Feds end Bitcoin bandits’ luxury life fueled by $230M crypto scam

*United States federal agents have arrested and indicted two men for stealing a whopping $230 million of Bitcoin from a Washington, DC resident, believed to be a creditor of Genesis. *

On Sept. 19, the US Attorney’s Office for the District of Columbia reported that two young men, Malone Lam (20) and Jeandiel Serrano (21), were arrested and charged with conspiracy to steal and launder over 4,100 BTC](https://www.tradingview.com/symbols/BTCUSD/)) worth $230 million at the time from an unnamed victim in the country’s capital. *

The pair used several online aliases and sophisticated methods to gain access to the victim’s accounts, transfer funds, and launder the proceeds from at least August 2024.

*Lam and Serrano reportedly spent their ill-gotten gains on a lavish lifestyle, including international travel, nightclubs, luxury vehicles, watches, jewelry, designer handbags, and rental homes in Los Angeles and Miami. *

Stealing $230M in BTC from just one person

Blockchain sleuth “ZachXBT” assisted law enforcement in what he described as a “highly sophisticated social engineering attack” in a post on X on Sept. 19. He also identified a third suspect, known by the alias “Wiz.”

*The onchain investigator elaborated that the scammers targeted a single Genesis creditor on Aug. 19. *

Genesis filed for bankruptcy in January 2023 following exposure to FTX and secured court approval to return $3 billion in cash and crypto to its creditors in May 2024.

They called, posing as Google Support via a spoofed number to compromise the victim’s personal accounts. They then called, posing as Gemini support, claiming the account had been hacked, and convinced the victim to reset two-factor authentication (2FA) before sending Gemini funds to a compromised wallet.

*They also got the victim to run screen-sharing software from which they obtained their Bitcoin private keys. *

An initial tracing showed as much as $243 million in crypto was split multiple ways between each party before funds “quickly peeled off to more than 15 exchanges immediately swapping back and forth between Bitcoin, Litecoin, Ethereum, and Monero,” he added.

*A follow-up investigation found that a cluster of Ethereum addresses linked to Serrano and ‘Wiz’ received over $41 million from two exchanges in recent weeks. *

*ZachXBT said that with the assistance of crypto forensic investigators, Web3 security firm zeroShadow, and the Binance Security Team, “more than $9 million has been frozen, and $500,000 has already been returned back after working closely with the victim to investigate the incident.” *

The Columbia DA’s Office said that the investigation is ongoing with assistance from the FBI’s Washington Field Office and the IRS-Criminal Investigation Washington Field Office.

Here’s what happened in crypto today

US lawmakers debate SEC overstepping in heated exchange. The co-founder of the BitMEX exchange told an audience on Token2039 in Singapore that he is banking on a short-term market crash if interest rates are cut. Meanwhile, two Republican lawmakers have asked SEC Chair Gary Gensler to answer questions on crypto airdrops.

US lawmakers want SEC clarity on crypto

US Republican lawmaker French Hill said SEC enforcement abuse makes it “harder for legitimate actors trying to follow the rules” in a scathing statement given during a hearing of the House Subcommittee on Digital Assets, Financial Technology and Inclusion on Sept. 18. 

The hearing, dubbed by lawmakers as “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets,” featured testimony from a litany of congressional figures on both sides of the US political spectrum, with at least one democrat siding with republicans on the issue.

Arthur Hayes predicts short-term market crash on rate cuts: Token2049

As investors anticipate the first rate cut by the United States Federal Reserve in four years, BitMEX co-founder Arthur Hayes has shared his perspective on how these potential cuts could affect the cryptocurrency market.

Hayes delivered the keynote speech at Token2049 in Singapore on Sept. 18, “Thoughts on Macroeconomics Current Events.”

He addressed holding 5%-yielding Treasury Bills (T-bills) versus investing in cryptocurrencies in the context of potential market changes arising from the Fed’s rate cut decision that is expected to finally come out on Sept. 18.

Cointelegraph

Before discussing the crypto implications behind potential rate cuts, Hayes slammed the Fed for considering cutting rates amid growing US dollar issuance and increased government spending.

“I think that the Fed is making a colossal mistake cutting rates at a time when the US government is printing and spending as much money as they ever have in peacetime,” the entrepreneur opined, adding:

“While I think a lot of people are looking forward to a rate cut, meaning that they think the stock market and other things are going to pump up the jam, I think the markets are going to collapse a few days after the Fed’s rates.”

According to Hayes, the potential rate cut — which he expects to stand at 75 or 50 basis points — will likely drive a market drop because it will “narrow the interest rate differential between the US dollar and the Japanese yen.”

“We saw what happened a few weeks ago when the yen went from 162 to about 142, over about 14 days of trading that caused almost a mini financial collapse,” the former BitMEX exec said, adding: “We’re going to see a revisit of that financial stress.”

GOP Reps want crypto airdrop answers from Gensler

Republican Representatives Tom Emmer and Patrick McHenry have demanded Securities and Exchange Commission Chair Gary Gensler answer questions about the classification of crypto airdrops by the end of the month. 

In a Sept. 17 letter to Gensler, Emmer and McHenry said they’re concerned the SEC made “assertions about airdrops” in various lawsuits over the last two years and was “precluding American citizens from shaping the next iteration of the internet.” 

The lawmakers pointed to the SEC’s 2022 case against Hydrogen Technology Corporation and its March 2023 lawsuit against Justin Sun and other firms where the regulator hinted that airdrops broke securities laws.

“We are concerned that a misapplication of the securities laws will prevent this technology from achieving decentralization to its full potential,” they wrote. 

Cointelegraph

Emmer and McHenry demanded Gensler answer questions by Sept. 30, around how crypto “given away for free” could be a security and how the SEC distinguishes airdrops from other rewards like credit card points.

They also asked if the regulator had assessed the market impact of classifying cryptocurrencies as securities and what the impact on onchain applications, economic growth and tax revenue would be.

USDT on TON chain surpasses $1 billion

USDT, Tether’s stablecoin, surpassed $1 billion in circulating supply on The Open Network (TON) on Sept. 17 according to data from on-chain researcher Token Terminal. 

Cointelegraph

USDT on TON chain has surpassed $1 billion. Source: Token Terminal

The surge in USDT activity on the TON platform comes as Telegram Mini Apps proliferate, bringing USDT to increasingly active communities. According to the data provided by Token Terminal, the $1 billion circulation threshold was crossed after approximately five months of activity.