Judgment Entered In Crypto Fraud Case, Hacked Bitcoin Seen On The Move – Technology – United States – Mondaq News Alerts

Late last week, a Nevada federal court entered a default
judgment against David Saffron, an Australian citizen residing in
the U.S., and Circle Society, his Nevada corporation, for running a
cryptocurrency Ponzi scheme. The case was brought by the Commodity
Futures Trading Commission, which alleged that Saffron fraudulently
solicited and accepted over $15 million of bitcoin and U.S. dollars
from at least 179 individuals by falsely promising to invest the
funds and generate guaranteed returns of up to 300 percent. Rather
than using the funds as promised, the defendants allegedly
misappropriated the funds, including by holding them in
Saffron’s personal wallet and using some to pay out redeeming
investors.

A former CIA director published an analysis last week of
bitcoin’s use in illegal activities. The paper concludes that
generalizations on the use of bitcoin in illicit finance are “significantly overstated” and cites a recent study by
blockchain analytics firm Chainalysis stating that illicit activity
among all cryptocurrencies was less than 1 percent of total
cryptocurrency activity between 2017 and 2020. According to the
paper, most of this activity consisted of “simple” scams
and purchases on the dark web. For bitcoin specifically, the paper
notes that illicit activity makes up less than 0.5 percent of total
transaction volume. The paper also notes that blockchain ledger
technology is underutilized by law enforcement and can become a
highly effective crime-fighting and intelligence-gathering
tool.

According to reports this week, long-dormant bitcoin stolen in
the 2016 hack of cryptocurrency exchange Bitfinex were seen on the
move. There were 63 transactions in all, totaling over $620
million, with the largest transaction worth over $78 million. Some
of the transfers were between wallets associated with the hack,
although many were to newly created wallets. Efforts to identify
the hacker are ongoing.

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