Tag: embezzlement

As it Happened: Binance Denies Ripping Off $1 million From a User's Account

Binance, one of the largest crypto exchanges based on trade volume, has hit back at embezzlement claims made in November 2018 after it froze a user’s account with crypto assets worth $1 million. It claims that its actions were based on a tip-off by the South Korean police to return the funds to a scam victim.

Binance on the defense

Binance noted that the theft allegations made against the company were misplaced as the suspension of the user’s account was triggered by requests from the South Korean authorities. As a result, it carried out a thorough investigation as stipulated under the KYC/AML policy to ascertain the origin of the funds. 

Nevertheless, the user stipulated that upon contacting the police, these claims emerged to be false as no complaints had been made against him. He added that the value of digital assets, such as Bitcoin, Litcoin, Bitcoin Cash, and Ethereum, blocked by the exchange at that time, stood at $860,000. 

Binance has refuted these allegations by tweeting that it continues being committed to tackling fraud without jeopardizing the truth.

Binance added that the user had ripped off 3,995 ETH, valued at $685,700 at current rates from a Korean cryptocurrency project. It also accuses the user of pretending to be its representative and, in the process, received a 10 billion KRW, approximately $8 million deposit to have the project’s cryptocurrency listed on the exchange. 

Binance revealed that it was requested by the South Korean authorities to have the funds channeled back to the victim on Jan. 18, 2019. 

Binance making waves

The revelation by Binance seeks to let the company off the hook in any wrongdoing in embezzling its user’s crypto assets. It even revealed a letter from the police to ascertain its claims.

Binance continues being a force to reckon with in the crypto space based on its notable strides. Recently, it acquired CoinMarketCap, the most popular crypto data aggregator, for an undisclosed fee, but it was previously alleged to be $400 million. 

Image via Shutterstock

Russian Intelligence are Hiding Embezzler and Former Wirecard COO in Belarus

Jan Marsalek, the former Chief Operations Officer of the now-defunct Wirecard payments firm, has been located in Belarus after supposedly heading to the Philippines to track down nearly 2 billion Euro missing from the firm’s spreadsheet. Jan Marsalek promptly disappeared shortly after undertaking an investigation for the Wirecard missing funds—which he claimed would clear him of any wrongdoing. However, new evidence suggests that he never made it to the Philippines at all, but has been in hiding with the help of the FSB, a Russian intelligence agency.Marsalek was reported to have entered the Philippines where he flew from Manila to Cebu and then on to China in June. However, the Philippines immigration authorities have asserted that there is no evidence he ever arrived or records of his supposed flight from Cebu City to China.

Where in the world is Jan Marsalek?

German Wirecard collapsed last week after auditors Ernst & Young raised the issue with a nearly 2 billion Euro hole in financial services provider’s books. The 40-year-old Austrian citizen, Marsalek, who held the position of COO of Wirecard since 2010, was in charge of the company’s Asian operations.

On 18 June 2020, Jan Marsalek along with the entire management team, was fired. Marsalek explained to his colleagues that he was going to the Philippines to chase and find the missing billions, in order to prove his innocence—only to go missing himself later that day.

Although there were airline bookings and immigration records that showed he had made his way to Manila on the 23 June and left onward to China, a deeper investigation by the Philippine authorities found that that the trip appeared to have been a distraction tactic, and immigration records had been forged on his behalf. IT was at this point that Marsalek became wanted by German and Austrian authorities on the charges of fraud and embezzlement.

According to a report by investigative journalists from Bellingcat, Der Spiegel, and the Insider on July 18, Marsalek has fled to Minsk, the capital of Belarus. In addition, the collaborative investigation also uncovered Russian immigration records and data kept by Russia’s Federal Security Services (FSB) that suggest that Russia’s security service had a long-standing interest in Marsalek, who used a number of different passports – including a third-country diplomatic passport – to visit Russia dozens of times in the last 15 years. In 2017, it appears that Russia’s security services are likely to have had met with Marsalek in Moscow on one of these trips.

Source: Bellingcat Report

The investigation points to Marsalek receiving help from Russia’s FSB intelligence, Bellingcat wrote:

“FSB has complete control over the Russian border service and thus over the centralized Russia-Belarus border database. Therefore any manipulation of data would have to be done at the behest of, or at least with the consent of, the FSB.”

Marsalek being free to traverse these FSB controlled borders undetected does appear to directly indicate collaboration between the former Wirecard COO and Russian Intelligence.

The data shared by Bellingcat shows that he flew to Belarus on June 19th and has not yet left the country.  

SPAC CFO Sentenced to Prison for Embezzling $5M

Cooper Morgenthau, the former CFO of African Gold Acquisition Corporation (AGAC), has been sentenced to three years in prison for embezzling $5 million from three different Special Purpose Acquisition Companies (SPACs). The sentencing comes as a result of Morgenthau’s use of the embezzled funds to trade cryptocurrencies and meme stocks, leading to significant losses. In addition to his prison sentence, Morgenthau has been ordered to forfeit $5.1 million and pay restitution of the same amount.

The embezzlement scheme began in June 2021 and continued until August 2022, during which time Morgenthau wired approximately $1.2 million from African Gold to his personal accounts for trading purposes. He traded equities and options of cryptocurrencies and meme stocks, leading to almost all of the funds being lost. Following the losses, he then provided falsified documents to accountants and an auditor at African Gold ahead of its public filing with the U.S. Securities and Exchange Commission (SEC). This led to “material misstatements” in the company’s public financial records.

Moreover, Morgenthau raised an additional $4.7 million from private investors in a separate SPAC, based on the fraudulent claim that the money would be used to launch yet another SPAC. Unfortunately for the investors, Morgenthau used the freshly-raised capital to cover his losses at African Gold and continue further trading of cryptocurrencies and meme stocks.

The malpractice was discovered by African Gold in August 2022, resulting in Morgenthau being fired, and the SEC being informed. Subsequently, Morgenthau pled guilty to one count of wire fraud on January 3.

The case sends a clear message to the SPAC community that fraud in the markets will not be tolerated. U.S. Attorney Damian Williams said in a statement, “With today’s sentencing of Cooper Morgenthau, SPAC promoters have been sent a message that fraud in the SPAC markets will be punished, and greed on Wall Street will be met with serious consequences.”

SPACs have become increasingly popular over recent years, and this case highlights the importance of proper oversight and compliance in the sector. While SPACs offer companies a faster and less complicated path to going public, they also come with risks. Embezzlement and fraud can damage the reputation of the entire industry, leading to regulatory scrutiny and increased oversight. As such, it is essential for SPACs and their investors to take proper precautions and perform proper due diligence when selecting management teams and making investment decisions.

Haru Invest Executives Arrested in $826 Million Crypto Embezzlement Case

South Korea prosecutors have detained three executives from the cryptocurrency yield platform Haru Invest, including its two co-CEOs, on serious charges of embezzlement. They are accused of misappropriating approximately 1.1 trillion Korean won (around $826 million) from about 16,000 users. This case has raised global concerns regarding the stability and transparency of the cryptocurrency sector, especially around crypto lending practices.

Investigations have revealed that Haru Invest advertised its deposits as being managed through “risk-free distributed investment techniques,” despite allegedly investing most of its client deposits through a single individual. This malpractice led to the abrupt suspension of withdrawals in June 2023, exposing the vulnerabilities and risks associated with the crypto lending industry. The firm had offered up to 12% yield for its Earn Plus product users, a claim that has now come under scrutiny.

The arrests follow a broader regulatory crackdown aimed at safeguarding consumers and ensuring the stability of the cryptocurrency sector. This incident underscores the need for more stringent oversight and transparent operations within the crypto lending space to protect investors from fraudulent activities. The case also reflects on the potential risks and challenges that investors face in the rapidly evolving digital asset market, highlighting the importance of due diligence and the role of regulatory bodies in preventing such malpractices.

The aftermath of the arrests and the ongoing investigations into Haru Invest and related entities, such as Delio, illustrate the interconnected risks within the crypto industry, particularly around the management and security of client deposits. The case against Haru Invest not only spotlights the significant impact of fraudulent activities on investors but also serves as a cautionary tale for the crypto industry at large, emphasizing the critical need for enhanced regulatory frameworks and operational transparency to foster a safe and stable cryptocurrency ecosystem​​​​​​.

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