This week the U.S. Department of Justice issued a press release announcing the arrest of an Arizona man and an Israeli woman who have been charged in connection with providing "shadow banking services" for cryptocurrency exchanges. The indictment alleges the man and woman participated in a conspiracy to facilitate unlicensed money transmission of hundreds of millions of dollars worldwide on behalf of numerous cryptocurrency exchanges. According to the press release, the co-conspirators falsified electronic wire payment instructions and made false and misleading statements to banks to open accounts used to receive deposits for cryptocurrency purchases. According to reports analyzing the indictment, the scheme may have connections to two cryptocurrency exchanges, QuadrigaCX and Bitfinex, that have recently been under scrutiny. Late last week, the New York Attorney General announced a court order enjoining iFinex Inc., operator of Bitfinex and Tether Limited, from further violations of New York law in connection with activities that may have defrauded New York investors.
This week the U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of Bitcoin Generation Inc., a cryptocurrency mining and trading firm, due to "concerns about the accuracy and adequacy of information in the marketplace." Overseas, the Malta Financial Services Authority recently issued new guidance warning the public against scams involving cryptocurrencies, initial coin offerings and cryptocurrency exchange platforms. According to a recent report by the Australian Competition and Consumer Commission, cryptocurrency-related scams increased 190% in 2018, with Australian consumers losing $4.3 million. In other news from Australia, the Australian Tax Office has announced an initiative to collect purchase and sale information from cryptocurrency exchanges to improve tax compliance in the cryptocurrency trading industry.
For more information on these developments, please follow these links:
- Arizona Man And Israeli Woman Charged In Connection With Providing Shadow Banking Services To Cryptocurrency Exchanges
- Report: Indictment Reveals Connection to Bitfinex, QuadrigaCX's Shadow Banking Services
- Indictment reveals new clues in the Crypto Capital situation
- Attorney General James Announces Court Order Against "Crypto" Currency Company Under Investigation For Fraud
- The Securities and Exchange Commission ("Commission") announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the "Exchange Act"), of trading in the securities of Bitcoin Generation, Inc.
- MFSA warns, guides consumers on crypto-currency scams: Educates public on how to avoid such scams
- Australia: ATO receives cryptocurrency data to assist tax compliance
- $4.3 Million Lost as Crypto Scams in Australia Rise 190% in 2018
- Report of the ACCC on scams activity 2018
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