US imposes sanctions on cryptocurrency mixer that allegedly laundered over $7 billion

The US is ramping up its efforts to crack down on shady cryptocurrency mixers. The Treasury Department has imposed sanctions on Tornado Cash, a mixer that allegedly helped launder more than $7 billion in stolen crypto funds since its inception in 2019. Like a previous sanctions target, Blender, Tornado Cash is accused of “indiscriminately” helping thieves by hiding transaction details while failing to institute meaningful anti-laundering safeguards. North Korea’s state-sponsored Lazarus Group hackers are believed to have funneled $455 million through the mixer.

The sanctions block transactions with or for the benefit of Tornado Cash-related individuals and entities, whether they’re located in the US or controlled by Americans. Anyone who detects banned activity is required to inform the Treasury’s Offices of Foreign Assets Control.

Tornado Cash runs on the Ethereum blockchain. Officials said the mixer played a role in other large-scale thefts, including the Harmony Bridge heist (where it laundered $96 million) from June and this month’s Nomad attack (involving “at least” $7.8 million).

The government has taken legal action against crypto mixers for years. Federal law enforcement charged an Ohio man in 2020 for running a darknet mixer that helped criminals launder $300 million. The Treasury only started sanctioning mixers when it blocked Blender this May, however. The US now believes criminal-friendly mixers are a national security threat, and hopes efforts like these will curb both terrorism as well as attempts to dodge conventional sanctions.

SEC charges 11 people over ‘textbook’ $300 million crypto Ponzi scheme

It’s a day of the week ending in the letter “y,” which inevitably means there’s news of anothermessysaga in the cryptocurrency world. The Securities and Exchange Commission has charged 11 people who allegedly set up and promoted Forsage, which it said was a crypto Ponzi scheme that pulled in over $300 million from retail investors.

The agency asserts that Forsage enabled millions of people to engage in transactions through smart contracts on the Ethereum, Tron, and Binance blockchains. It alleged that Forsage had essentially been operating as a pyramid scheme for over two years, wherein the main way for investors to make money was by luring other people into the scheme. “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains,” Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit, said in a statement.

“Forsage is a textbook pyramid and Ponzi scheme,” the SEC’s complaint reads. “It did not sell or purport to sell any actual, consumable product to bona fide retail customers during the relevant time period and had no apparent source of revenue other than funds received from investors.”

Four of those charged are Forsage’s founders, who were last known to be living in Russia, the Republic of Georgia and Indonesia. The SEC also charged three promoters based in the US, who the founders allegedly recruited to endorse Forsage on its website and social media. Several members of a group called Crypto Crusaders, a group that promoted the scheme, were charged with violating the registration and anti-fraud provisions of federal securities laws as well. Two defendants have agreed to settle the charges without admitting or denying the allegations.

As CNBC notes, Forsage’s founders launched the platform in January 2020. Regulators in the Philippines and Montana tried to shut it down with cease-and-desist actions. The SEC alleged that the defendants continued to promote Forsage while denying claims made against the platform in YouTube videos.

Amazon employees in Illinois file federal complaint over workplace racism

On Wednesday, former Amazon employee Tori Davis and 25 other workers filed complaints with the Equal Employment Opportunity Commission (EEOC) alleging the company forced them to work in a dangerous environment, reports the Chicago Tribune. Davis raised concerns about Amazon’s handling of a racist death threat, and claims the retailer fired her after she threatened legal action if it did not address the incident.

In May, workers at the company’s MDW2 warehouse in Joliet, Illinois — a city 35 miles outside of Chicago — found two racist messages using the N-word scribbled on the wall of one of the facility’s bathrooms, according to the complaint filed with the EEOC. Davis, who is Black, left work without pay after her co-workers discovered the graffiti. After police investigated the incident, Amazon allegedly sent a text message to staff stating law enforcement “did not identify threats to the site’s safety.”

According to the complaint, Amazon also allowed white employees at MDW2 to wear clothing that displayed the Confederate flag. One individual allegedly had a shirt where workers could see the flag “prominently” on both the garment’s back and sleeves.

“Amazon works hard to protect our employees from any form of discrimination and to provide an environment where employees feel safe,” an Amazon spokesperson told Engadget. “Hate or racism have no place in our society and are certainly not tolerated by Amazon.”

At a press conference, Davis said she would like to see Amazon implement additional safety policies at MDW2 and improve Black worker representation at the facility. She is also appealing her termination. Amazon has faced allegations of allowing racism in the workplace before. Last year, a manager with the company’s AWS division said she was subjected to harassment from a supervisor who used racial tropes. The company also has a history of terminating employees who have sought to improve conditions at its workplaces

Climate change has Seville so hot it’s started naming heat waves like hurricanes

The city of Seville is trying something new to raise awareness of climate change and save lives. With oppressive heat waves becoming a fact of life in Europe and other parts of the world, the Spanish metropolis has begun naming them. The first one, Zoe, arrived this week, bringing with it expected daytime highs above 109 degrees Fahrenheit (or 43 degrees Celsius).

As Time points out, there’s no single scientific definition of a heat wave. Most countries use the term to describe periods of temperatures that are higher than the historical and seasonal norms for a particular area. Seville’s new system categorizes those events into three tiers, with names reserved for the most severe ones and an escalating municipal response tied to each level. The city will designate future heat waves in reverse alphabetical order, with Yago, Xenia, Wenceslao and Vega to follow. 

It’s a system akin to ones organizations like the US National Hurricane Center have used for decades to raise awareness of impending tropical storms, tornadoes and hurricanes. The idea is that people are more likely to take a threat seriously and act accordingly when it’s given a name. 

“This new method is intended to build awareness of this deadly impact of climate change and ultimately save lives,” Kathy Baughman McLeod, director of the Adrienne Arsht-Rockefeller Foundation Resilience Center, the think tank that helped develop Seville’s system, told Euronews. Naming heat waves could also help some people realize that we’re not dealing with occasional “freak” weather events anymore: they’re the byproduct of a warming planet.

SEC investigates Coinbase, says it may have illegally sold unregistered securities

Coinbase is facing a US Securities and Exchange Commission (SEC) probe into whether it allowed users to trade digital tokens that should have been registered as securities, Bloomberg has reported. Coinbase, involved indirectly in another probe by the SEC and state of New York, recently caught the regulator’s eye after expanding the number of tokens it offers for trading. 

After taking a conservative approach to listing cryptocurrencies, Coinbase now lets Americans trade more than 150 tokens, according to Bloomberg. If any of those are considered to be securities, it would need to register as an exchange with the SEC. A token is considered to be a security if it involves investors putting up funds for a company in order to profit from the work of its leadership.

Last week, the commission accused a former Coinbase employee of violating insider-trading rules by helping his brother and a friend buy dozens of different types of tokens before they were listed on the platform. Coinbase itself wasn’t accused of any wrongdoing, but the SEC said it considered nine of the dozens of digital tokens traded by the men to be securities, including seven listed by the exchange. 

In a response by chief legal officer Paul Grewal, Coinbase said that it “does not list securities on the platform. Period.” As evidence of that, it said that the US Department of Justice “reviewed the same facts [as the SEC] and chose not to file securities fraud charges against those involved.” 

Coinbase has previously complained that there’s no regulatory framework for digital asset securities. As it happened, the company filed a petition for rule making to clarify those rules just before the SEC filed charges. “Instead of crafting tailored rules in an inclusive and transparent way, the SEC is relying on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction, even those assets that are not securities,” Grewal wrote. 

A chess-playing robot broke its seven-year-old opponent’s finger

In something out of Black Mirror meets Queen’s Gambit, a chess robot accidentally broke the finger of its seven-year old opponent during an exhibition in Moscow, The Guardian reported. The child apparently moved his piece too soon and the robot grabbed his finger and squeezed it, causing a fracture before help could arrive. “The robot broke the child’s finger,” said Moscow Chess Federation president Sergey Lazarev. “This is of course bad.” 

Video shows the robot grabbing the boy’s finger and holding it for several seconds a group of people come to free him. It’s not clear what went wrong, but Lazarev said the child had “made a move, and after that we need to give time for the robot to answer, but the boy hurried and the robot grabbed him.” He implied that the robot’s suppliers may need work on the safety aspects, saying the are “going to have to think again.” 

The boy was identified as Christopher and went on to play the next day, finishing the tournament. His parents, however, have reportedly contacted the public prosecutor’s office. Russian chess official Sergey Smagin downplayed the incident, calling it “a coincidence” and saying the machine was “absolutely safe.” 

In any case, the incident can be seen as a modern parable of the dangers of robots, even in something as innocuous as chess. On a larger scale with things like robotic cars, however, the stakes are considerably higher

Lawsuit accuses Chicago authorities of misusing gunshot detection system in a murder case

A 65-year-old man named Michael Williams spent almost a year in jail over the shooting of a man inside his car before prosecutors asked a judge to dismiss his case due to insufficient evidence. Now, the MacArthur Justice Center has sued the city of Chicago for using ShotSpotter, which it calls an “unreliable” gunshot detection technology, as critical evidence in charging him with first-degree murder. The human rights advocate group out of Northwestern University accuses the city’s cops of relying on the technology and failing to pursue other leads in the investigation.

Williams was arrested in 2021 over the death of Safarian Herring, a young man from the neighborhood, who asked him for a ride in the middle of unrest over police brutality in May that year. According to an AP report from March, the key piece of evidence used for his arrest was a clip of noiseless security video showing a car driving through an intersection. That’s coupled with a loud bang picked up by ShotSpotter’s network of surveillance microphones. ShotSpotter uses a large network of audio sensors distributed through a specific area to pick up the sound of gunfire. The sensors work with each other to triangulate the shot’s location, so perpetrators can’t hide behind walls or other structures to mask their crime.

However, a study conducted by the MacArthur Justice Center in 2021 found that 89 percent of the alerts the system sends law enforcement turn up no evidence of any gun-related crime. “In less than two years, there were more than 40,000 dead-end ShotSpotter deployments,” the report said. The group also pointed out that ShotSpotter alerts “should only be used for initial investigative purposes.” San Francisco’s surveillance technology policy (PDF), for instance, states that its police department must only use ShotSpotter information to find shell casing evidence on the scene and to further analyze the incident.

The lawsuit accuses Chicago’s police department of failing to pursue other leads in investigating Williams, including reports that the victim was shot earlier at a bus stop. Authorities never established what’s supposed to be Williams’ motive, didn’t find a firearm or any kind of physical evidence that proves that Williams shot Herring, the group said.

On its website, ShotSpotter posted a response to “false claims” about its technology, calling reports about its inaccuracy “absolutely false.” The company claims its technology has a 97 percent accuracy rate, including a 0.5 percent false positive rate, and says those numbers were independently confirmed by Edgeworth Analytics, a data science firm in Washington, D.C. It also answers the part of the lawsuit that criticizes Chicago’s decision to place most of it sensors in predominantly Black and Latino neighborhoods, which could lead to potentially dangerous clashes with the police. ShotSpotter said it’s a false narrative that its coverage areas are biased and racially discriminatory and that it works with clients to determine coverage areas based on historical gunfire and homicide data .

As AP reports, the lawsuit is seeking class-action status for any Chicago resident who was stopped because of a ShotSpotter alert. The MacArthur Justice Center is also seeking damages from the city for the mental anguish and loss of income Williams had experienced throughout the whole ordeal, as well as for the legal fees he incurred. Further, the group is asking the court to ban the technology’s use in the city altogether.

US files its first criminal charges over insider trading of cryptocurrency

American authorities are continuing to crack down against insider trading of digital assets. The New York Timesreports that federal prosecutors in New York City have charged three people with wire fraud relating to an insider trading scheme for cryptocurrency, including former Coinbase exchange employee Ishan Wahi. This is the first time officials have levelled charges relating to insider trading of digital currency, according to Southern District of New York attorney Damian Williams.

As with a companion civil case from the Securities and Exchange Commission, prosecutors allege Wahi shared confidential information about future asset listings with his brother Nikhil Wahi and his brother’s friend Sammer Ramani. The data, shared between “at least” June 2021 and April 2022, helped Nikhil and his friend buy assets before the listing boosted their value. The two would then sell their assets for a profit. The purchases of 25 or more assets netted a profit of more than $1.1 million, according to the SEC.

Coinbase started an internal investigation in April in response to a Twitter post about unusual trading activity. Ishan Wahi booked a flight to India right before Coinbase was set to interview him, but he and his brother were arrested in Seattle this morning. Ramani is still at large and believed to be in India, the SEC said.

Wahi’s lawyers maintained their client’s innocence, and said he would “vigorously” defend against the charges. Ramani and the attorney for Wahi’s brother haven’t commented on the charges. Coinbase said it had turned over information to the Justice Department and had fired Wahi as part of a “zero tolerance” policy for this behavior.

This is far from the largest crypto case. Lending firm BlockFi recently paid $100 million to settle securities violations, while Telegram had to return $1.2 billion to investors for its own violations on top of paying $18.5 million. However, the charges are intended more to send a warning. The government wants to make clear that fraud is illegal whether it’s “on the blockchain or on Wall Street,” as Williams explained to The Times. This is as much about discouraging would-be crooks as it is punishment for the defenders.