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INDUSTRY UPDATES & INSIGHTS

May 22, 2020

  • J.P. Morgan to Support Cryptocurrency Exchanges
  • Wotoken Scam Steals $1 Billion in Crypto from Over 715,000 Victims
  • Binance Prevents Upbit Hacker from Cashing-Out 

J.P. Morgan Announces New Support for Crypto Exchanges

On May 12, J.P. Morgan announced it will support two major cryptocurrency exchanges— Coinbase and Gemini—with traditional bank accounts. The terms of the partnership further elaborate that JPM will provide the exchanges with withdrawal, deposit, and transfer services through Automated Clearing House (ACH) assistance. This is the first time the bank has accepted virtual asset customers.

An anonymous banker shared in a report, “I would expect that there are other associated benefits to JPM from any associated banking services, additional collaboration with both of those firms, potential for winning any future IPO [initial public offering] or another angle such as JPM coin being offered on either of those platforms.”

Why it matters: As cryptocurrencies continue to grow into a major asset class, the acceptance of cryptocurrency businesses by major financial institutions is inevitable. Traditional Financial Institutions are learning to successfully identify and mitigate the risks that comes from this new asset class.

Read the coverage in Live Bitcoin News here: https://www.livebitcoinnews.com/j-p-morgan-offers-bank-accounts-to-btc-exchanges/

CipherTrace COO Stephen Ryan discusses a risk-based approach to Crypto AML for banks with CipherTrace partner NICE Actimize on this recorded webinar.

Wotoken Scam Connected to PlusToken Ponzi Scheme Makes Off with More Than $1 Billion in Crypto

On May 16, Chinese media outlet Qianba reported that the trial of six defendants who were members of Wotoken—an MLM network investment scam—began on May 14. The scam involved over 715,000 victims and generated an estimated $1 billion USD in cryptocurrencies.

Wotoken was marketed as an algorithm-based investment platform that in reality did not exist. One of the defendants allegedly had ties to the infamous PlusToken Ponzi scheme that made off with more than $4 billion in cryptocurrencies in 2019. The court recommended prison terms of between six months and eleven years for all six defendants.

Why It Matters: Ponzi schemes like Wotoken and PlusToken contribute to an atmosphere of distrust. Such massive scams highlight the ongoing need for effective regulations to protect investors and create a safe environment for all participating parties.

Read the Cointelegraph story: https://cointelegraph.com/news/plustoken-scammer-implicated-in-chinas-second-ten-figure-crypto-ponzi

Read the translated Qianba story: https://www.qianba.com/news/p-415391.html

Binance Freezes Hacker’s Account Before Ethereum Theft Could Happen

On May 13, $27,164 in ETH transferred from a flagged wallet linked to the 2019 Upbit hack to Binance. Reacting quickly, Binance was able to freeze the hacker’s account before they could cash out the stolen funds.

Binance CEO Changpeng Zhao responded to the transfer on Twitter an hour after a Whale Alert post with, “Frozen, will work with #UpBit to verify and get law enforcement involved and hand off the funds. Waiting for someone to complain on social media about us freezing funds. But fight bad actors, we must.”

Why it matters: This incident highlights the importance of monitoring criminal addresses, maintaining strong AML procedures at fiat off-ramps, and the benefit of industry collaboration. Criminals will continue to look for ways to cash out on their illicit funds.

Read the full coverage of this story on Daily Hodl: https://dailyhodl.com/2020/05/14/binance-freezes-crypto-funds-as-hacker-tries-to-sell-stolen-ethereum/

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