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January 29, 2021

Crypto Crime Report | NetWalker Bust | Brits Contract Custody Firm to Hold Seized Crypto | Japanese, Indian, and Austrian Crypto Arrests


  • Read the new Cryptocurrency Crime and Anti-Money Laundering Report
  • DOJ, International Partners Take Action Against NetWalker After 18-Month Spree
  • Custody Firm Komainu to Hold Confiscated Crypto for British Police
  • Quick Reads:
    • 30 People Arrested in Japan for Involvement in Coincheck Hack 
    • Police Arrest BTC Scammer in India 
    • Austrian Citizens Arrested for Helping Wirecard’s COO Escape to Belarus 


Get the Low-Down on All the Hacks, Scams, and Crypto Crimes of 2020

CipherTrace’s Latest Cryptocurrency Crime and Anti-Money Laundering Report reveals that in 2020, major crypto thefts, hacks, and frauds totaled $1.9 billion—the second-highest annual value in crypto crimes yet recorded.

Decentralized finance (DeFi) is the next major threat vector for fraud and money laundering: half of all thefts in 2020, totaling $129 million, were DeFi-related hacks. Meanwhile, some centralized exchanges, most notably Shapeshift, are transforming into decentralized exchanges (DEXs) to avoid KYC requirements.

Our latest report dives into the details of whale-sized exit scams, harder-to-hack crypto systems, and the role DeFi played in the year’s numbers.

Download your copy:

Read coverage of the report in Reuters:


Canadian National Charged in NetWalker Ransomware Scheme

On January 27th, the Department of Justice announced a series of actions against the NetWalker ransomware group, in coordination with international law enforcement partners. NetWalker was first detected in August 2019 and has victimized local governments, educational institutions, corporations and more; even the healthcare sector has been attacked, in the midst of the continuing COVID-19 crisis.

Sebastien Vachon-Desjardins, a Canadian man, is facing charges after allegedly obtaining more than $27 million from NetWalker victims. The DOJ also seized more than $450k worth of cryptocurrency paid as ransom by victims in three separate attacks.

Read the DOJ announcement

In August 2020, McAfee Advanced Threat Research investigated NetWalker. 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.

Read McAfee’s analysis on the NetWalker Ransomware here:


British Police Partner with Komainu to Hold Confiscated Crypto Assets

Komainu, a custody firm developed by Nomura and CoinShares, has been contracted to hold cryptocurrency confiscated by the British police. In both 2018 and 2020, large amounts of cryptocurrency were seized. Though Komainu generally serves institutional investors, the head of the Cybercrime Programme stated that Komainu’s relationship to CoinShares set the firm apart from other options, as CoinShares could be leveraged for crypto-to-fiat conversions.

Although British police have been undergoing training programs to learn the necessary tools to deal with crypto crimes, authorities have been overwhelmed by the increase in crypto-related crimes happening in the UK. The British National Crime Agency has posted jobs asking for more professionals experienced in the work of crypto crime investigations.

Why it Matters:

Law enforcement officers around the world continue to see more crypto in arrests each year. Globally, there has been a consistent decrease in reported bulk cash seizures, possibly indicating increased cryptocurrency use by criminals in favor of cash. As such, the ability to seize and custody crypto is an absolutely critical capability for investigators. Simply seizing hardware wallets is not enough to prevent savvy criminals or their accomplices from using their private keys to move funds out of law enforcement’s reach during an investigation.

Read more in The Block:


Japanese Authorities Arrest 30 People in Connection with 2018 Coincheck Hack

Back in 2018, Japanese exchange Coincheck was the victim of a hack that saw over $500 million worth of NEM lost in what is still the largest exchange hack. This month, the Japanese police were able to arrest 30 people connected to the hack by tracing the accounts at crypto exchanges where the hacked funds were converted. There is a suspicion that Russian hackers are to blame for infecting the computers of Coincheck employees with a virus that allowed for the remote takeovers.

Previous to these arrests, authorities had only identified two men as having bought stolen NEM through dark net sellers at the time the hack happened. When the men were questioned by the police, they admitted that they knew where the funds had originated from and did not seem to care as they were able to buy those funds at a discounted rate.

Read more Cointelegraph:


Indian Police Arrest BTC Scammer

Indian authorities arrested an infamous BTC scammer in the city of Bengaluru and recovered $1.23 million worth of funds as a result. The scammer was found to have hacked into government websites, three crypto exchanges, and ten online poker sites using malware. Police are now investigating if the scammer was previously involved in other hacks or had accomplices. India has seen an increase in crypto crimes, especially since the rise of BTC prices—the scammer’s preferred cryptocurrency.

A Microsoft report found that India has “the third highest ransomware encounter rate” across southeast Asia. As ransomware attacks become increasingly frequent and more sophisticated, governments and other enterprises will want to prioritize digital security.

Read more in Coin Geek:


Two Austrian Citizens Arrested for Helping Wirecard COO Escape Fraud Charges

Jan Marsalek, the disgraced COO of Wirecard, has been on Interpol’s most wanted list for a while after creating the fraudulent financial firm that led to the disappearance of 1.9 billion euros ($2.3 billion). On January 25th, two Austrian men were arrested for having assisted Marsalek in his escape: a former politician and a former member of the Austrian secret service. The police concluded that Marsalek was able to escape by traveling to Belarus on a private jet from his native Austria.

Read more in Coin Desk:


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