SEC - Page 117

Martin Shkreli, famously known as “Pharma Bro,” claims that Donald Trump’s 18-year-old son, Barron Trump, launched the TrumpCoin (DJT) token with his father’s approval and holds the private keys to its smart contract address.

Shkreli, who served over six years in prison for securities fraud, alleges Barron approached him in April to launch the Solana-based token, now valued at $146 million according to Birdseye data.

Barron Trump and his representatives have not commented on the matter.

In an X Spaces hosted by Mario Nawfal, Shkreli stated he merely provided advice about the token launch and did not actively participate in its deployment.

He claimed Barron was the true creator of DJT, with cryptocurrency influencer “Ansem” also involved.

“I taught someone how to make a contract, and they pushed the button, not me.

‘Keys are with Trump, not me,” Shkreli said in an X post.

He suggested around 10 people were involved in the token launch.

”I did not act alone.”
Shkreli also claimed Trump was in contact with crypto exchange Kraken about potentially listing DJT.

Cointelegraph reached out to Kraken but did not receive an immediate response.

Shkreli asserted that Donald Trump was aware of and approved the DJT token. “I have receipts of Barron saying his dad approved it.”

To support his claims, Shkreli introduced “Mongolian Prince” in the X Spaces—a teenager with less than 500 X followers who allegedly worked with Shkreli.

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Mongolian Prince confirmed Barron made the token and holds the private keys.

When asked by an audience member who deployed the contract, Mongolian Prince answered, “Barron.”

“[Barron] wanted to do something special, something significant, and we all wanted to help him with that.”

Mongolian Prince claimed he recently met with Trump in Florida.

However, his account of Donald Trump’s involvement was less clear.

He recounted that Barron showed his Solana-based Phantom wallet to his father before the DJT token launch, who supposedly responded with laughter.

The seven-hour X Spaces followed blockchain sleuth ZachXBT winning a $150,000 award from Arkham Intelligence for identifying Shkreli as the creator of the DJT token.

Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, accused Shkreli of “trying to throw Barron under the bus” to clear his name.

Audience opinions on Shkreli’s version of events were mixed. Some believed him, while others doubted Trump would risk creating controversy during an election year.

Roger Stone, a close aide to Trump, denied any involvement of the former President or his son with the DJT memecoin.

Shkreli, convicted in 2017 on securities fraud and conspiracy charges, served nearly seven years in prison and paid over $70 million in fines.

Some have suggested his recent involvement might violate his parole conditions, which Shkreli denies.

“Read the law idiot,” Shkreli responded to the 1.6 million follower X account “BORED,” which claimed he would return to prison.

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Blockchain security firm CertiK has publicly identified itself as the “security researcher” that cryptocurrency exchange Kraken accused of stealing $3 million worth of digital assets.

On June 19, CertiK announced via X that it had informed Kraken about an exploit that enabled it to withdraw millions of dollars from the exchange’s accounts.

Kraken’s chief security officer, Nicholas Percoco, had previously claimed that an unnamed security team had committed “extortion” by refusing to return the funds until Kraken agreed to provide a significant sum for the disclosure of the bug.

“After initial successful conversations on identifying and fixing the vulnerability, Kraken’s security operation team has THREATENED individual CertiK employees to repay a MISMATCHED amount of crypto in an UNREASONABLE time even WITHOUT providing repayment addresses,” stated CertiK.

“In the spirit of transparency and our commitment to the Web3 community, we are going public to protect all users’ security. We urge [Kraken] to cease any threats against whitehat hackers.”

CertiK released a timeline of events, beginning with identifying the exploit on June 5 and ending with claims that Kraken threatened a CertiK employee on June 18.

CertiK told Cointelegraph that it planned to transfer the funds “to an account that Kraken will be able to access.”

Many in the crypto community initially sided with Kraken, suggesting that CertiK’s actions did not align with typical white hat hacker behavior.

READ MORE: Ether Surges Above $3,500 as SEC Ends Ethereum 2.0 Investigation

It remains uncertain whether Kraken has grounds for legal action.

In April, CertiK reported that approximately $1 billion in digital assets had been lost to illicit activity in 2023.

The firm has a history of identifying vulnerabilities, including issues with the Wormhole bridge on Aptos and the Telegram app.

CertiK’s decision to go public reflects its commitment to transparency and the security of the Web3 community.

The firm’s actions aim to protect users and uphold ethical standards within the industry.

As this situation unfolds, the crypto world watches closely, awaiting further developments and possible resolutions.

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India’s Financial Intelligence Unit (FIU) has fined crypto exchange Binance 188.2 million rupees ($2.25 million) for violating the country’s Anti-Money Laundering (AML) rules while providing services to Indian clients.

On June 19, the agency announced that the penalty resulted from multiple violations of the Prevention of Money Laundering Act (PMLA), 2002.

Binance, as a Virtual Digital Asset Service Provider, is classified as a reporting entity under Section 2 (as) (vi) of the PMLA. This classification mandates that Binance maintain and report transaction records and implement robust AML measures.

However, the FIU’s investigation found that Binance failed to comply with these requirements when serving Indian clients.

Indian authorities issued show-cause notices to Binance and other offshore cryptocurrency exchanges, banning them from India for “operating illegally” in January 2024.

In May, Binance, along with KuCoin, was the first offshore crypto-related entity to be approved by the Financial Intelligence Unit.

This approval was conditional on paying a penalty after a hearing with the FIU.

The FIU’s announcement stated that the charges against Binance were confirmed after reviewing the director’s written and oral submissions.

READ MORE: Ether Surges Above $3,500 as SEC Ends Ethereum 2.0 Investigation

The fine on Binance covers multiple violations, including failing to maintain and report transaction records, not providing required information to authorities, and not preserving records as mandated.

In May, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) imposed a $4.4 million administrative penalty on Binance for failing to register and report large digital asset transactions.

According to FINTRAC, Binance failed to register as a foreign money services business and report digital currency transactions exceeding $10,000.

Binance has appealed against FINTRAC’s director over allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.

In February, Nigerian authorities detained two Binance executives following allegations of tax evasion and money laundering at the company.

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The Kraken-CertiK saga has taken another twist. Security firm CertiK claims it conducted a white hat operation on specific Kraken accounts, draining nearly $3 million, according to Kraken.

However, Kraken contends that the total exploited amount was not returned, while CertiK asserts it has returned all funds according to their records.

On June 20, CertiK provided an update on X, stating it had returned 734 Ether, 29,001 Tether tokens, and 1,021 Monero coins.

In contrast, Kraken requested 155,818 Polygon tokens, 907,400 USDT, 475.5 ETH, and 1,089.8 XMR.

The saga began on June 9, when Kraken reported receiving a bug bounty alert from an alleged security researcher.

The alert highlighted a bug in Kraken’s system allowing users to inflate their account balances. While patching the bug, Kraken discovered three accounts exploiting the flaw, stealing $3 million.

Kraken found that one of these accounts was KYC-verified and used the bug to credit $4 to their account.

Kraken chief security officer Nick Percoco noted, “This would have been enough to prove the bug and claim the bounty,” but the account allegedly shared the flaw with two others, resulting in the $3 million theft.

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When Kraken requested the alleged “security researcher” return the funds and collect the bounty after providing the required onchain proofs, the white hat hacker allegedly refused and demanded the bounty first.

Although Kraken did not disclose the security firm behind the exploit, CertiK revealed its involvement.

CertiK claimed its employee, who found the vulnerability, was threatened to return the stolen funds but did not receive a wallet address.

CertiK co-founder Ronghui Gu told Cointelegraph:

“The verbal consensus reached during our meeting was not confirmed afterward.

“Ultimately, they [Kraken] publicly accused us of theft and even directly threatened our employees, which is completely unacceptable.”

CertiK reportedly sent the stolen funds to Tornado Cash, a crypto mixing service, to avoid them being frozen by exchanges.

This move drew heavy criticism, with many questioning CertiK’s motives behind the white hat operation.

The crypto community largely sided with Kraken, accusing CertiK of theft and blackmail.

Kraken informed Cointelegraph it is in contact with law enforcement agencies regarding the matter.

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Asset management firm Bitwise has updated its spot Ether exchange-traded fund (ETF) Form S-1 registration statement, revealing a potential $100 million investment in the ETF at its trading launch.

According to Bitwise’s June 18 filing with the United States Securities and Exchange Commission (SEC), investment firm Pantera Capital Management “has indicated an interest in purchasing an aggregate of up to $100 million of Shares” in the spot Ether ETF.

“However, because indications of interest are not binding agreements or commitments to purchase, these potential purchasers could determine to purchase more, fewer or no Shares,” the filing stated.

A Form S-1 is a document submitted to the SEC before a security starts trading, detailing financials, operations, and risk analysis.

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These filings are the final step in the approval process before the spot Ether ETFs can be publicly traded, an event that SEC Chair Gary Gensler anticipates will happen “sometime over the course of this summer.”

On May 23, the SEC approved 19b-4 filings from eight Ether ETF applicants, but these applications require Form S-1 approvals before the ETFs can begin trading on U.S. exchanges.

The revised filing coincides with the SEC ending its investigation into whether Ether is a security.

“The Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0,” Ethereum developer Consensys announced in a June 19 X post.

“This means that the SEC will not bring charges alleging that sales of ETH are securities transactions,” the firm explained.

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On June 12, the Cybersecurity and Infrastructure Security Agency (CISA) issued an alert about a rise in impersonation scams often involving the names and titles of government employees.

The alert emphasized that CISA staff will never request money wiring, “cash, cryptocurrency, or use gift cards.”

“If you suspect you are a target of an impersonation scammer claiming to be a CISA employee, do not pay the caller; take note of the phone number calling you; hang up immediately, [and] validate the contact by calling CISA.”

In response to written questions from Cointelegraph, Phil Larratt, Chainalysis’ director of investigations, highlighted that scams “continue to be a major threat to the [crypto] ecosystem at large.”

Larratt noted that scams remain significant drivers of cryptocurrency-based crime, generating at least $4.6 billion in revenue in 2023.

“Impersonation scams, in particular, had the fourth-worst impact on victims in 2023 based on an average payment size of $948, as we found in our Chainalysis 2024 Crypto Crime Report.”

Addressing prevention, Larratt emphasized the importance of public education as a first line of defense against large-scale scamming: “This is critical because once crypto assets are transferred to a third party, there is no longer control of that asset without the private keys of the third party’s funds.”

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Larratt detailed two prominent scam tactics among fake Federal employee impersonation scams: approval phishing and crypto drainers.

“Approval phishing scammers have historically targeted wide swaths of crypto users through the proliferation of fake crypto apps.”

This method has been adopted by romance scammers, also known as pig butchering scammers, resulting in substantial losses.

“[Crypto drainer operators] often promote their fake Web3 sites in Discord communities and on compromised social media accounts […] enticing victims into connecting their crypto wallets to the drainer and then using the approval phishing technique to trick the victims into approving transaction proposals that grant the operator control of the funds inside the wallet.”

Larratt concluded by stressing the importance of implementing protective security measures like “Web3 security extensions” for both Web3 projects and users to combat these scam tactics effectively.

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