Prime Suspect in $24 Million Bitcoin Scam Arrested in Thailand

The main suspect in a Bitcoin fraud case in Thailand was detained at a Bangkok airport after being on the lam for 2 months.

Thai citizen Prinya Jaravijit, who allegedly defrauded a Finnish investor of $24 Million worth of Bitcoin (BTC), has recently been detained in Suvarnabhumi Airport in Bangkok, the Bangkok Post reports Friday, Oct. 12.

According to newspaper, Jaravijit arrived in Bangkok on a flight from South Korea en route from the U.S., where he allegedly spent two months after his brother’s detention in connection with the same crime.

Shortly after the arrest Jaravijit, who was wanted on charges of conspiracy to defraud and money laundering, was delivered to local police where he was questioned. His lawyers are reportedly preparing to apply for bail.

As per the Bangkok Post, in January Finnish investor Aarni Otava Saarimaa along with his Thai business partner Chonnikan Kaewkasee complained to the Thai Crime Suppression Division (CSD). They claimed that Jaravajit along with six other suspects had duped them into investing $24 million worth of BTC into a scheme involving three companies and gambling-focused crypto token Dragon Coin (DRG).

However, Saarima and Kaewkasee never received any dividends from the so-called investment, proof of investment in DRG, nor were they invited to a shareholder’s meeting. CSD states that the funds were withdrawn from their BTC wallets, converted into baht and then spent by the alleged fraudsters.

As Cointelegraph previously reported, the case came to public attention when soap-opera actor Jiratpisit “Boom” Jaravijit — Prinya’s younger brother — was detained  in August.

In October, the Thai Money Laundering Office confiscated funds worth $6.4 million from Jaravijit’s family and other people connected to the case, and is preparing to charge the suspects with fraud.

Following the detention of his brother, Prinya Jaravijit reportedly fled to the U.S. to avoid charges. He was ordered to return to Thailand by Oct. 8, but failed to do so. The Thai Foreign Ministry then revoked his passport which made his further stay in the U.S. illegal.

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US SEC Halts Fraudulent ICO That Claimed to Possess Regulator’s Approval

The U.S. Securities and Exchange Commission has halted an ICO that falsely claimed the support of the SEC and used a fake regulatory agency to promote their product.

The U.S. Securities and Exchange Commission (SEC) has halted a planned Initial Coin Offering (ICO) that falsely claimed have SEC approval, the agency reported in an official press release Thursday, Oct. 11.

The SEC suspended the ICO project with an emergency court order, and also halted pre-ICO sales by the company Blockvest LLC, and its founder Reginald Buddy Ringgold III.

The complaint by the SEC alleges that Blockvest falsely claimed that their ICO and affiliates had acquired approval from major financial regulators, including the SEC itself. Blockvest and Ringgold — who also goes by the name Rasool Abdul Rahim El — claimed the crypto fund was “licensed and regulated.”

The firms are accused of violating federal law by impersonating the SEC seal, as well as running an ICO promoted by a fake agency dubbed the “Blockchain Exchange Commission.” The “Commission” reportedly used a graphic similar to the SEC seal, as well as the SEC address.

According to the SEC, Blockvest and Ringgold also violated the law by continuing their fraudulent activity after receiving a cease-and-desist letter by the National Futures Association (NFA).

Following the SEC’s complaint, the U.S. District Court for the Southern District of California issued an order freezing Blockvest and Ringgold’s funds as well as suspending their securities registration provisions. The hearing is set for Oct. 18, and will consider prolonging the preliminary injunction and the asset freeze.

Other firms have attempted to defraud investors by make spurious claims about their status with federal regulators. On Sept. 28, the U.S. Commodity Futures Trading Commission (CFTC) filed a suit against two companies for alleged fraudulent solicitation of Bitcoin (BTC). The companies were also impersonating a CFTC investigator, as well as using forged official documents to pose as the the CFTC’s General Counsel with the CFTC’s official Seal.

The SEC’s Office of Investor Education and Advocacy, and the CFTC Office of Customer Education and Outreach have issued an investor warning on the use of false claims regarding SEC and CFTC endorsements.

Earlier this year, the SEC Office of Investor Education and Advocacy launched a fake ICO website, intended to increase awareness of the typical warning signs of scam ICOs and promote investor education.

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Crypto Exchange YoBit Starts Pump Scheme on Random Coins

Russian crypto exchange YoBit tweeted that it will pump the price of 10 random coins.

Cryptocurrency exchange YoBit is going to perform a pump scheme on random coins, according to an Oct. 10 tweet. A pump and dump scheme is a form of fraud that attempts to artificially boost the price of an asset through misleading or false recommendations.

In addition to announcing the pump scheme in a tweet, the exchange posted a countdown clock for a ‘YoBit pump’ on its website.

YoBit is a Russia-based digital currency exchange founded in 2015, which offers access to hundreds of digital currencies. The trading platform was in the headlines a number of times in multiple reports of suspicious activity and problems with users trying to withdraw funds from their wallets. At press time, YoBit’s daily trading volume is around $28 million, according to CoinMarketCap.

The community reacted quickly, with some users asking whether YoBit’s Twitter account had been hacked, and others accusing the company of fraudulent activity. User @Altcoinbuzzio wrote:

“…Looks like Yobit is serious about it, unbelievable… surprised to see an exchange do this.”

Another user @PsychedelicBart tagged the U.S. Securities and Exchange Commission (SEC) in one of his comments:

In November 2017, a Business Insider investigation revealed that traders were conducting pump and dumps on YoBit via the messaging app Telegram. However, it remained unclear whether the exchange was aware of the pump and dump activity, as Yobit reportedly did not respond to a request for comment from Business Insider.

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Suspect in Thai Bitcoin Scam Unable to Return to Thailand Due to Passport Revocation

The Foreign Ministry of Thailand has invalidated the passport of an alleged Bitcoin scammer, rendering him unable to return to his home country for prosecution.

The Foreign Ministry of Thailand has revoked the passport of an alleged crypto scammer, which has reportedly rendered him unable to return to his home country for prosecution, the Bangkok Post reports Wednesday, Oct. 10.

According to the report, Prinya Jaravijit was in the U.S. after a cryptocurrency investment scheme surfaced in which he and several accomplices allegedly defrauded a Finnish investor of $24 million.

The Crime Suppression Division’s (CSD) deputy commander Pol Col Chakrit Sawasdee claimed on Wednesday that the Foreign Ministry invalidated the passport of the prime suspect Jaravijit.

Sawasdee reportedly ordered the suspect to turn himself in by Monday, but Jaravijit stated that he was not able return to Thailand since his passport was revoked, making his stay in the U.S. illegal. Jaravijit was reportedly in the process of handling his return with the Thai embassy in the U.S.

On Tuesday, the Thai Anti-Money Laundering Office (AMLO) confiscated funds worth $6.4 million from Jaravijit’s family and other people connected to the case. Next week, local police are reportedly set to charge the suspect’s family and elder brother with money laundering. The accused allegedly received money from Jaravijit and spent it later.

As previously reported by Cointelegraph, Jaravijit and his accomplices are accused of defrauding Finnish millionaire Aarni Otava Saarima and his business partner, who were lured into investing their Bitcoin (BTC) in a fake investment scheme involving three companies and  gambling-focused crypto token Dragon Coin.

The alleged scammers took their victims to a Macau-based casino, where they claimed the tokens would be used. Saarima subsequently transferred his bitcoins, but never saw returns, nor shareholder papers or proof of investment in Dragon Coin. Saarima approached the CSD with a complaint in January.

The deputy commander reported that the other suspects have all been members of the Jaravijit family, including investor Prasit Srisuwan and businessman Chakrit Ahmad, who reportedly have reached a compensation settlement with the Finnish investor.

The case first came to light in August, when Thai police arrested 27-year old soap-opera star Jiratpisit “Boom” Jaravijit, who is reportedly one of the seven suspects involved in the $24 million crypto scam.

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Hackers Breach Smart Contract on Ethereum-Based Adult Entertainment Platform SpankChain

Blockchain-based adult entertainment platform SpankChain lost $38,000 in ETH in a hack of its payment channel smart contract.

Ethereum-based adult entertainment platform SpankChain has suffered a smart contract security breach that led to loss of around $38,000, the firm reported on its Medium page Oct. 9.

The hack, which purportedly took place Oct. 6, was detected by SpankChain a day after, and was announced today in a post entitled “We Got Spanked: What We Know So Far.”

Anonymous attackers managed to steal 165.38 Ethereum (ETH) or around $38,000 from the platform’s payment channel smart contract. Additionally, the security breach caused the immobilization of $4,000 worth of the SpankChain’s internal token called BOOTY.

While most of lost or immobilized funds belong to SpankChain itself, the platform claimed that client reimbursements are of “immediate priority.” The company will shortly repay $9,300 worth of Ethereum and Booty coins directly to users’ SpankPay accounts via Ethereum airdrop.

The SpankChain team has subsequently halted its camservice Spank.Live in order to prevent users from depositing via the payment channel smart contract. The website reboot is expected to take around two to three days in order to reset the payment channel smart contract, carry out airdrop reimbursements, reset native token distribution, and eliminate the security weakness.

The attack was related to a “reentrancy” bug similar to that which exploited The Decentralized Autonomous Organization (The DAO). The hacker reportedly created a malicious contract mimicking an ERC20 token, with a “transfer” function calling back into the payment channel smart contract multiple times in a loop, extracting Ethereum each time.

A smart contract is a protocol that enables the specific behavior of a contract by applying the terms of the agreement into the code, eliminating the need for a third party intermediary.

While smart contracts are reportedly “extremely difficult to hack,” they are still a young technology, and can be prone to bugs, which may in turn be exploited by scammers.
The adult entertainment industry is increasingly taking advantage of cryptocurrencies and blockchain technology, mostly driven by the technology’s inherent anonymity, as well as a number of other benefits.

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US Regulator Acts Against Crypto Firm Falsely Claiming to Represent Coinbase, Cointelegraph

The Texas Securities Commission has issued an emergency cease and desist order against a Russian crypto firm for misleading representation.

The Texas Securities Commission (TSC) has issued an emergency cease and desist order against a Russian crypto firm, according to an official press release published September 18. The Texas regulator states that the company allegedly misappropriated both Coinbase and Cointelegraph materials to attract investors.

The firm, operating as Coins Miner Investment Ltd., is said to have spoofed the email address of major U.S. crypto exchange and wallet service provider Coinbase in order to make its email solicitations to investors seem as if they were endorsed by the entity.

The cease-and-desist order states that Coins Miner falsely claimed to be registered at a U.K. address, whereas the firm was in fact operating from Volgograd in Russia. It is charged with sending unsolicited emails to numerous recipients — including Texas residents — luring them to purchase investments in crypto mining programs issued by Coins Miner.

At the center of the order is a Coins Miner affiliate “Ana Julia Lara,” who is charged with falsely depicting herself as a Coinbase crypto trader, as well as misappropriating a photograph of “herself” posing with the president of crypto company Ripple.

The person in the photograph is in fact one of Cointelegraph’s vice presidents, and is not the Coins Miner scammer “Lara,” according to the cease-and-desist:

“Respondent Lara is telling potential investors she met the president of Ripple and [is] providing potential investors with a photograph that purports to depict her and the president of Ripple. The photograph does not depict Respondent Lara. Instead the photograph depicts a vice president at CoinTelegraph Media Group [sic].”

Third parties reporting on the matter have confusingly described the cease-and-desist order, with media outlet Finance Feeds erroneously writing that “the person identified as Lara is [editor’s emphasis added] a vice president of CoinTelegraph Media Group [sic].” Cointelegraph officially denies all connection with the person “Ana Julia Lara.”

Coins Miner is further charged with publishing a “phony” video that “falsely” depicts its facilities, engineers, and financial professionals, and with using “fake” photos that purport to show the interior of its office suite, but are in fact stock Internet photographs available for purchase online.

It is also charged with misappropriating a video of a Fortune journalist discussing crypto next to a superimposed Coins Miner logo. According to the TSC press release, “neither the journalist nor Fortune authorized the use of the video, which was filmed for Fortune as part of its coverage of cryptocurrencies.”

Alongside these charges of misleading and deceptive representations, the TSC deems the investments in Coins Miner to be securities, and their unregistered sale in Texas to therefore be in violation of Section 12 of the Securities Act.

TSC also issued two further cease-and-desist orders on the same day, September 18: one against “DGBK Ltd., an offshore digital “bank” that says it has developed hack-proof storage for virtual currencies”; and Ultimate Assets LLC, a “supposed crypto and foreign exchange trader.”

Earlier this month, in what appeared to be the first U.S. court to address the matter, a New York federal judge ruled that U.S. securities laws are applicable for prosecuting crypto fraud allegations.

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CEO Behind GAW Miners, PayCoin Ponzi Scheme Sentenced to 21 Months in Prison

The CEO of now-defunct GAW Miners has been sentenced to 21 months in prison and ordered to pay $9.2 million in restitution to investors.

Homero Joshua Garza, the CEO of the now-defunct U.S. crypto firm GAW Miners, has been sentenced to 21 months in prison for defrauding investors, local news agency Hartford Business reports Thursday, September 13.

Garza received the verdict in the Hartford federal court, following his guilty plea to a wire fraud charge related to creating and selling a scamcoin dubbed PayCoin (XPY).

Instead of serving the original 20 year sentence, Garza will report to prison on January 4, 2019 and be jailed until 2021, with an additional three years of supervised release, including six months in home detention.

In addition to prison time, the former CEO of GAW Miners will have to repay a $9.2 million restitution to investors, which is the approximate amount of financial damage wrought by the nine-month crypto scam.

Founded in 2014, Bloomfield-based GAW Miners was a firm that specialized in manufacturing, supplying and selling special hardware for crypto mining. The company was shut down in 2015 following allegations of operating as a Ponzi scheme, which was followed by a lawsuit in 2016.

Created by GAW Miners developers, the PayCoin cloud mining cryptocurrency was launched in 2014. The digital currency was based on the SHA-256 algorithm and both proof-of-work (PoW) and proof-of-stake (PoS) protocols.

While GAW Miners had reportedly “guaranteed” investors a $20 floor price for PayCoin, the highest XPY price was $15.92 instead, according to CoinMarketCap.

In late August, the alleged former owner of crypto exchange BTC-e Alexander Vinnik was indicted and subjected to a “fake” interrogation by French prosecutors in a Greek Court. Following a protracted legal battle and several lower court rulings, the Greek Supreme Court eventually ruled to extradite Vinnik to Russia.

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Two US States Implore Indian Authorities to Seize Property of BitConnect Promoters

Two U.S. states have asked Indian authorities to seize the property of the promoters of alleged BTC Ponzi scam BitConnect.

Authorities from two U.S. states have implored the Criminal Investigation Department (CID) in India to seize the property of promoters of Bitcoin (BTC) investment firm BitConnect, the Times of India reported September 11.

BitConnect, which ceased its operations in January of this year, was an open-source cryptocurrency and an investment program accused of being a Ponzi scheme. The accusations were based on the multi-level referral system and promise of astronomical returns on customers’ investments.

The U.S. states of Illinois and Arizona are asking the CID to seize the property of the promoters, who are suspected of raising Rs 41,000 crore (around $5.6 billion) from investors. Most of the funds were purportedly poured into the firm after the demonetization of high-value banknotes at the direction of the Modi government in 2016.

The CID claims that “those who invested in this virtual currency company after demonetization are suspected of laundering black money.” The agency added that it will request the probe of such investors by the enforcement directorate and income tax  authorities.

Initially, the fraud scheme was reported by businessman Shailesh Bhatt, who claimed that he had been kidnapped and robbed of Rs 9 crore ($1.2 million) worth of BTC by local police. The CID said:

“The investigation found that Bhatt had invested Rs 2 crore ($275,000) in BitConnect and after the company shut shop in January 2017, he kidnapped an employee of BitConnect, Dhaval Mavani, and extorted Bitcoins, Litecoins and cash worth Rs 155 crore ($25 million) from him.”

At the end of August, Indian police arrested Divyesh Darji for allegedly promoting BitConnect and scamming investors. Darji, a resident of Surat city, reportedly said that he had been the India head of BitConnect. The CID claims that staff at the BitCoinnect office in Surat admitted that promoters had overall amassed “crores [tens of millions] of rupees from thousands of investors.”

Following the cessation of BitConnect’s activities, a number of users in the U.S. launched a class action lawsuit against the company, seeking compensation for lost funds, reportedly amounting to $771,000. The suite alleges that the BitConnect tokens were unregistered securities in a “wide-ranging Ponzi scheme.”

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Breaking: Founder of Crypto Exchange OKEx Allegedly Detained on Crypto Fraud Charges in China

The founder of crypto exchange service provider OKCoin and crypto exchange OKEx has allegedly been detained in China for suspected digital currency fraud.

Star Xu, the founder of exchange services provider OKCoin and the world’s second-largest crypto exchange OKEx, has allegedly been detained in China in relation to suspected digital currency fraud, local news outlet Sina News reports September 11.

According to the news outlet, Xu is currently being held in the Shanghai Weifang Xincun police station, and will be released within 24 hours if insufficient evidence is found of his participation in suspected fraud.

Tech news sources ZeroHedge reports that investors in WFEE Coin — a company where Xu is a shareholder — complained to the police about the company’s allegedly fraudulent practices, prompting the police to bring Xu in for questioning.

As ZeroHedge writes, WFEE issued tokens and sold them through their website. As a WFEE shareholder, Xu can be held responsible for any kind of fraud related to the company.

However, the investigation has seemingly shown that Xu’s company in Shanghai is not related to issuing the WFEE Coin, ZeroHedge notes, adding that it makes “little sense” for them to defraud investors through a Beijing subsidiary.

The news of Xu’s detentions comes shortly after OKEx volumes significantly surged this summer. As Cointelegraph reported earlier in August, OKEx posted a new record in July 2018 with $5.7 billion in volume, as compared to June’s $2.9 billion.

After the news of Xu’s alleged detention broke today, CoinMarketCap data showed that OKEx saw an almost 3 percent drop in trading volume over a 24 hour period, having traded around $714 million on the day.

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Chinese Gov’t Study Detects 421 Fake Cryptos, Outlines Key Features of Fraud

China’s Ministry of Industry and IT says it has detected 421 fake cryptos, identifying key signs of fraudulent tokens in its recent report.

A government-led study in China has detected 421 fake cryptocurrencies, according to a report published today, May 18.

IFCERT, a national committee of internet financial security experts initiated by China’s Ministry of Industry and IT, has warned of the dangers of fraud in the crypto space. The committee’s report notes that as of April, over 60% of the 421 detected fake cryptos are run from overseas servers, making them “difficult to find and to track.”

IFCERT’s ongoing monitoring identified three key features of fraudulent digital currency profiles.

Firstly, their reliance on a so-called ‘pyramid scheme’ operational model, in which investors are first compelled to make a payment, and then promised returns on the basis that they enroll others in the scheme.

The second feature of a fraud crypto, according to IFCERT, is the absence of open-source code of the fake digital asset, allowing its creators to dupe investors into an illusion of skyrocketing growth by artificially splitting the tokens to create an impression of proliferating rewards. The fraudsters claim that the more tokens are generated, the more wealth increases, “only rising without falling.”

Lastly, according to IFCERT, given that bogus coins cannot be traded on legitimate crypto exchanges, they are largely traded through over-the-counter deals, or even on transient phony platforms. With no transparency, scammers can manipulate apparent price surges, while at the same time preventing investors from withdrawing funds in order to benefit from such ‘spikes.’

The report concludes that such virtual currency scams are cases of “illegal fundraising,” with a high risk that their creators will disappear and wreak huge losses for investors, left unable to defend their rights.

The features of a fraud cryptocurrency identified by the IFCERT in their recent study are  strikingly similar to those identified by the U.S. Securities and Exchange Commission’s (SEC). In a recent campaign aimed to educate investors, the U.S. SEC created a website for a fake Initial Coin Offering (ICO) that went live just two days ago. The SEC’s mock lures investors with a “too good to be true investment opportunity” – using the very “red flags” the organization claims to have identified in the majority of fraudulent ICOs – and redirects those who attempt to purchase the ersatz tokens to an educationally-oriented page on the SEC’s own site.

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