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DOJ Extradites Bitcoin Thief From Cyprus Along With Hezbollah Terrorist

The US Department of Justice has extradited two criminals from Cyprus—one with known connections to terrorism and the other on suspicion of stealing thousands in Bitcoin.

Two accused criminals have been extradited from Cyprus by the DOJ, one for stealing thousands of dollars worth of Bitcoin, and the other is a money launderer connected to the terrorist organization Hezbollah.

According to the DOJ, a Cypriot national named Joshua Polloso Epifaniou stands accused of conspiracy to commit wire fraud, identity theft, and extortion. The DOJ alleges that Epifanou, along with his co-conspirators, targeted a Californian online game publisher, a hardware company in New York, an online sports website and an employment website in Virginia—to steal users personal information between 2014 and 2016. Epifaniou allegedly gained access to these networks and managed to defraud them of over $55,000 dollars in Bitcoin.

Per the report, “After obtaining the personal identifying information, Epifaniou allegedly used proxy servers located in foreign countries to log into online email accounts and send messages to the victim websites threatening to leak the sensitive data unless a ransom was paid. He is alleged to have defrauded the entities of $56,850 in bitcoin, and two victims incurred losses of over $530,000 from remediation costs associated with the incident.”

In addition, Epifaniou has been accused of organizing a brute force attack on Ripoff Report in 2016. A brute force attack is a trial-and-error method used to obtain information, such as a user password or personal identification number. Epifaniou allegedly used the attack to successfully override Ripoff Report’s login and password protection to access its database through an existing account for a ROR employee. He then allegedly held the database ransom for $90,000.

The other man extradited from Cyprus is Ghassan Diab who has been identified by the DOJ as a member of Hezbollah. The Lebanese national, Diab is suspected of money laundering over $100,000 and conspiring to launder a further $100,000 as well as standing accused of the unlicensed transmission of currency.

The news comes just days after another criminal complaint was filed on July 9 by the DOJ charging a New York resident—Douglas Jae Woo Kim, 27 years old, with wire fraud in where he allegedly conned three investors out of over $4.5 million of Ethereum and Bitcoin.

Israeli Authorities Disrupt Hezbollah and Iran Quds Force Terrorism Financing Crypto Infrastructure, Seize $1.7 Million

Israeli authorities have achieved a significant milestone in the fight against terrorism financing, according to Chainalysis. On June 27, 2023, Israeli Defense Minister Yoav Gallant announced that Israel’s National Bureau for Counter Terror Financing (NBCTF) successfully disrupted the cryptocurrency infrastructure used by Hezbollah, a heavily sanctioned terrorist group based in Lebanon, and Iran’s Quds Force, known for its extensive funding and collaboration with Hezbollah. This operation marks the first time that cryptocurrency has been seized from these organizations, with a total value of approximately $1.7 million. The joint efforts also resulted in the dismantling of the cryptocurrency-based terrorism financing network operated by both groups. It is worth noting that Chainalysis tools played a vital role in facilitating this landmark achievement in national security.

The seizure carried out by NBCTF represents yet another significant victory in the ongoing battle against cryptocurrency-based terrorism financing. The announcement sheds light on the operational tactics employed by Hezbollah and other terrorist organizations in utilizing cryptocurrencies for their illicit activities.

Traditionally, Hezbollah has relied heavily on financial support from Iran, particularly through the Iran Quds Force of the Islamic Revolutionary Guard Corps (IRGC). However, the recent revelations indicate a shift in their funding methods, with a portion of the funds being channeled through cryptocurrencies. The investigation uncovered a pattern wherein funds were transferred from financial facilitators to hawala services and over-the-counter (OTC) brokers before being directed to Hezbollah-controlled addresses at mainstream cryptocurrency exchanges. Previous analyses primarily focused on the laundering of small donations, rather than funding from state sponsors like Iran. Thus, these findings provide crucial insights into the evolving tactics of terrorism financing.

The NBCTF’s seizure primarily targeted the wallets controlled by Tawfiq Muhammad Said Al-Law, a hawala operator based in Syria. Al-Law collaborated with senior Hezbollah operators, including Muhammad Qasim Al-Bazzal and Muhammad Ja’far Qasir, both of whom are sanctioned by the Office of Foreign Assets Control (OFAC). Their collaboration facilitated the operation of Hezbollah’s cryptocurrency funding infrastructure, with Qasir playing a crucial role in managing financial disbursements from Iran’s Quds Force to support Hezbollah’s activities.

Circle Formally Refutes Allegations of Illicit Financing and Connections to Justin Sun

Circle, a leading issuer of stablecoins, has recently addressed and strongly refuted allegations regarding its involvement in illicit financing and alleged connections with Justin Sun, the founder of Tron. These claims, brought forward by the nonprofit watchdog organization, Campaign for Accountability (CfA), prompted Circle’s Chief Strategy Officer and Head of Public Policy, Dante Disparte, to write a formal response to U.S. Senators Elizabeth Warren and Sherrod Brown.

In the letter, Disparte emphatically denies any involvement of Circle in facilitating or financing activities related to Hamas or any other illicit actors. He highlights Circle’s unwavering commitment to combating illicit financial activities. Circle has been an active partner with regulators and law enforcement in the United States, Israel, and other jurisdictions, ensuring that their stablecoin, USDC, is not used for illicit activities. The company’s dedication to legal compliance was recently acknowledged by the U.S. Secret Service, recognizing Circle’s efforts in identifying fraud and assisting in fund recovery.

Addressing specific allegations, Disparte referred to an incident where the National Bureau for Counter Terror Financing of Israel identified digital wallets linked to the Palestinian Islamic Jihad (PIJ) with assets amounting to $93 million. A report by the blockchain firm Elliptic initially suggested that all assets in these wallets were used to finance PIJ, but this was later corrected. Public blockchain ledgers revealed that of the $93 million, only $160 in USDC was transferred among those wallets, and none of that amount originated from Circle. This example underscores Circle’s stance against the misrepresentation of its role in alleged illicit activities.

Furthermore, Circle clarified its relationship with Justin Sun, stating that it does not provide banking services to him or his associated entities, including the TRON Foundation or Huobi Global. Despite the absence of specific designations by the U.S. government, Circle terminated all accounts associated with Mr. Sun and his affiliated companies in February 2023.

Circle also emphasized its status as a highly regulated financial entity. It operates under the regulatory frameworks of multiple U.S. states and federal bodies, including the Ohio Department of Commerce Division of Financial Institutions and the New York Department of Financial Services. As a Money Services Business registered with FinCEN, Circle adheres to the Bank Secrecy Act, anti-money laundering laws, and other regulatory standards. This regulatory compliance is a cornerstone of Circle’s operations, reflecting its commitment to legal and ethical business practices.

In its advocacy for regulatory reforms, Circle has been a vocal proponent for a comprehensive federal framework governing stablecoins. The firm has actively participated in legislative processes, seeking to establish robust reserving, redemption, disclosure, liquidity, and operational risk management standards for stablecoin issuers. Circle’s CEO, Jeremy Allaire, has testified before Congress, advocating for standards that would elevate the safety and reliability of stablecoin issuers.

Circle’s response to the allegations made by the CfA is a strong affirmation of its dedication to regulatory compliance and ethical practices in the digital assets space. The company remains committed to collaborating with regulatory bodies to enhance the regulation of digital asset markets and to combat money laundering and terrorism financing effectively.