Russian Crypto Operation: An Endgame
October 3, 2024
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This essay is the work of a dumb dinobaby. No smart software required.
The US Department of the Treasury took action to terminate “PM2BTC—a Russian virtual currency exchanger associated with Russian individual Sergey Sergeevich Ivanov (Ivanov)—as being of “primary money laundering concern” in connection with Russian illicit finance.” The DOT’s news release about the multi-national action is located at this link. Fogint has compiled a list of details about this action.
The write up says:
Today, the U.S. Department of the Treasury is undertaking actions as part of a coordinated international effort to disrupt Russian cybercrime services. Treasury’s Financial Crimes Enforcement Network (FinCEN) is issuing an order that identifies PM2BTC—a Russian virtual currency exchanger associated with Russian individual Sergey Sergeevich Ivanov (Ivanov)—as being of “primary money laundering concern” in connection with Russian illicit finance. Concurrently, the Office of Foreign Assets Control (OFAC) is sanctioning Ivanov and Cryptex—a virtual currency exchange registered in St. Vincent and the Grenadines and operating in Russia. The FinCEN and OFAC actions are being issued in conjunction with actions by other U.S. government agencies and international law enforcement partners to hold accountable Ivanov and the associated virtual currency services.
Here’s a selection of the items which may be of interest to cyber crime analysts and those who follow crypto activity.
- Two individuals were added to the sanctions list: Sergey Ivanov and Timur Shakhmametov. A reward or bounty has been offered for information leading to the arrest of these individuals. The payment could exceed US$9 million
- The PM2BTC and Cryptex entities has worked or been associated with other crypto entities; possibly Guarantex, UAPS, Cryptex, Hydra, FerumShop, Bitzlato, and an underground payment processing service known as Bitzlato
- Among the entities working on this operation (Endgame) were Europol, Germany, Great Britain, Latvia, Netherlands, and the US
- In 2014, the two persons of interest want to set up an automated (smart) service and may have been working with PerfectMoney and Paymer
- The activities of Messrs. Ivanov and Shakhmametov involved “carding” and other bank-related fraud
Russian regulations provide wiggle room for certain types of financial activity not permitted in the US and countries associated with this take down.
Several observations:
- The operation was large, possibly exceeding billions in illegal transactions
- The network of partners and affiliated firms illustrates the appeal of illegal crypto services
- One method of communication used by PM2BTC was Telegram Messenger.
- “The $9 Million US reward / bounty for those two Russian crypto exchange operators wanted by US DOJ is a game changer due to the enormous reward,” Sean Brizendine, blockchain researcher told the FOGINT team.
Additional information may become available as the case moves forward in the US and Europe. FOGINT will monitor public information which appears in Russia and other countries.
Stephen E Arnold, October 3, 2024
Hamster Kombat: Does It Matter?
October 2, 2024
![green-dino_thumb_thumb_thumb_thumb_t[2]_thumb_thumb](https://arnoldit.com/wordpress/wp-content/uploads/2024/09/green-dino_thumb_thumb_thumb_thumb_t2_thumb_thumb-3.gif "green-dino_thumb_thumb_thumb_thumb_t[2]_thumb_thumb")
This essay is the work of a dumb dinobaby. No smart software required.
The Fogint team pays attention to crypto plays like Hamster Kombat. Those engaged in cyber fraud investigations, analysis, and research may want to take a quick look at what is called a “click to earn” game. I was asked the question at a recent lecture to cyber fraud professionals, “Why should I care about Hamster whatever?” This free, public blog is not the place for a detailed answer. However, I am willing to share several observations offered by Coin Telegraph.
First, check out this chart. From zero users in late March 2024 to a few weeks ago. The hockey stick is what is reported at 300 million users. Anecdotal information suggests that one third may be agentic; that is, bots. And “only” 100 million are people looking to make a quick buck on a crypto play.
Note that the chart only shows growth through June 2024. The number cited above is derived by normalizing user estimates from a range of sources which the Fogint team has compiled and reviews on a daily basis.
Second, the word game does not convey exactly what Hamster Combat and similar “games” offer their users. Cointelegraph.com reports that an expert named Sébastien Borget uses the phrase “play to earn games.” The question some may pose is, “What is a play to earn game?” The clicks on icons or the actions of the user generate money in the form of crypto for those who play them. The easiest way to understand the business model is to get a burner mobile phone, a pay-as-you-go SIM, a disposable email address, and the Telegram app. Search for Hamster Kombat and “play.” If you cannot figure out the interface, ask a mobile-dependent teen.
Third, this facet of Telegram is one that helps differentiate its “games” from those available on other platforms. Everything in Hamster Kombat is about revenue generation, the belief that the HMSTR coin will be increasingly valuable, and the addictive nature of clicks, buying software items from Hamster Kombat, and becoming “addicted” to or dependent upon the Open Network, a “spin off” or “spin up” from Telegram and its plumbing.
The Fogint team believes that Telegram itself will be monitoring more closely than the fate of Pavel Durov (Telegram’s founder who is possibly enjoying the ministrations of the French bureaucracy) how the TON blockchain handles validation. This process is not going to be explained in this blog post, but for those who are curious, just email benkent2020 at yahoo dot and a Fogint professional will respond with options for getting more information about what is likely to be a significant digital fraud event in 2025. “INDOAX Exchange the first Exchange to list Hamster Kombat coin does not allow US residents to open accounts,” Sean Brizendine, blockchain researcher told the FOGINT team.
When this post becomes public, the mining of HMSTR coins will be underway. Hamster Kombat is a combination of old-fashioned online games, crypto mining, and human enthusiasm to get rich quick. And what does one need to join in the craze? The Telegram application and the mini app Hamster Kombat.
Stephen E Arnold, October 2, 2024
Solana: Emulating Telegram after a Multi-Year Delay
September 27, 2024
This essay is the work of a dumb dinobaby. No smart software required.
I spotted an interesting example of Telegram emulation. My experience is that most online centric professionals have a general awareness of Telegram. Its more than 125 features and functions are lost in the haze of social media posts, podcasts, and “real” news generated by some humanoids and a growing number of gradient descent based software.
I think the information in “What Is the Solana Seeker Web3 Mobile Device” is worth noting. Why? I will list several reasons at the end of this short write up about a new must have device for some crypto sensitive professionals.
The Solana Seeker is a gizmo that embodies Web3 goodness. Solana was set up to enable the Solana blockchain platform. The wizards behind the firm were Anatoly Yakovenko and Raj Gokal. The duo set up Solana Labs and then shaped what is becoming the go-to organization Lego block for assorted crypto plays: The Solana Foundation. This non-profit organization has made its Proof of History technology into the fires heating the boilers of another coin or currency or New Age financial revolution. I am never sure what emerges from these plays. The idea is to make smart contracts work and enable decentralized finance. The goals include making money, creating new digital experiences to make money, and cash in on those to whom click-based games are a slick way to make money. Did I mention money as a motivator?
A hypothetical conversation between two crypto currency and blockchain experts. What could go wrong? Thanks, MSFT Copilot. Good enough.
How can you interact with the Solana environment? The answer is to purchase an Android-based digital device. The Seeker allows anyone to have the Solana ecosystem in one’s pocket. From my dinobaby’s point of view, we have another device designed to obfuscate certain activities. I assume Solana will disagree with my assessment, but things crypto evoke things at odds with some countries’ rules and regulations.
The cited article points out that the device is a YAAP (yet another Android phone). The big feature seems to be the Seed Vault wallet. In addition to the usual razzle dazzle about security, the Seeker lets a crypto holder participate in transactions with a couple of taps. The Seeker interface is to make crypto activities smoother and easier. Solana has like other mobile vendors created its own online store. When you buy a Seeker, you get a special token. The description I am referencing descends into crypto babble very similar to the lingo used by the Telegram One Network Foundation. The problem is that Telegram has about a billion users and is in the news because French authorities took action to corral the cowboy Russian-born Pavel Durov for some of his behaviors France found objectionable.
Can anyone get into the generic Android device business, do some fiddling, and deploy a specialized device? The answer is, “Yep.” If you are curious, just navigate to Alibaba.com and search for generic cell phones. You have to buy 3,000 or more, but the price is right: About US$70 per piece. Tip: Life is easier if you have an intermediary based in Bangkok or Singapore.
Let’s address the reasons this announcement is important to a dinobaby like me:
- Solana, like Meta (Facebook) is following in Telegram’s footprints. Granted, it has taken these two example companies years to catch on to the Telegram “play”, but movement is underway. If you are a cyber investigator, this emulation of Telegram will have significant implications in 2025 and beyond.
- The more off-brand devices there are, the easier it becomes for intelligence professionals to modify some of these gizmos. The reports of pagers, solar panels, and answering machines behaving in an unexpected manner goes from surprise to someone asking, “Do you know what’s in your digital wallet?”
- The notion of a baked in, super secret enclave for the digital cash provides an ideal way to add secure messaging or software to enable a network in a network in the manner of some military communication services. The patents are publicly available, and they make replication in the realm of possibility.
Net net: Whether the Seeker flies or flops is irrelevant. Monkey see, monkey do. A Telegram technology road map makes interesting reading, and it presages the future of some crypto activities. If you want to know more about our Telegram Road Map, write benkent2020 at yahoo.com.
Stephen E Arnold, September 27, 2024
Is Crypto the Funding Mechanism for Bad Actors?
December 6, 2023
This essay is the work of a dumb dinobaby. No smart software required.
Allegations make news. The United States and its allies are donating monies and resources to Israel as they fight against Hamas. As a rogue group, Hamas is not as well-funded Israel and people are speculative about how it is financing its violent attacks. The Marketplace explains how the Palestinian group is receiving some of its funding and it’s a very obvious answer: “Crypto Is One Way Hamas Gets Its Funding.” David Brancaccio, host of the Marketplace Morning Report, interviewed former federal prosecutor and US Treasury Department official and current head of TRM Labs, Ari Redford. TRM Labs is a cryptocurrency compliance firm. Redford and Brancaccio discuss how Hamas uses crypto.
Hamas is subject to sanctions from the US Treasury Department, so the group’s access to international banking is restricted. Cryptocurrency allows Hamas to circumvent those sanctions. Ironically, cryptocurrency might make it easier for authorities to track illegal use of money because the ledger can’t be forged. Crypto moves along a network of computers known as blockchains. The blockchains are public, therefore traceable and transparent. Companies like TRM allow law enforcement and other authorities to track blockchains.
The US Department of Justice, IRS-CI, and FBI removed 150 crypto wallets associated with Hamas in 2020. TRM Labs is continuously tracking Hamas and its financial supporters, most appear to be in Iran. Hamas doesn’t accept bitcoin donations anymore:
“Brancaccio: I think it was April of this year, Hamas announced it would no longer take donations in bitcoin.. Perhaps it’s because of its traceability? Redbord: Yeah, really important point. And that’s essentially what Hamas itself said that, you know, law enforcement and other authorities have been coming down on their supporters because they’ve been able to trace and track these flows. And announced in April that they would not be soliciting donations in cryptocurrency. Now, whether that’s entirely true or not, it’s hard to say. We’re obviously seeing at least supporters of Hamas go out there raising funds in crypto.”
What will bad actors do to get money? Find options and use them.
Whitney Grace, December 18, 2023
Crypto and Crime: Interesting Actors Get Blues and Twos on Their Systems
January 31, 2023
I read a widely available document which presents information once described to me as a “close hold.” The article is “Most Criminal Crypto currency Is Funneled Through Just 5 Exchanges.” Most of the write up is the sort of breathless “look what we know” information. The article which recycles information from Wired and from the specialized services firm Chainalysis does not mention the five outfits currently under investigation. The write up does not provide much help to a curious reader by omitting open source intelligence tools which can rank order exchanges by dollar volume. Why not learn about this listing by CoinMarketCap and include that information instead of recycling OPI (other people’s info)? Also, why not point to resources on one of the start.me pages? I know. I know. That’s work that interferes with getting a Tall, Non-Fat Latte With Caramel Drizzle.
The key points for me is the inclusion of some companies/organizations allegedly engaged in some fascinating activities. (Fascinating for crime analysts and cyber fraud investigators. For the individuals involved with these firms, “fascinating” is not the word one might use to describe the information in the Ars Technica article.)
Here are the outfits mentioned in the article:
- Bitcoin Fog – Offline
- Bitzlato
- Chatex
- Garantex
- Helix – Offline
- Suex
- Tornado Cash – Offline
Is there a common thread connecting these organizations? Who are the stakeholders? Who are the managers? Where are these outfits allegedly doing business?
Could it be Russia?
Stephen E Arnold, February 1, 2023
FTX: What Does B Stand For?
December 2, 2022
I am not a krypto kiddie. After the mysterious Nakamoto white paper became available, I made an informed judgment: Bad actors will love this crypto thing. My hunch was correct. The meltdown of a crypto wizard and his merry band of tea totaling worker bees have demonstrated that cyber fraud can be entertaining.
I read “Does B Stand for Bankman-Fried or Bankruptcy?” The write up asks a simple question. I noted this passage from the “real” Silicon Valley write up:
SBF said FTX failed on risk management and he didn’t “knowingly co-mingle funds.”
There you go.
Now what does B stand for? Here are my suggestions:
bamboozle – to rip off, fool, or deceive
bane – a source or ruin, harm, or evil
baseborn – a nice way to question one’s family position in society
bebotherer – one who brings trouble
besotted – drunk and incoherent
bonkers — a few cans short of a six pack
brock—a nasty, little, furred creature
I am leaning toward bamboozle but I think brock has a certain charm. Perhaps a combo; to wit:
The brock bamboozled himself and others.
Close enough for horseshoes as the “we’re not talking” analytics folks like to say among friends at lunch.
Stephen E Arnold, December 2, 2022
Simplifying the Geometry of Conscience
November 14, 2022
My first brush with crypto currency was a request to include the topic in a lecture for an outfit running international training programs for law enforcement and intelligence professionals. In 2013, I was in my first year of retirement and interested in what I called CyberOSINT. My definition of the term pivoted on the companies providing tools and software to deal with was grouped under the category of cyber crime. A decade ago, cyber crime was big, but it was propelled by what now seems to have been bad actor minnows.
The hot topics were the Dark Web, forums offering tips and tricks for hacking, and CSAM (child sexual abuse material). Digital currency, specifically Bitcoin, was the lubricant for cyber crime. Therefore, my team and I had no choice but take a look at the Nakamoto white paper, poke into the universities in England beavering away on techniques to deanonymize individual transactions, and the early research efforts of everyone’s favorite online bookstore Amazon. We attended meet ups about digital currency and spoke with seemingly well meaning people who were excited about doing money things without annoying intermediaries and regulatory authorities.
It became clear at least to me and my team that digital currency would become a replacement for paper and coin currencies because [a] money costs a lot to produce, manage, and make counterfeit resistant and [b] values could be whipped up using the juices that bad actors, money launderers, and financial “innovators” have pumping through their veins.
Today digital currencies have become a big financial play. It works… for a while. Then like the tragedy of the commons, the open green field is trashed. I thought about the current big time mess a whiz kid has created. The scale of the fraud makes those early players look less like minnows and more like clueless paramecia with math skills. “Sam Bankman-Fried and the Geometry of Conscience” is an interesting essay. However, it is difficult for a simple and somewhat dull person like myself to understand.
The write up says (and I urge you to read the complete 1,400 word essay. I want to cite one passage, if I may:
On reflection, maybe I’d just try to convince SBF to weight money logarithmically when calculating expected utility (as in the Kelly criterion), to forsake the linear weighting that SBF explicitly advocated and that he seems to have put into practice in his crypto ventures. Or if not logarithmic weighing, then at least some concave utility function—something that makes, let’s say, a mere $1 billion in hand seem better than $15 billion that has a 50% probability of vanishing and leaving you, your customers, your employees, and the entire Effective Altruism community with less than nothing.
Interesting, right.
Here’s my take. The SBF innovator attended MIT. In theory, he was exposed to MIT thinking, which as you may recall, involved taking money from everyone’s favorite poster child for questionable behavior Jeffrey Epstein. Several questions:
- What’s up with an MIT education and inculcation of such quaint concepts as moral behavior?
- Why are individuals willing and able to commit financial fraud when it is comparatively easy to deanonymize some crypto activities?
- Do we need big thoughts like “linear and concave utilities” to explain criminal behavior?
My take. Effective altruism is word salad. Say crypto to me I think of cyber crime. End of story. No Hopf fibration or wordsmithing needed, thank you very much.
Stephen E Arnold, November 14, 2022
Bitcoin Dip: Buy a Dubai Villa Today?
June 9, 2022
Now there is an easy way to buy property with Bitcoin—if one is looking to settle in Dubai, that is. The International Business Times reveals, “Coinsfera Makes It Easy to Buy Real Estate in Dubai with Bitcoin.” Reporter Anjali Kochhar writes:
“If a buyer is not a UAE national, then they need to have an original ID or passport to buy properties in Dubai through Bitcoin. Meanwhile, the payment through Bitcoin will be considered in US Dollars or Dirhams. The crypto exchange will help the buyers with selecting different properties at premium locations in Dubai by assigning real estate agents who will help in property dealing. After that, the company will arrange a meeting for further dealing where you can negotiate and finalize the deal. Once all things are decided, buyers can transfer the capital amount in Bitcoin through their wallet. The buyers can have possessions of the villa right after the transfer of Bitcoins. ‘Coinsfera offers luxurious apartments in the great buildings of Dubai. We will not just save your time but also your cost in the transaction process. You just have to select your apartment and we will take care of the rest,’ the statement read.”
Sounds convenient. But who are the customers? We are not sure, but some people in Russia, the Middle East, and Monaco may be interested. The service’s launch follows the passage of recent legislation designed to position the Dubai Emirate as a leader in crypto currencies, NFTs and any other virtual assets that might come along. Founded in 2015, Coinsfera is a Bitcoin exchange firm based in Dubai that also serves customers in Istanbul, London, and Kosovo.
Cynthia Murrell, June 9, 2022
CoinMarketCap User Data Leaked
November 3, 2021
The IRS may be interested in these data. Many turn to crypto currency because it is (nearly) untraceable. The major website where users go to keep up to date on crypto currency markets, however, has proven to be less secure. Gadgets360 reports, “Data of Over Three Million CoinMarketCap Users Breached, Crypto-Tracker Acknowledges.” We learn:
“Data of over three million CoinMarketCap (CMC) users was leaked earlier in October, the crypto tracker confirmed. Every day, over 27 million people from the US, India, and Japan among other nations visit the platform to price-track and stay updated on cryptocurrency, a report by statistics firm HypeStat claimed recently. This data breach comes at a time when cyber-attacks specifically targeting the crypto-community are rising in numbers, worldwide. Despite several nations still being skeptical about legalizing crypto currencies, the crypto space is witnessing rapid expansion in many parts of the world. Registered email addresses of 3,117,548 CMC users were unlawfully obtained and uploaded on hacking forums by nefarious cyber criminals on October 12, CryptoPotato reported earlier this week. These email ids are now being traded on the dark web. CMC has acknowledged this data breach while noting that the passwords of these leaked email addresses remain safe.”
We suppose that is something to be grateful for. CMC insists the data leak was not on their own servers, and is still investigating what went awry. Writer Radhika Parashar reminds us this is not the first time a crypto firm has been breached, pointing to BitMEX and Ledger as examples. Also, a recent Business Insider report identifies 32 fraud and hacking attacks on crypto targets so far this year to the tune of nearly $3 billion. The same study states the number of attacks is growing by 41% each year. Ah, secure crypto.
Cynthia Murrell, November 3, 2021
Why Big Tech Is Winning: The UK Admission
August 31, 2021
I read “UK’s FCA Say It Is Not Capable of Supervising Crypto Exchange Binance.” This is a paywalled story, and I am not sure how much attention it will get. As Spotify is learning from locking up the estimable Joe Rogan, paywalls make sense to a tiny slice of one’s potential audience.
The story is an explanation about government helplessness when it comes to fintech or financial technology. The FCA acronym means Financial Conduct Authority. Think about London. Think about the wizards who cooked up some nifty digital currency methods at assorted UK universities less than one hour from the Pickle. Think about the idea that a government agency with near instant access to the wonks at the National Crime Agency, the quiet ones at Canary Wharf, and the interesting folks in Cheltenham. Now consider this passage from the write up:
… the Financial Conduct Authority said that Binance’s UK affiliate had “failed to” respond to some of its basic queries, making it impossible to oversee the sprawling group, which has no fixed headquarters and offers services around the world. The admission underscores the scale of the challenge facing authorities in tackling potential risks to consumers buying frequently unregulated products through nimble crypto currency businesses, which can often circumvent national bans by giving users access to facilities based overseas.
Hello? Rural Kentucky calling, is anyone at work?
Let’s step back. I need to make one assumption; that is, government entities’ have authority and power. What this write up makes clear is that when it comes to technology, the tech outfits have the authority and the power.
Not good in my opinion for the “consumer” and maybe for some competitors. Definitely not good for enforcement authorities.
Who finds sun shining through the clouds after reading this Financial Times’s story? I would wager that tech centric outfits are thinking about a day or more at the beach. No worries. And look. Here comes Snoop Dog handing out free beer. What a day!
Stephen E Arnold, August 31, 2021
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