the relative anonymity of mainstream cryptocurrencies like Bitcoin and Ethereum to hide the origin of illicit funds.
But the move by a UK street gang to develop and launch its own digital coin takes things 'one step further', according to drug crime expert Gary Carroll of Claymore Advisory Group.
The plot, which is currently active, bears a passing resemblance to OneCoin - a fake cryptocurrency launched in Germany that turned out to be a giant Ponzi scheme.
However, this is thought to be the first time experts have observed the launch of a genuine digital coin by a street gang.
Mr Carroll, who spent 14 years in policing before becoming an expert witness, learned of the scheme through sources but was unable to name the coin or the gang to protect their identity.
He described it as a 'meme coin', which refers to a cryptocurrency that is designed to go viral on social media and rapidly rise in price.
He said the gang hoped to wait for the coin to become more valuable before suddenly selling out as part of a 'pump and dump' strategy.
'Criminals have been using crypto to launder money for at least 15 years now,' he told DailyMail.com.
'But developing a meme coin is one step further than simply buying cryptocurrencies like Bitcoin and Ethereum and suggests the process is becoming easier.
'They are using illicit money to pay developers to create a legitimate coin and then launch it onto the market. They are hoping to get the coin onto popular wallets and for the public to fall on it and turn it into the next Dogecoin.
'This is essentially a pyramid scheme and relies on multi-level marketing and loads of people buying in.
'Even if the coin only rises by a small amount they could still make a lot of money before selling out.
'The those profits will appear to be from crypto entrepreneurship rather than drugs.'
Mr Carroll described the gang behind the coin as 'mid-level' operators who make money through extortion, fraud, drug supply, and the sale of counterfeit goods and cigarettes.
'They are based in England but they've got connections to other countries,' he said.
'They're not a household name - but they've got enough to throw in a few hundred grand and get the coin off the ground.
'There are lots of meme coins out there that do absolutely nothing but have huge uptakes, so the potential rewards are astronomical.'
Mr Carroll has completed more than 1,000 expert reports over nine years and given evidence to multiple court cases, giving him a deep understanding of the rapidly evolving nature of international drug crime.
He believes the relative ease of creating meme coins suggested it could become a popular method for gangs looking to launder money and turn a quick profit.
'It's just one step further than urban street gangs investing in crypto - why invest in the coin when they can just start one themselves?
'In one or maybe two years time there will be cases in court, I'm confident about that.
'Criminals, especially drug dealers, aren't known for their patience. So they are wanting to do something that makes money as quickly as possible.
'My own opinion is this will become more common. It's a way to semi-legitimize their trade.'
OneCoin remains the largest crypto-related scam to date. It was launched in 2014 by German-Bulgarian businesswoman Dr Ruja Ignatova, who described it as 'the Bitcoin killer' while addressing an adoring crowd at Wembley Arena.
Between August 2014 and March 2017, more than $4.5billion was invested by devotees in dozens of countries before Dr Ruja suddenly disappeared in October 2017.
It later emerged OneCoin was not a real cryptocurrency at all but a pyramid scheme hosted on its parent company's servers.
The FBI is now offering a $5m bounty to help track down Dr Ruja, despite rumors she has been murdered at the orders of a Bulgarian mafia boss.
Mainstream cryptocurrencies like Bitcoin are regularly used by criminals to launder cash or move large sums across borders without having to resort to traditional banking methods.
This is often done through highly organized networks that operate across multiple countries and have a wide variety of different criminal clients.
One system recently exposed by police was run by Russian-speaking hackers and consisted of two networks called Smart and TGR.
Smart was run by Ekaterina Zhdanova, a glamorous businessman who regularly graced the covers of business magazines during her earlier career in financial services.
She is currently in custody in France, while the whereabouts of the boss of TGR, Russian businessman Georgy Rossi, are unknown.
Police say Smart and TGR used their global reach to launder money for crime groups including the Kinahans, as well as street drugs gangs operating in several different countries.
They also helped Russian clients bypass financial restrictions to invest money in the UK and the Kremlin pay spies overseas, according to the National Crime Agency.
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The Guardian
5 hours ago
- The Guardian
Online hacks to offline heists: crypto leaders on edge amid increasing attacks
Cryptocurrency traders such as Mohammed Arsalan are prepared to watch their online assets expand and explode if they miss the right moment, making or breaking their fortunes in just minutes. All in a day's work on the internet. Offline, though, they have found themselves less equipped for the consequences of affluence. A string of kidnappings has plagued the industry over the past year and left traders across the globe paranoid, fearful and keen to invest in physical security measures. Arsalan grew up working class in Karachi, Pakistan. He hustles in any setting. At 14, he started a business exporting T-shirts overseas. By 17, the pandemic swept it all away. Inside, online and penniless, the booming world of Bitcoin beckoned him. To learn how to trade digital coins, he would record himself explaining how the markets worked. His phone didn't have enough storage to keep the videos, so he'd upload them onto Facebook groups. To his surprise, people were watching. 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The list goes on. As the industry matures, so does the cybersecurity guarding exchanges and wallets. The value stored within these digital vaults is soaring. The result: hacks are becoming heists. Cryptocurrency has long suffered from sophisticated and devastating digital attacks. Now, however, thefts are manifesting in the offline world, too. For the industry's high-rollers, the targets on their backs have never felt heavier. 'Everybody's a bit on edge,' says Louis d'Origny, the founder of FTXCreditor, a platform that buys bankruptcy claims. 'In five minutes, you can find someone's address. You can see our wallets online. You can see millions of dollars a day transacting out of these wallets. You'd be very tempted to show up at a house with a machete.' Recent attacks have even led his co-founder to move house, after realizing his home address was available online. Navigating an increasingly dangerous offline world, the industry is on edge, feeling as though securing their empires now falls to them as law enforcement struggles to keep up. Building one's fortunes on blockchains entails novel risks. Firstly, blockchains, the technology on which cryptocurrency is based, create public ledgers, so balances and transactions are visible. Every online wallet corresponds with an address in the form of a randomly generated series of characters. To avoid hacking, bigger sums are typically stored offline, on a small piece of hardware called a 'cold wallet', which also corresponds to a public address. Assailants invade homes to steal devices or force hostages to unlock their online wallet at gunpoint. Criminals have started to find who owns which wallet, by using illicit software to analyze blockchain data. 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Following the attack, Arsalan was offered protection from three other officers and a police car. But, fearing this could actually endanger him further, he declined. For many of crypto's kings and queens, unfettered access to one's money via blockchains can feel buffered from institutional corruption. 'There is no justice in Pakistan if you're poor,' says Arsalan. 'But decentralization means there are no institutions, no people, no banks … I own this money.' But self-custody comes with a downside: there are fewer middlemen deterring a thief. This means taking matters into their own hands – or a pair they've hired. 'I used to like my space away from my [bodyguards], but now I want them closer,' says the anonymous US-based founder and trader, who doesn't reveal his security arrangements to anyone, even his close circle. 'In crypto, no one trusts anybody. Half of these guys are scammers,' he says. Over the past month or so, his two guards have not left his sight – even for walks around the block. 'Everyone's being a lot more cautious.' Over the past six months, Jethro Pijlman's global security services firm, Infinite Risks International, has seen a rise in cryptocurrency investors from western cities wanting protection. Requests range from safeguarding team meetings to guarding entire families around the clock. Paris leads when it comes to new requests, says Pijlman, as France emerges as a hotspot for attacks, particularly after the high-profile kidnapping in January of David Balland, the entrepreneur whose finger was severed. In mid-June, an investor was abducted from a Paris suburb, while his partner was ordered to deposit the key to his cryptocurrency account. Sign up to TechScape A weekly dive in to how technology is shaping our lives after newsletter promotion The Ethereum Community Conference takes place at the end of June in Cannes, but the mood will be different from last year. It will feature the 'most comprehensive security effort in the event's history', conference organizers said in a statement. For the first time, local police, special forces and the coast guard are being deployed to the site. Prepping security began almost a year ago, taking three times longer than usual, according to Bettina Boon Falleur, head of EthCC. Companies are also taking measures to protect their staff. Kraken, the second-largest exchange in the US, has deployed armed guards to accompany its top executives at all times, including outside their homes, according to a source familiar with the matter. Matthew Liu, co-founder of the cryptocurrency Origin Protocol, was among the attendees of Donald Trump's private gala for the top owners of his token last month, a guest list which was leaked to the New York Times. Liu says his company is evaluating hiring a team of bodyguards for trips. 'It's a cost, but the cost of getting kidnapped or dealing with violence? It's very, very scary,' says Liu. He's also begun learning how to shoot a firearm and using a multi-signature wallet, whereby multiple people across the world need to sign-off on a payment. His company has also introduced a new rule when the team goes to conferences: no posting until after the event. 'Many crypto investors are increasingly conscious of their exposure, especially after publicly sharing – or oversharing – details of their success and affluent lifestyles online,' says Pijlman in regards to his clients. Indeed, for an industry that's chronically online, its titans have often built large social media followings, while their wealth stays encrypted in anonymous blockchains. 'This illusion of invisibility may have led to a false sense of security.' For Arsalan, he watched his savings be chopped up and sprinkled across the cryptographic abyss. Over the next four months, he fell into a deep depression. He went offline and relied on whatever handouts his father could afford to give him. He considered ending his life, he says. As Arsalan's case demonstrates, kidnappers haven't exclusively targeted only multimillionaires or only westerners. Between 2020 and 2023, a Florida-based gang accessed the personal data of everyday cryptocurrency investors, and were able to steal from their wallets remotely. The gang then carried out four home invasions against the same victims, spanning North Carolina, Texas and Florida, according to the US Department of Justice. Account holders were forced to unlock their wallets at gunpoint, while their families were tied up. One man's mother was tortured. Another man was abducted and found 120 miles from his home. Two of the attacks targeted seniors, court documents show. 'I always dreamed of having a good retirement. I worked for it. I feel like I deserved it,' one victim, 70, told the court during the sentencing. Her husband has Parkinson's. They'd hoped to take one last trip together – 'to have at least some good years, good times', she said. The couple lost $3m in cryptocurrency at 2022 prices via wire fraud. Wanting more, the gang invaded their home and held them at gunpoint to claim whatever was left. Their portfolio would be worth nearly $10.7m today. 'One whole life of savings and you just took it all,' she said. In the case of the retirees, the judge ordered the defendants to pay restitution to the victims. Receiving it looks unlikely. 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He says seven people have reached out to him with similar ordeals they didn't report. Trading digital assets in Pakistan is a legal gray area, as banks are forbidden from facilitating transactions. When asked why they targeted crypto traders, the kidnappers said they thought victims wouldn't have legal recourse, according to Arsalan. In the meantime, Arsalan trades on. He wants to rebuild within a year: 'They grabbed my money but they did not grab my brain.' He's also returned to social media, posting his first video in May. No amount of threats will make him give up crypto, he says. Despite all of its risks, public ledgers still feel safer to him than institutions.
Reuters
2 days ago
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OurCryptoMiner Launches Reliable Passive Income Platform Amid Bitcoin Volatility
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Daily Mirror
2 days ago
- Daily Mirror
Poker controversy amid ‘chip dumping' investigation into star's £1.6million win
Jesse Yaginuma beat James Carroll heads-up to win a grand prize of more than £1.6 million on the World Series of Poker, but the contest has been marred by allegations of chip dumping The poker world is in up in arms after a tournament finale that saw more than £1.6million in winnings distributed to the champion was marred by accusations of chip dumping. Jesse Yaginuma triumphed over James Carroll at the final table of the World Series of Poker 's $1,500 Millionaire Maker on Wednesday, sparking a whirlwind of controversy. At one stage, Yaginuma had less than 10% of the total chips in play before staging a daring comeback to clinch victory. Consequently, he pocketed the main prize of just over £915,000, along with an extra £730,000 thanks to a ClubWPT Gold promotion. Among the two heads-up players, only Yaginuma was eligible for the ClubWPT Gold promotion, having secured a Gold Rush ticket from the sweeps coin poker site. That entitled him to the bonus if he won one of the qualifying events at the WSOP. While it's typically a cause for celebration when any player secures a WSOP bracelet, this wasn't necessarily the case this time around. That's after legions of online users noticed some questionable hands in the heads-up match that raised eyebrows. Chip dumping in poker happens when a player deliberately loses hands to favour their opponent. This is done to effectively transfer funds to one's adversary, either through intentional folding or irrational betting. Carroll, who pocketed a runner-up prize of around £750,000, was accused of making several nonsensical moves as the finale reached its peak. His behaviour was described as particularly out of character given he had built up such a substantial lead not long before. One of the most scrutinised hands saw Yaginuma take the lead for the first time after winning a pot with 174m chips at stake. With the blinds set at 1.5m and 3m, Yaginuma called the big blind pre-flop with a Jack (clubs) and an eight (spades), prompting Carroll to raise to 13m with a six (clubs) and a three (diamonds), which his opponent called. The flop produced a 10 (clubs), five (clubs) and Jack (spades), leading Carroll to bet another 17m, which was called again. Both players checked when a seven of clubs came out on the turn, then raised the stakes once more when Yaginuma called Carroll's 57m bet after the river produced a Queen (spades). There were also several instances where Carroll folded to some significant pre-flop bets courtesy of Yuginama. Again, poker enthusiasts were quick to highlight some concerns over the integrity of their play. PokerNews said it reached out to a representative from ClubWPT Gold, who responded that the company was "looking into the matter." However, they were unable to comment anything further. "Hope you guys don't honour it," said one enraged fan on X. "It was clear chip dumping and such a f-----g horrible look for poker and the community. Absolutely disgusting." "Did they forget this was live streamed? Just absolutely disgusting and bizarre chip dumping," echoed another critic. Meanwhile, a third poker enthusiast wrote: "Jesse Yaginuma and James Carroll should be disqualified with no prize money and permanently banned from the @WSOP and @WorldPokerTour. The bracelet should go to 3rd place Josh Reichard." This scandal has erupted almost exactly one year after Jonathan Tamayo faced backlash over his simulator use during a WSOP Main Event. He won £7.7m in July 2024, but critics quickly scrutinised Tamayo after he appeared to be consulting a simulator mid-game at the final table. Tamayo had just celebrated a major hand victory against runner-up Jordan Griff before turning to consult his coaches and friends, where a laptop featuring a running simulator was allegedly spotted. Both professional and amateur poker players decried the move, arguing Tamayo should have been penalised at the time.
