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Bitcoin Laundering: Two Men Convicted in Drug-Infused $3 Million Scam

Bitcoin Laundering: Two Men Convicted in Drug-Infused $3 Million Scam

Bitcoin Laundering: Two NY’ers Convicted in $3 Million Drug-Infused ScamThe criminals were operating out of New York and Texas selling steroids and other controlled substances. | Source: ShutterstockBy CCN: Callaway Crain and Mark Sanchez recently pleaded guilty to money laundering in New York. Investigators allege the pair earned close to $3 million selling steroids and controlled substances, mostly in bitcoin. They were first arrested almost exactly a year ago.$2.8 Million Over Six Years for Homemade SteroidsCrain and Sanchez operated on the clear and dark webs and left New York in 2015 to continue their enterprise in Texas. The guilty plea gives them guaranteed sentences of no more than seven-and-a-half years but no less than two-and-a-half. Each is convicted of a second-degree money laundering and fifth-degree drug trafficking, both felonies.According to a note on the Manhattan District Attorney’s page, the men manufactured the steroids themselves in private residences. They reportedly sold to at least one NFL player and a few other prominent people through a string of websites called “NextDayGear.” They even sold to police officers, according to the DA:“The defendants purchased steroids, precursor chemicals, and other controlled substances wholesale from China and other countries. After obtaining the chemicals and substances, they mixed, pressed, and packaged them, often under brand names they created; advertised and sold them online; and shipped them to customers in all 50 states and sixteen countries. Their customers included a college football player, an NFL football player, a professional volleyball player, fitness trainers, police officers, members of the armed services deployed overseas, body builders, drug dealers, doctors, lawyers, and a high school athletic coach.”Callaway Crain’s mugshot courtesy of Arrests.org.The notice doesn’t name the exchange that the men used to convert from crypto to cash, but it does mention that they tried to tumble the coins in a rather lazy manner: they just hopped them to an intermediary wallet before depositing them on exchanges. There are professional coin-mixing services that might have been useful for a business like this, but they take time and cost money.If customers chose not to pay in bitcoin, they could use Western Union, which the men would have sent to fake identities.“Customers also made payments through Western Union. Those payments were laundered through the use of false identities, or through international wire transfers from foreign-based receivers.”In total, “NextDayGear” moved 10,000 orders to 16 countries, though their business was primarily in the U.S. The DA says this is the first time they’ve had a money laundering conviction related to cryptocurrency in New York State, although the state has some of the most stringent crypto regulations on its books.Bitcoin Laundering Cases Stacking UpThe announcement also mentions a pending case involving dark web seizures that may lead to more money laundering charges.DA Cyrus Vance said:“These defendants raked in crypto and cash worth millions on their full-service website that sold prescription-free counterfeit steroids and other controlled substances to customers in all 50 states. Online drug sellers who do business in New York should take note: whether you’re operating in plain sight or in hidden corners of the dark web, my Office has the skills and resources to follow the money, shut down your business, and hold you accountable.”Although this is the first case prosecuted by local authorities, Crain and Sanchez are not the first New Yorkers to go down on money laundering charges related to cryptocurrency. Federal authorities charged Charlie Shrem with money laundering for knowingly handling funds for a Silk Road vendor, and he did some prison time as a result. About The AuthorP. H. MadoreP. H. Madore has written for CCN since 2014 and is currently Head of Crypto. Please send breaking news tips or requests for investigation to [email protected] His website is http://phm.link
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Moonday Mornings: Binance to resume deposits and withdrawals after $40M Bitcoin hack

It’s time for Moonday Mornings, Hard Fork’s wrap-up of the weekend’s top cryptocurrency and blockchain headlines. Here’s what happened. 1. Binance says it will resume deposits and withdrawals on its platform on Tuesday. The cryptocurrency exchange had suspended the functions following an attack in which hackers stole over $40 million worth of Bitcoin. 2. The…

Moonday Mornings: Binance to resume deposits and withdrawals after $40M Bitcoin hack

It’s time for Moonday Mornings, Hard Fork’s wrap-up of the weekend’s top cryptocurrency and blockchain headlines.

Here’s what happened.

1. Binance says it will resume deposits and withdrawals on its platform on Tuesday. The cryptocurrency exchange had suspended the functions following an attack in which hackers stole over $40 million worth of Bitcoin.

2. The figureheads of the fake cryptocurrency scheme, OneCoin, are being sued. Brother and sister duo, Konstantin Ignatov and Ruja Ignatova are facing a class action law suit for their involvement in the scam which was “based completely on lies and deceit,” ZDNet reports.

3. A Bitcoin BTC fueled ransomware attack hit the Baltimore City government last week. Despite being cleaned of the ransomware, hackers are allegedly still accessing the infected computers, ZeroHedge reports. The Federal Bureau of Investigation is now investigating the attack.

4. The creator of the Bitcoin treasure hunt Satoshi’s Treasure is claiming nearly 60,000 people are following the global challenge, CoinDesk reports. One player has already claimed the first prize, and didn’t even have to go anywhere to claim it.

And finally.

5. William Shatner is putting William Shatners on the blockchain. The former Star Trek actor is joining Mattereum, a legaltech firm, to document the authenticity of science collectibles and memorabilia from a range of franchises on the blockchain.

That’s another weekend’s headlines for you. Live long and prosper.

Published May 13, 2019 — 07:58 UTC

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Amazon granted patent for Bitcoin-style system to fight DDoS attacks

Cryptocurrency rumor mongers are likely to be dancing today as Amazon has successfully filed a patent for a Bitcoin-styled Proof-of-Work system. But don’t get ahead of yourself, it doesn’t look like the Seattle-based ecommerce giant will be accepting Bitcoin for payments. Despite first being filed in December 2016, Amazon’s patent application was granted earlier this…

Amazon granted patent for Bitcoin-style system to fight DDoS attacks

Cryptocurrency rumor mongers are likely to be dancing today as Amazon has successfully filed a patent for a Bitcoin-styled Proof-of-Work system. But don’t get ahead of yourself, it doesn’t look like the Seattle-based ecommerce giant will be accepting Bitcoin for payments.

Despite first being filed in December 2016, Amazon’s patent application was granted earlier this week and appears to outline a system that uses Proof-of-Work to prevent distributed denial-of-service (DDoS) attacks.

“One way to mitigate against such attacks is to configure a service such that requests to the service incur some sort of expense, thereby providing a disincentive to participating in the attack,” the application reads.

Planting a Merkle Tree

Amazon proposes to use Merkle Trees to present a Proof-of-Work challenge and make it too costly for a series of computers to perform a DDoS attack.

But what’s a Merkle Tree? In short, Merkle Trees are cryptographic tools where blocks of data are manipulated to give them a unique identifier also known as a hash.

These hashes are then manipulated again to create a parent hash. Parent hashes are always a combination of two or more child hashes. It’s layers on layers of hashed data.

Since computing power is required to build a Merkle Tree, performing such hashes could get very costly in terms of time, electricity, and resources. In turn, this makes DDoS attacks economically unfeasible.

In the case of Amazon’s patent, imagine having to construct a Merkle Tree before you’re allowed to access a website hosted on one of its servers. To an individual the cost might be insignificant, but to an organization trying to carry out a DDoS attack – which might involve many hundreds of computers – it could become prohibitively expensive.

Amazon’s Merkle Tree

Merkle Trees are also used in Proof-of-Work blockchains like Bitcoin as part of its consensus mechanism. But for now that’s as close as Amazon will get to Bitcoin.

Indeed, with this news it seems Amazon is still of the “blockchain, not Bitcoin” mantra. Earlier this month, the web giant said that AT&T, Accenture, and Nestlé are all using its cloud-based blockchain tools.

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South African voters fear mobile political campaigns will steal their personal info

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