Blockchain & Cryptocurrency
Fraud Management & Cybercrime
Also: Crypto Q3 Losses; China Companies Use Digital Assets to Distribute Drugs
Every week, ISMG rounds up cybersecurity incidents in digital assets. This week, the FTX hacker moved more than $100 million of funds as the trial of the company’s former CEO begins; crypto losses in the third quarter of this year were $685.5 million; and the DOJ said that China uses crypto to hide funds and identities in its illicit drug operations.
FTX Hacker Moves Millions
The FTX hacker moved $113 million worth of Ether from multiple wallets starting Saturday, nearly a year after the theft. The wallet currently contains a balance of $194 million worth of ethereum across 10 addresses.
The news comes near the start of former FTX CEO Sam Bankman-Fried’s criminal trial in U.S. federal court, which began Wednesday. He faces seven fraud charges, including five conspiracy charges, and a statutory maximum of 110 years in prison if convicted on all counts. Several former FTX executives, including former Alameda Research CEO Caroline Ellison, FTX co-founder Gary Wang, former FTX Engineering Director Nishad Singh and former FTX Chief Operating Officer Constance Wang, are likely to testify. Ellison, Gary Wang and Singh have already pleaded guilty to the charges against them.
Crypto Q3 Losses
The third quarter of this year was a bad one in terms of thefts. Web3 lost $685.5 million during the last three months due to hacks and fraud, contributing to total losses so far this year of $1.4 billion, Immunefi said. Cross-chain platforms Mixin Network and Multichain exploits made up nearly half of the total losses in the quarter. Third-quarter losses were up 59.9% compared to the same period last year, when hacks and fraud added up to $428.7 million. State-backed threat actors, primarily North Korea’s Lazarus Group, played a “crucial” role in this quarter’s hacks, Immunefi said, and their focus on centralized financial platforms led to a sharp surge in losses within that sector.
China Uses Crypto in Illicit Drugs Operations
China-based companies and their employees are producing and distributing fentanyl and methamphetamine, among other drugs, and using cryptocurrency to conceal identities, locations and the movement of funds during these operations, the U.S. Department of Justice said. Fentanyl is the leading cause of death among U.S. residents between 18 and 49 years of age and has caused at least 105,263 deaths between February 2022 and January this year. The Department of the Treasury’s Office of Foreign Assets Control also last week sanctioned a member of Mexico’s Sinaloa Cartel, which used an ethereum wallet to move funds connected to the smuggling of fentanyl into the U.S.