Blockchain & Cryptocurrency , Cryptocurrency Fraud , Fraud Management & Cybercrime

Cryptohack Roundup: Court Summons for Binance Chief

Also: Atomic Wallet, Tornado Cash, Coin Dispute Network, Crypto Hacks Down
Cryptohack Roundup: Court Summons for Binance Chief
Image: Shutterstock

Every week, Information Security Media Group rounds up cybersecurity incidents in the world of digital assets. This week: A U.S. federal court issued a summons to Binance CEO Changpeng Zhao, Lazarus may be behind the $35 million Atomic Wallet heist, Manhattan prosecutors seized a scam crypto recovery website, a friend of the court brief was filed in a lawsuit seeking to overturn the U.S. Department of Treasury's sanctions against Tornado Cash, and crypto security attacks continue to decline.

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Days after the U.S. Securities and Exchange Commission sued Binance, accusing it of peddling unregistered securities and mishandling customer funds, the U.S. District Court for the District of Columbia issued a summons to CEO Changpeng Zhao and Binance companies requiring them to respond in federal court or face a default judgment.

The document lists Zhao's address in Malta and says the court expects a response to the complaint within 21 days. Federal regulators also pressed their bid for the court to repatriate and freeze the assets of U.S. consumers, arguing that the court has jurisdiction over the defendants notwithstanding "Binance's and Zhao's pattern of geographical elusiveness." Binance earlier said the SEC's actions in this case are "limited in reach," as it was not a U.S. exchange.

A declaration from a SEC official said banking records show large deposits and withdrawals from two American crypto-focused banks that collapsed this year - Silvergate Bank and Signature Bank.

Binance lawyers reportedly said that SEC Chair Gary Gensler, an outspoken crypto critic, offered to be an adviser to the exchange in 2019. He was a professor at the Massachusetts Institute of Technology's Sloan School of Management at the time.

Atomic Wallet

North Korean threat actor Lazarus Group is likely behind the $35 million attack on Atomic Wallet, Elliptic said with "high-level confidence" in a Tuesday report. The company said the laundering process and the services used point to Pyongyang, adding that it is "possible that the stolen crypto assets have been co-mingled in wallets that hold the proceeds of past hacks perpetrated by Lazarus Group." Atomic Wallet said on Saturday that less than 1% of its monthly active users had been affected and that it will report victim addresses to major exchanges and blockchain analytics companies to "trace and block the stolen funds," as it continues to investigate the incident.

Coin Dispute Network

Prosecutors from the Manhattan district attorney's office said on Wednesday that it had seized a website that fraudulently claimed to help victims of crypto thefts recover stolen funds in exchange for a fee. Coin Dispute Network kept the fee and extracted more crypto from the customers by "making false promises of asset recovery, and generated inaccurate blockchain tracing reports to victims," said Manhattan District Attorney Alvin L. Bragg Jr. Law enforcement continues to investigate the criminal case, which began in November 2022, and has recovered more than $1.3 million worth of stolen cryptocurrency so far.

Tornado Cash

The Blockchain Association, alongside DeFi Education Fund, on Friday filed a friend of the court brief calling the U.S. Department of Treasury's August 2022 decision to sanction Tornado Cash "unprecedented and unlawful." The crypto advocacy group's brief supports Washington, D.C., policy nonprofit Coin Center's lawsuit against the agency. Blockchain Association attorneys said federal governments lacks authority to sanction Tornado Cash, as it is neither a person nor a property. They also argued that the sanction infringes on the right to free speech and privacy. The arguments are similar to a September lawsuit, bankrolled by Coinbase.

Blockchain Security Attacks Decline

The amount stolen as part of "various blockchain security incidents" continued to decline in May, despite experts predicting that the slowdown of the first quarter of 2023 is unlikely to last. In the last month, security incident-related losses were $19.7 million, an 80% decline from April, Beosin's report said. Hackers also found new attack methods, such as using shared rechargeables to steal private keys. Hackers and scammers are also "gradually" shifting their focus from blockchain projects to users, it said.

About the Author

Rashmi Ramesh

Rashmi Ramesh

Assistant Editor, Global News Desk, ISMG

Ramesh has seven years of experience writing and editing stories on finance, enterprise and consumer technology, and diversity and inclusion. She has previously worked at formerly News Corp-owned TechCircle, business daily The Economic Times and The New Indian Express.

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