Blockchain & Cryptocurrency , Cryptocurrency Fraud , Fraud Management & Cybercrime

Cryptohack Roundup: Avraham Eisenberg's Trial Pushed to 2024

Every week, ISMG rounds up cybersecurity incidents in digital assets. This week, the trial of the alleged Mango Markets hacker was delayed, Bitfinex reported a "minor" cybersecurity incident, the U.S. Securities and Exchange Commission sought summary judgement in the Terraform Labs case and the U.S. Department of Treasury designated a Russian money launderer.

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Avraham Eisenberg, the alleged mastermind behind the Mango Markets hack, will face trial on April 8 instead of the original scheduled date of Dec. 4, court documents show. His lawyers requested the delay after Eisenberg was unexpectedly transferred from prison in New Jersey to the Metropolitan Detention Center in Brooklyn, where FTX founder Sam Bankman-Fried is being held. The attorneys said they needed more time to prepare Eisenberg's defense due to the case's "legal and factual complexities" and the large quantity of discovery produced by the government. Eisenberg had denied any wrongdoing, calling the exploit a "highly profitable trading strategy."

Cryptocurrency exchange Bitfinex said it has resolved a "minor" information security incident after one of its customer support agents was hacked. The subsequent phishing attacks allowed hackers to access a "small portion" of the company's customer support boards that "held partial, incomplete and stale information," the company said. The compromised customer support agent did not have "senior permissions," so no systems were compromised and no customer funds were lost. "No server, wallet or database infrastructure was accessed." Bitfinex added.

The U.S. Securities and Exchange Commission filed a motion for summary judgement in its lawsuit against Terraform Labs. Securities violations by Terraform Labs and its co-founder Do Kwon are "clear, undisputed and overwhelming." The regulator alleges that Terraform and Kwon committed fraud that led to $45 billion in market losses.

Federal prosecutors in New Jersey filed a civil forfeiture action to recover more than $54 million in cryptocurrency seized as part of an illegal darknet narcotics distribution scheme in New Jersey. The proceeds are from the operations between 2010 and 2015 of Christopher Castelluzzo and others, who conspired to sell narcotics on darknet sites for bitcoin. Castelluzzo also used some of the bitcoin to purchase ether. The complaint sought the forfeiture of all of the cryptocurrency from Castelluzzo, who is currently serving concurrent 20-year federal and state prison sentences.

The U.S. Department of Treasury's Office of Foreign Assets Control sanctioned Ekaterina Zhdanova, a Russian national, for laundering millions of dollars for Russian elites and cybercriminals using virtual currency to offset the effect of international sanctions. Calling her a "key gateway to the international financial system for Russian elites and ransomware actors," including Ryuk, the agency said she used virtual currency to facilitate large cross-border transactions, assisted Russians in obfuscating the source of their wealth, and provided access to Western financial markets for Russian individuals who might otherwise have been blocked due to U.S. and international prohibitions.