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Darknet AlphaBay Moderator Paid in Bitcoin Sentenced to 11 Years in Prison

A darknet moderator for marketplace AlphaBay has been apprehended by law officials and sentenced to 11 years in prison.

FBI Cracks Down on Crypto-Driven Darknet

Bryan Connor Herrell, a 26-year-old man from Colorado, has been sentenced by the US Department of Justice for his part as a moderator for an illegal darknet website that conducted illicit transactions, from selling guns and drugs to credit card numbers. Previously considered the world’s largest online drug marketplace, AlphaBay has now been shut down.

Speaking on the matter, Special Agent in Charge for the FBI Sean Ragan said:

“The FBI is committed to developing highly trained cyber investigators […] to counter the threat darknet criminals pose. Cases like these exemplify how the FBI and our international partners are eliminating the false promise of anonymity dark marketplaces claim to provide.”

He added that the capture of Herrell was “a clear message to criminals that the darknet is no safe haven for illegal transactions.”

Since the arrest of Herrell, the darknet website, which operated by Bitcoin and cryptocurrency payments for illicit transactions, has been shut down. Law officials were adamant that this was an exemplary case scenario that demonstrated that “criminals cannot hide behind technology to break the law.”

Herrell was known to be the moderator for AlphaBay, conducting business online under the usernames “Penissmith” and “Botah.” He also adopted the role of a scam watcher, which entailed that he monitored cyber attack attempts aimed at defrauding AlphaBay users. For his role in moderating the darknet marketplace, Herrell was paid in Bitcoin.

Founder of AlphaBay Arrested

In June 2017, the alleged founder of AlphaBay, Alexandre Cazes, was arrested and indicted. Through passkeys and codes stored on Caze’s personal laptop, law enforcement was able to track other individuals involved with managing AlphaBay. However, Cazes was found dead in his jail cell prior to his indictment, and law enforcement went on to investigate the other members of the darknet marketplace.

US Attorney Scott spoke about the ongoing fight to take down dark web sites, which facilitate illicit activities involving guns, drugs, stolen data, credit card numbers, to name a few:

“Operating behind the veil of the darknet may seem to offer shelter from criminal investigations, but people should think twice before ordering or selling drugs online – you will be caught.”

Along with Silk Road, AlphaBay was known to be one of the biggest online darknet markets before being shut down.

Darknet Marketplace Empire Disappears

Recently, darknet marketplace Empire Market has been reported to have exit scammed and made off with around 2,638 Bitcoin (BTC), which translates to around $30 million.

Silk Road Programmer Pleads Guilty for Covering Up His Darknet Involvement to FBI and IRS

Silk Road computer programmer Michael R. Weigand pleaded guilty for providing false statements regarding his involvement with the darknet marketplace.

Silk Road programmer confesses

Weigand served as a tech advisor for the darknet leaders, and also utilized his skills as a programmer to fix any vulnerabilities the illicit marketplace encountered. Serving as a backend technician, the Silk Road operator also confessed that he had previously lied to the IRS and FBI about his involvement with Silk Road darknet market.

In addition, he had used Bitcoin (BTC) on the darknet website for his own gains. Finally, the computer programmer was alleged to have removed evidence leading to Silk Road from a London apartment in 2013.

Weigand is sentenced to five years in jail for his wrongdoings. The US Department of Justice (DoJ) chose to charge him for concealing his involvement with the darknet and misinforming the FBI and the Internal Revenue Service (IRS), rather than for the crime itself. Weigand’s five-year prison term is nowhere as hefty as that of Silk Road founder, Ross Ulbricht, who is sentenced to prison for life.

Speaking about the now-defunct Silk Road and the charges against Weigand yesterday in US court, acting attorney Audrey Strauss said:

“Silk Road was a secret online marketplace for illegal drugs, hacking services, and a number of other criminal activities. When Weigand was questioned by law enforcement in 2019, he falsely claimed not to have done anything at all for Silk Road. For his various false statements, Weigand now faces potential prison time.”

Weigand’s sentencing is scheduled for December.

For some law enforcers, this serves as a perfect depiction of how Bitcoin’s underlying public ledger has made it hard for cybercriminals to hide from law enforcement forever, as the transactions that they conduct run on a blockchain, which can be easily accessed.

Crypto makes financial crime easier to track

Paxful chief compliance officer Lana Schwartzmann brought up the advantages of cryptocurrency adoption in a regulatory discussion about cryptocurrency, by indicating that digital assets could easily be traceable and tracked.

She referenced the infamous Twitter Bitcoin hack targeting moguls such as Bill Gates and Elon Musk that overtook the internet by storm a few months ago, and how the huge crypto heist that ran on the platform was resolved within a matter of weeks. The culprits were also caught and punished accordingly by US law enforcement.

Corrupt Cop Sentenced to Prison for Accepting Bitcoin Bribe from Dark Web Drug Dealer

A former Russian police officer has been sentenced to eight years in prison for accepting a Bitcoin and cryptocurrency bribe from a dark web drug dealer, in exchange for his professional services.

Darknet: Bitcoin for professional services

The former cop, Yuri Zaitsev, was the former head of department for a drug trafficking task force operating under the Ministry of Internal Affairs for the Republic of Khakassia. He was found guilty of receiving a cryptocurrency bribe and of disclosing State secrets.

The investigation started in 2018 and found that Zaitsev had initiated contact with a drug dealer operating for a darknet marketplace. The operator illicitly sold narcotics online and was fouled by a customer that had stolen from him. In exchange for tracking down the thief that had wronged the darknet dealer, Zaitsev accepted Bitcoin cryptocurrency payments amounting to 52,000 rubles.

In addition, the former chief officer was charged by the Investigative Committee of Russia for disclosing classified information to the dark web operator.

Charges against corrupted cop

Not only did Zaitsev accept Bitcoin bribes from the darknet dealer, but he also allegedly informed the criminal of State secrets and provided information concerning his work environment, officers he collaborated with as well as their schedule and daily conduct.

This confidential information was given as a means to ensure that the dark web dealer and his organized criminal group could operate their online drug business while remaining undetected by police officials and law enforcers.

Following prosecution from Russian law officials, the dirty cop was fired from the Main Directorate for Drugs Control in Khakassia and sentenced to 8 years in prison.

In addition, Zaitsev was charged with a penalty of 156,000 rubles and is prohibited from holding a position of authority within organizations for 4 years. Furthermore, he is stripped of his title as a police lieutenant colonel.

Silk Road defunct, dark web programmer arrested

This is not unlike the former Silk Road programmer Weigand’s verdict.

The dark web software operator was charged for using Bitcoin for his own gains, for lying to the FBI and the IRS about his involvement with the dark web marketplace as a tech advisor and programmer.

Weigand has been sentenced to five years of prison by the US Department of Justice. His sentencing is set for December.

OKEx Launches DeFi Hub with Integrated NFT Marketplace

Cryptocurrency trading outfit OKEx has joined the Non-Fungible Token (NFT) bandwagon with the launch of DeFi Hub. This platform will feature a marketplace for all forms of digital collectables and the maintenance of a cross-chain DeFi dashboard.

As announced by the exchange, the NFT Marketplace will make it easy for digital content creators and artists to mint their NFTs or artworks. The supported protocol for this minting includes its native blockchain infrastructure, OKExChain, and Ethereum Network, respectively. The minted NFTs will find their ways to the marketplaces where they can be traded, and creators will also have the leeway to set their royalty fees.

The announcement reads:

“OKEx believes that NFTs are changing the landscape of art and entertainment by making it easier than ever for fans to support their favourite creators and for artists to mint and trade unique, collectable pieces. The creation of DeFi Hub signals the company’s commitment to protecting the interests of creators by giving them lasting incentives in the subsequent sales of their work,”

As part of its efforts to champion the growth of the NFT Metaverse, OKEx said it would not be charging any fees for the minted NFTs. The NFT Marketplace’s uniqueness will also let users import digital collectables that have been generated on other supported platforms.

Non-Fungible Tokens are undoubtedly the buzzword in the crypto and decentralised finance ecosystems today. The new digital innovations let anyone register an item, be it artwork, music, Intellectual Property, or other rare objects on the blockchain. This helps maintain their integrity, immutability, and verifiability. Typically, these features add to the valuation growth of the NFT, boosted by the fact that these assets can be transferred on-chain.

“The NFT market is proliferating in popularity, creating a need for a comprehensive system for managing NFTs,” said OKEx Director Lennix Lai in a statement and adding:

“With DeFi Hub, we’ve created an NFT Marketplace that will accelerate NFT adoption by making it easier than ever for anyone to create, exchange, and sell NFTs. We’re also thrilled to launch DeFi Dashboard to bring much-needed improvements to users’ visualisations of their cryptocurrency portfolios.”

The OKEx NFT Marketplace is live, and users will need third-party wallets to connect to the trading platform.

FTX Cryptocurrency Exchange Launches a Marketplace for Selling and Buying NFTs

FTX, a popular cryptocurrency exchange in the US, has announced a launch of its NFT marketplace that aims to enable its users to create their own artworks and mint them as Non-Fungible Tokens (NFTs) on the exchange, to be sold within its marketplace.

Sam Bankman-Fried, the founder and CEO of FTX crypto exchange, talked about the news and stated that the company’s latest development offers the ability for people to mint NFTs directly on the exchange.

FTX, based in California, unveiled its NFT marketplace on Monday, September 6, as a move to allow people to create, display, and sell their works directly on the US exchange, as interest in the digital collectables continues surging.

Based on the development, Bankman-Fried tweeted: “Make your own NFTs.”

Generally, buying and selling NFTs does not come cheap, though. FTX plans to charge 5% to the buyer and the seller per sale – a 10% fee in total.

Currently, users can only store and view such NFTs within the exchange. However, FTX’s marketplace will be expanding to support deposits and withdrawals within a few weeks, allowing users to sell mainstream NFT projects on the exchange.

FTX clarified that users don’t have to be in the US to use the NFT marketplace. The CEO said the NFT marketplace can be used globally, with international users accessing both the crypto exchange and the NFT platform.

Bankman-Fried stated that payments for the NFTs would be cross-chain enabled between Solana and Ethereum. This means that the platform will allow trading tokens across both blockchains, executed using smart contracts or applications that can connect with two different chains.

By storing the NFT as information on a blockchain, it becomes almost impossible to remove or edit it, making it a permanent record of the owner’s purchase.

The NFT Boom

While most NFT trading volume conducts on the OpenSea marketplace, a rising number of cryptocurrency exchanges are beginning to realise that they can directly provide similar services to their millions of users.

FTX is the latest crypto exchange to announce the launch of its NFT marketplace.

In April, Binance cryptocurrency exchange launched its own NFT marketplace where users can create, buy, and sell digital collector’s items, popularly known as NFTs.

On September 2, the OKEx crypto exchange launched a new platform for minting and trading NFTs.

The demands for non-fungible tokens have significantly surged, with their sales soared to over 2 billion in the first quarter of 2021. That figure does not even account for the record-breaking $69 million NFT sold by digital artist Mike Winkelmann (Beeple) at Christie’s in March.

Wallet Code Bug Destroys $100,000 Worth of Ethereum on NFT Marketplace Opensea

A bug in Opensea online marketplace has accidentally burned (destroyed) more than 42 NFTs (Non-fungible tokens) worth a minimum of $100,000.

Nick Johnson, a lead developer of the Ethereum Name Service (ENS), first noticed the incident and talked about the matter.

Johnson tweeted about the incident, thinking that he was the only victim affected after the bug burnt his NFT, but later realised that other 42 NTF users were also affected.

On Tuesday, September 7, Nick Johnson announced that a “bug” introduced to the “Opensea” transfer page in the last 24 hours accidentally destroyed (burned) NFTs that users attempted to transfer to an Ethereum wallet using an ENS name.

The Ethereum Name Service (ENS) is a service that provides easily readable names for Ethereum wallet addresses. Many NFT users normally use ENS names to simplify the process of transferring their NFTs – rare digital items (like images, video clips, interactive video games items, and many more digital assets) – to an Ethereum wallet address and to cultivate a brand around their collection.

Johnson himself lost an NFT because of the mysterious bug in Opensea online platform, including at least 42 other collectors who also lost their respective NFTs.

Johnson disclosed that he encountered the bug while transferring his NFT into his personal wallet (nick.eth) by using the ENS service.

After he tried to transfer the digital asset, OpenSea instead sent the NFT to an incorrect wallet address. Johnson then wrote that Opensea’s interface failed to resolve the ENS name linked to his wallet. In other words, the Opensea network accidentally sent the NFT to an address that nobody controls and cannot be transferred back to Johnson.

Initially, Johnson tweeted that he was the first and the only victim of the bug after talking to Opensea, which he stated has fixed the bug. But later, Johnson found out that more than 42 NFTs from various collectors were affected and destroyed by the bug. The total amount for such 42 NFTs was $100,000.

Talking about the incident, Johnson tweeted: “A frantic call to OpenSea later, it transpires I was the first and apparently only victim of a bug introduced to their transfer page in the past 24 hours, which affected all ERC721 transfers to ENS names. Ownership of rilxxlir.eth is now permanently burned.”

Some of the affected users have tweeted about the incident, requesting Opensea to respond to the matter and provide compensation for the losses. Opensea has yet to talk about the situation officially. Johnson noted that the marketplace is still conducting a postmortem analysis about the issue.

Opensea To Expand Its Digital Commerce

Opensea intends to expand its service to multiple blockchains in search of a long-term solution.

The marketplace is currently the single hottest platform for purchasing NFTs, processing around $3.4 billion worth of transaction volume in August alone. But when something goes wrong within the online marketplace, it can have serious consequences for owners of crypto collectables. Some users have lost almost $100,000 attributed to the mysterious presence of the aforementioned bug in the Opensea platform.

In July, Opensea raised $100 million in a Series B round led by venture capital firm Andreessen Horowitz (a16z). The new funding valued the firm at $1.5 billion, effectively making Opensea a unicorn or a startup with an over $1 billion total valuation.

During that time, Opensea stated that it planned to use the new funding to scale up its NFT marketplace by hiring more engineers and expanding to new markets and audiences worldwide.

Kraken Develops NFT Trading Platform, Offering Token-Backed Loans

On December 24, U.S.-based cryptocurrency exchange Kraken announced that it is developing a marketplace for NFTs where users can trade digital art and collectables and organize loans using the tokens as collateral.

Jesse Powell, the CEO and founder of Kraken, accepted an interview with Bloomberg media outlets. He disclosed that the exchange is developing a marketplace that will offer custodial services for NFTs and facilitate loans for users using such assets as collateral.

In his conversation, the Kraken CEO regarded 2021 as the year of nonfungible tokens, which will be remembered in history as the period in which NFTs become mainstream. Powell admitted that interest in NFTs has been increasing, thus driving a rise in capital inflow. He expects rising demand to attract retail and institutional investors to the NFT platform and provide more than selling and buying digital art and collectables.

Powell talked about the development and said: “If you depos’t a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that.”

The Rush to Make Money on NFTs

Kraken follows major exchanges such as Gemini, Binance, Coinbase, and FTX to develop an NFT market as the assets continue to surge in popularity. As reported by Blockchain.News, nonfungible tokens’ market has grown to currently worth more than $7 billion, according to nonfungible.com and tech-tracking company L’Atelier BNP Paribas. In 2020, investments in NFTs has increased by nearly three times, gaining popularity as crypto-assets such as Bitcoin continue to boom. Opensea, the largest marketplace for NFTs, recently conducted more than $2 billion in trading volume in the last 30 days, according to Crypto data firm DappRada.

NFT resellers and creators have made hundreds of millions. In March, artist Beeple smashed digital art records and became one of the most successful living artists when he sold a crypto art piece for almost $70 million. NFTs encompass digital real estate, virtual gaming, digital trading cards, and art. Unlike major crypto coins such as Bitcoin and Ethereum, NFTs cannot be directly exchanged with one another and are spread out across many different types of platforms. Of course, most platforms require users to have a digital wallet and use crypto platforms.

SoftBank's Tech Division Z Holdings Eyes NFT Marketplace

Z Holdings, the internet arm of Japanese multinational conglomerate SoftBank Group, is reportedly planning to launch a Non-Fungible Token (NFT) marketplace before the end of the year.

As reported by Bloomberg, the marketplace is designed to help the company meet its mid-term revenue targets by tapping into the growing hype around digital collectables.

With the exact name of the proposed marketplace yet unknown, reports have it that the trading venue is likely to launch as early as Spring this year to attract users from over 180 countries. The aim of Z Holdings concerning the proposed NFT marketplace launch is billed to help boost the user base of its PayPay fintech unit to more than 90 million.

NFT Marketplaces are an integral part of the growing world of collectables. With more than $17.7 billion transacted in NFTs in 2021, up by more than 21,000% according to a new report from Nonfungible.com, more mainstream companies are beginning to see the prospects in brokering deals for digital arts residents on the blockchain.

According to the company’s co-CEO Kentaro Kawabe, the firm cannot afford to miss out on the opportunities provided by the emerging web3 space that includes markets like crypto, decentralized finance, NFTs, and the metaverse.

With its primary base in Japan, Z Holdings’ proposed marketplace will face a number of tough competition as other prominent players, including Rakuten, and Animoca Brands, are also exploring NFT marketplaces and related solutions in the country.

While this competition is a positive one for consumers as it helps promote creativity across the board, the deep integration of SoftBank through its many investments in NFT and metaverse related protocols creates a network that is poised to aid the company’s pursuits with the marketplace.

With its standing as a regulated entity in Japan, securing the proper approvals to operate should be no hindrance for the Z Holdings marketplace.

Defunct File Sharing Network LimeWire to Make a Comeback as NFT Marketplace

LimeWire, the controversial file-sharing network that closed down back in 2010, is relaunching this May, but as a Non-Fungible Token (NFT) marketplace.

Despite the inherent controversy the startup was known for, its new owners, Paul and Julian Zehetmayr, who obtained the rights to the LimeWire name, are hoping the thrill to the startup’s name will stir a whole new enthusiasm amongst users.

The Zehetmayr brothers have rebranded the LimeWire name to LimeWire GmbH, according to a Bloomberg report, and the new company or its management will have no affiliation with the old company in any way.

“LimeWire will not be an alternative to streaming platforms, but rather an additional channel for artists to sell exclusive music and art directly to collectors and to engage with their most loyal community of fans,” Julian says, highlighting their aim “to give artists full flexibility and control when it comes to their content.”

As a platform that hosted a ton of files that can be shared amongst its users, LimeWire was embroiled in a massive copyright lawsuit with the Industry Association of America. The case ended with an out-of-court settlement worth $105 million and the eventual closure of the platform back then.

The platform’s relaunch is well calculated as there is a massive embrace of NFTs at this time. Despite the fact that there are many dominant players in the NFT world nowadays, including OpenSea and Rarible, LimeWire is poised to gain a fair market share because of its target demographics, including millennials and Gen Z.

Knowing the controversies that embroiled LimeWire in its prime, the new offshoot has put some safeguards in place, including incorporating stringent anti-money laundering checks and accountancy firm EY for vetting all activities. LimeWire GmbH will also permit its users to purchase their collections through payment cards as it seeks to create a seamless experience for all of its users.

NHL Partners with Sweet for Digital Collectibles NFTs Marketplace

The National Hockey League (NHL), an organization managing 32 professional ice hockey teams in North America, announced on Thursday that it plans to launch an NFT marketplace. NHL partnered with the non-fungible token (NFT) platform Sweet to develop the project.

Dave Lehanski, NHL Executive Vice President, For Business Development and Innovation, said that the ice hockey league is proud to be launching the NHL’s official NFT digital collectables marketplace this upcoming season. The executive said the marketplace would offer such a new and innovative interactive touchpoint for NHL fans.

Lehanski further disclosed: “We invested a significant amount of time to analyze the marketplace and establish a fan-first strategy and are now thrilled to announce a partnership with a company, Sweet, that will not only provide us with a world-class digital NFT collectables experience but also a commitment to developing a comprehensive platform that is completely designed and customized for the NHL and wholly focused on connecting with hockey fans in the most authentic and engaging manner possible.”

The National Hockey League has signed a multiyear deal with NFT platform Sweet – a partnership that will see Sweet create NFTs featuring cinematic, high-definition moments, and become NHL’s official digital collectables marketplace that allows NHL fans to trade and collect NFTs.

The anticipated NFT marketplace will allow fans to purchase digital collectables based on recent and historic NHL video footage from iconic moments in the competition’s rich history.

The digital collectables will include both the latest and archival NHL’s video moments. The collectables will feature previous and current NHL players, including the likes of Wayne Gretzky, Tie Domi, Sidney Crosby, and Mario Lemieux, among others.

The partnership marks the first time when the NHL, National Hockey League Players’ Association (NHLPA) and NHL Alumni Association (NHLAA) come together to release videos and other collectables.

The NHL said Sweet’s simplified user interface will easily engage first-time NFT owners as well as gamify features within the marketplace, like quizzes and challenges, and also allow fans to interact with each other.

Sweet’s other sporting clients include the NBA’s New York Knicks, the McLaren and Red Bull Formula One teams, and the Australian Open tennis tournament, the report indicated.

NFTs Defining the New Sports Industry

NFTs have penetrated the art market and are now rapidly expanding into the sports market. The announcement by the National Hockey League follows several other major league sports associations embracing NFTs.

Throughout the world of sports, NFTs are being used to unlock new channels for creative expression, fan engagement, and revenue generation.

Most of the world’s watched leagues, such as the National Basketball Association (NBA), Major League Baseball (MLB), the National Football League (NFL), and the National Hockey League (NHL), are releasing NFT collectables that digitize current and past beloved traditions of trading cards and memorabilia.

In this way, such sports leagues are not only providing their fans with a new way to engage with their favourite sports but also a way for themselves to earn new sources of revenue.