Tornado Cash creator arrested & much more! – #24!

The cryptocurrency market had a crazy weekend! The cryptocurrency business is thriving, as there’s a lot happening, including BlueBenx terminating staff and halts withdrawals, alleging a $32 million breach, Mailchimp prohibiting crypto content producers without notification and Indian law enforcement charges WazirX exchange of facilitating $130M in money laundering.


In this issue:

  • BlueBenx terminates staff and halts withdrawals, alleging a $32 million breach.
  • Mailchimp prohibits crypto content producers without notification.
  • Russia intends to implement the digital ruble in all banks by 2024.
  • Indian law enforcement charges WazirX exchange of facilitating $130M in money laundering.
  • Dutch investigators arrest a suspected Tornado Cash creator.


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BlueBenx terminates staff and halts withdrawals, alleging a $32 million breach.

BlueBenx, a Brazilian crypto-lending site, allegedly prevented all 22,000 of its customers from retrieving their assets after a $32 million theft (or 160 million Brazilian real). The majority of the company’s workers were reportedly let go despite the lack of information concerning the attack. BlueBenx joins the expanding list of crypto firms that have failed to deliver on their promises of extravagant yield returns during the crypto winter.

The Brazilian crypto lender claimed up to 66 percent profits on cryptocurrency investments via a variety of in-house earning channels.

BlueBenx ceased all withdrawals after falling prey to a “very aggressive” breach, according to a report from the local Bitcoin news website Portal do Bitcoin. BlueBenx’s attorney, Assuramaya Kuthumi, said that the assault resulted in a $32 million loss, which investors found hard to accept given the lack of information around the purported breach.

The lack of investor confidence derives from the fact that various crypto platforms that claim high returns have accused similar circumstances in the past, in which they end up suspending withdrawals of cash while concealing their inability to provide the previously promised returns to the consumers.



Mailchimp prohibits crypto content producers without notification.

It looks as if the email marketing tool Mailchimp has discontinued its services for bitcoin content writers. This week, platforms affiliated with crypto-related news, content, or services began experiencing login troubles, followed by notifications of service outages.

Several crypto-related accounts were compromised, including those of Edge wallet, a supplier of self-custody crypto holding services, and Messari, a crypto research business.

Sam Richards of the Ethereum Foundation tweeted early this morning that the Ethereum Foundation Ecosystem Support Program is also facing suspension.

Cory Klippsten of Swan Private, a Bitcoin investment advising service for organisations and people with high net worth, also tweeted about the event. In light of this occurrence and others, Klippensten called on other marketing firms to “step up.”
Subsequently, it became apparent that accounts were being deactivated or “temporarily suspended” for service breaches. According to Mailchimp’s website, the phrase comes under the “Acceptable Use” policy, which specifies forbidden material.

It is stated in this section that “cryptocurrencies, virtual currencies, and other digital assets associated with an Initial Coin Offering” are outlawed owing to “above-average misuse reports.” The site policy was supposedly revised in May of last year. The email marketing service company was bought by the financial services behemoth Intuit in the last year.

Instances of service interruptions or suspensions have reemerged this week, but this is not the first time that Mailchimp has targeted crypto-related material. This pattern of activity dates back to 2018.
Due to violations of regulatory requirements, Facebook prohibited cryptocurrency-related advertisements on its website in 2018.



Russia intends to implement the digital ruble in all banks by 2024.

The Bank of Russia continues to work toward the imminent adoption of the central bank digital currency (CBDC), with an official digital ruble rollout scheduled for a few years in the future.

In 2024, the Bank of Russia will begin connecting all banks and credit institutions to the digital ruble network, according its most recent monetary policy update. The nation is slated to have presidential elections in March 2024, and current President Vladimir Putin has the constitutional right to run again.

The central bank anticipates completing trials of “real money” customer-to-customer transactions as well as customer-to-business and business-to-customer settlements by then.

The Bank of Russia plans to start beta testing of digital ruble-based smart contracts for trading with a restricted number of participants in 2023.

The bank said that it anticipates a gradual deployment of CBDC, releasing additional trials and features annually. As soon as the Federal Treasury is prepared, the digital ruble will also support consumer-to-government, business-to-government, government-to-consumer, and government-to-business transactions, according to the Bank of Russia.

In addition to integrating non-bank financial intermediaries, financial platforms, and exchange infrastructure, the central bank anticipates launching the offline mode for the digital ruble by 2025.

The Bank of Russia highlighted that the staggered introduction of the digital ruble would provide market players the time to adjust to new circumstances. The authority stated that the Bank of Russia would collaborate with other central banks establishing their own digital currencies to conduct cross-border and foreign currency transactions using digital currencies.



Indian law enforcement charges WazirX exchange of facilitating $130M in money laundering.

The Financial Crimes Wing of India’s Enforcement Directorate (ED) is investigating cryptocurrency exchanges accused of executing transactions that transported around $130 million from organisations under investigation to foreign wallets. According to an official who talked with The Economic Times, at least 10 crypto exchanges are reportedly implicated, and the bank accounts of exchange WazirX have been suspended, the newspaper stated.

In a case involving rapid loans, organisations under investigation reportedly conducted transactions totaling up to 1 billion rupees, or $1.3 million, in the names of persons with no ties to the funds. These businesses often have links to China. Even though Know Your Customer/Anti-Money Laundering (KYC/AML) protocols indicated that the transactions were suspicious, the agency said that neither increased due diligence nor suspicious transaction notifications were submitted with the ED.

Last Monday, the ED blocked the bank accounts of WazirX, totaling around 647 million rupees or $8.1 million, on the grounds that the exchange aided approximately 16 fintech businesses under investigation for money laundering. WazirX published a blog post on Tuesday “on behalf of Zanmai Labs Pvt. Ltd,” which, according to the post, cooperates with WazirX and Binance, stating that all users are subject to KYC/AML procedures and that the exchange works closely with law enforcement. The blog post said, “For every transaction, we can create the KYC information of the appropriate user.”

The claims against WazirX have brought to light its opaque ownership structure and Binance’s position within it. Binance CEO Changpeng Zhao (CZ) tweeted on August 5 that his business did not complete the 2019-announced purchase of WazirX. The next day, in a conversation with WazirX cofounder Nischal Shetty, CZ remarked, “We requested the transfer of WazirX system source code, deployment, and operations in February of this year. WazirX refused to comply. Binance has NO control over its systems.”
This probe was not the first time that WazirX was accused of lacking AML safeguards. In 2021, the ED accused WazirX in the laundering of earnings from unlawful online gaming, with a Chinese link.


Dutch investigators arrest a suspected Tornado Cash creator.

Authorities in the Netherlands have detained a developer accused of money laundering using the Tornado Cash service.

Friday, the Fiscal Information and Investigation Service (FIOD), the Dutch agency responsible for investigating financial crimes, reported the arrest of a man, age 29, in Amsterdam.

The individual reportedly facilitated unlawful financial flows and engaged in money laundering using Tornado Cash, according to the authorities. The FIOD said that it has not ruled out the possibility of several arrests in this case, adding that its Financial Advanced Cyber Team (FACT) initiated a criminal investigation into Tornado Cash in June 2022.

Tornado Cash has reportedly been used to mask large-scale illegal money flows, including crypto hacks and frauds, according to the FACT. “These included monies obtained via hacking by an organisation suspected of having ties to North Korea. “According to FACT, Tornado Cash has generated at least $7 billion in revenue since its inception in 2019,” the release states.

The announcement comes soon after the U.S. Treasury Department put hundreds of Tornado Cash addresses on the Office of Foreign Asset Control’s (OFAC) sanctions list on August 8. Circle, a prominent cryptocurrency company and issuer of USD Coin (USDC), later froze 75,000 USDC associated with OFAC-restricted addresses.

Due to the penalties, it is currently prohibited for any U.S. individual or organisation to connect with Tornado Cash’s smart contract addresses. Willful violation may result in penalties ranging from $50,000 to $10,000,000 and 10 to 30 years in jail.
The Treasury’s action accelerated the progression of events around Tornado Cash. A few additional alleged participants in the mix-up were apparently detained in the United States and Estonia, according to some reports. Among those reportedly detained were Roman Panchenko in Seattle and Nikita Dementyev in Tallinn.

Numerous members of the cryptocurrency community have voiced concern over the arrests of developers and others engaged in the creation of Tornado Cash. Observers of the industry pointed out that taxing programmers for developing privacy solutions violates the ideals of a free society.



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