Blockchain & Cryptocurrency Security Blog

Taking center stage in a key-note address at the virtual 2020 ACAMS Las Vegas Conference, FinCEN Director Kenneth A. Blanco clarified a long-standing confusion banks have had regarding their exposure to cryptocurrencies and the steps they must take the mitigate these risks.  Director Blanco said that FinCEN continues to focus its efforts on a number…

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SANCTIONS UPDATE: On September 16, 2020, two Russian nationals were added to OFAC’s SDN List for their involvement in a sophisticated phishing campaign that targeted customers of two US-based and one foreign-based virtual asset service providers (VASPs) in 2017 and 2018 . This attack resulted in combined losses of at least $16.8 million. The designation…

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On Monday, September 14, 2020, FATF released a report on Virtual Assets Red Flag Indicators. This report is meant to assist reporting entities, including financial institutions (FIs), designated non-financial businesses and professions (DNFBPs), and VASPs. The red flag indicators are an excellent start and are mostly focused on indicators of money laundering for VASPs.  The… Read more

SANCTIONS UPDATE: On September 10, 2020, four individuals were added to OFAC’s SDN List for attempting to influence the US electoral process. Three of the designated individuals were linked to supporting the cryptocurrency accounts of the Internet Research Agency (IRA)—a Russian “troll farm” tied to influence operations abroad on behalf of Russian political interests. According…

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Existing FinCEN regulations clearly state that it is the responsibility of all financial institutions to identify and report suspicious activity concerning how criminals and other bad actors exploit CVCs for money laundering, sanctions evasion, and other illicit financing purposes. These requirements apply to all financial institutions, even if those financial institutions do not directly buy,… Read more

On August 3, cybersecurity firm McAfee released new researching showing the activities of NetWalker—ransomware that has collected more than 2,795 bitcoin by operating a ransomware-as-a-service (RaaS) model. Using CipherTrace Inspector, McAfee was able to trace through NetWalker ransomware transactions to follow the coins and uncover intelligence on the revenue-sharing scheme that helped proliferate the malware to make it as profitable as possible.  A contributing factor to NetWalker’s success was the utilization… Read more

UPDATED 7/31 Three Charged for Role in Twitter Hack On July 31, three individuals were charged for their alleged roles in the July 15 Twitter hack— Mason Sheppard, aka “Chaewon,” 19, from the United Kingdom; Nima Fazeli, aka “Rolex,” 22, from Florida; and a juvenile whose identity is sealed. According to San Francisco FBI Special…

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On July 15, Twitter accounts for multiple high-profile cryptocurrency exchanges, public figures, and various entities were taken over by hackers promoting a Bitcoin Doubler scam. Shortly after 12pm PST, the Twitter accounts for AngeloBTC, Binance, Binance CEO Changpeng Zhao, CoinDesk, Coinbase, Gemini, Kucoin, and Tron Founder Justin Sun were taken over by most likely the… Read more

Jurisdictions Race to Implement Regulation Regimes for Virtual Asset Service Providers while Industry Develops Travel Rule Solutions On June 24, 2020, the Financial Action Task Force met, albeit virtually, for the third and final Plenary meeting under President Xiangmin Liu, of the People’s Republic of China, to review progress towards implementing new anti-money laundering guidance…

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As more mainstream consumer and institutional investors embrace cryptocurrencies, it becomes increasingly difficult, if not impossible, for traditional financial institutions to avoid entanglements with the crypto economy. For example, banks face significant counter-party transaction risks from customers interacting with high-risk crypto exchanges—especially when a bank is unable to identify these transactions as to or from…

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