Do Kwon was sentenced earlier this month to 15 years in prison by a New York court for crimes associated with the fall of his cryptocurrencies TerraUSD and Luna. Kwon joins the hall of shame of crypto kings, queens and geniuses who were celebrated at the heyday of the digital currencies a decade ago, but manipulated their systems to defraud customers. Kwon was charged with money laundering and fraud, having been apprehended after a years-long manhunt. This is his story.<h2>Do Kwon: the baby-faced crypto genius</h2>Do Kwon, born in South Korea on 6 September 1991 as Kwon Do-hyung, went from software engineer to cryptocurrency entrepreneur after graduating from Stanford University with a degree in computer science. He cut his teeth at Microsoft and Apple before co-founding Singapore-based Terraform Labs with Daniel Shin in 2018, and serving as CEO.Terraform Labs developed the Terra blockchain, the Luna cryptocurrency, and the algorithmic stablecoin TerraUSD (UST), which was marketed as maintaining a $1 peg through an automated mechanism involving Luna. But before we move further, you need to know about the concept of stablecoins.<a href="https://www.wionews.com/videos/markets-in-numbers-2025-precious-metals-rise-crypto-worst-performing-asset-1766467180818/embed">https://www.wionews.com/videos/markets-in-numbers-2025-precious-metals-rise-crypto-worst-performing-asset-1766467180818/embed</a><h2>What are dollar-pegged stablecoins?</h2>Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged as equal to, or 1:1 with, the US dollar or other fiat currencies.The aim is to combine the benefits of crypto, such as fast and borderless transfers, with the stability of traditional money. The equal pegging to the dollar enabled stablecoins to be used in trading, remittances, and decentralised finance (DeFi) lending. Stablecoins were advertised as a “safe haven” during cryptocurrency volatility, something that Bitcoin, Ethereum, Dogecoin and others are notorious for.&nbsp;Also read: <a href="https://www.wionews.com/business-economy/why-are-crypto-markets-falling-1760706709071">Why are crypto markets falling? Explained</a>&nbsp;There are three main types of dollar-pegged stablecoins.The most common are fiat-collateralised cryptocurrencies. These dominate market capitalisation and are backed by 1:1 reserves of US dollars, usually in cash or treasuries held off-chain by a centralised issuer. Examples of such coins include Tether and USD Coin.The second type are crypto-collateralised. These are over-collateralised, sometimes up to 200 per cent, by other cryptocurrencies locked in smart contracts. If the collateral value drops, positions can be liquidated to maintain the peg. Examples include DAI from MakerDAO, which is backed by Ethereum and other cryptocurrencies.The third type are algorithmic stablecoins, which have minimal or no collateral. These use algorithms or incentives to adjust supply automatically through arbitrage operations, usually involving a more volatile “sister” tokens which absorbs price fluctuations. Fully decentralised, algorithmic stablecoins are the riskiest in volatile market conditions.Do Kwon’s TerraUSD, or UST, was one such algorithmic stablecoin. It worked on what is known as a “burn-and-mint mechanism” using the sister coin Luna. In reality, UST was not actually backed by dollar reserves. In the ‘burn and mint operation’, when UST was down in value to US dollars, users would ‘burn’ UST and ‘mint’ more Luna coins, and when Luna was down, they would mint UST and burn Luna, and so on.Also read: <a href="https://www.wionews.com/india-news/india-us-coordinate-real-time-to-seize-cryptocurrency-assets-worth-150-million-1757086955195">India, US coordinate real time to seize cryptocurrency assets worth $150 Million</a><h2>The massive fraud of Kwon</h2>Kwon misled investors in his crypto assets about the stability and mechanics of TerraUSD, falsely claiming that the dollar peg was purely maintained by algorithms.But the reality was different.The dollar was “depegged” in May 2021, meaning UST temporarily lost its one-to-one value against the US dollar. But to hide this, Kwon secretly made arrangements with a trading firm to buy millions of dollars’ worth of UST to artificially restore the dollar peg.This led to the inflation of Kwon’s cryptocurrency ecosystem, valued at $50 billion at its peak.<h2>The spectacular collapse of TerraUSD and Luna and crypto winter</h2>Crypto investments saw massive growth during the Covid pandemic. As the lockdowns eased, investments came down. In May 2022, Kwon’s crypto assets UST and Luna collapsed spectacularly, as a chain reaction of panic withdrawals contributed to the situation similar to run on the banks..Nearly $40–50 billion in investor value was wiped out in days. Many retail investors lost their entire life savings.The collapse highlighted algorithmic stablecoins’ vulnerability, a case of fake confidence without sufficient underlying mechanisms.&nbsp;The fall of UST contributed to a broader crypto market crash known as “crypto winter”. It may have also partially caused the downfall of other firms like FTX, run by Sam Bankman-Fried.&nbsp;Firms such as Three Arrows Capital, Voyager were also affected.<h2>After the fall: Kwon’s life as a fugitive</h2>After the 2022 collapse, Kwon disappeared. Reports claimed he fled first to Singapore, then to the Balkans, using false passports. But in March 2023, his escape from the law ended. Kwon was arrested at Podgorica Airport in Montenegro while attempting to board a flight to Dubai using forged Costa Rican documents. He was given a short jail term in Montenegro for passport forgery.Already, both the US and South Korea were on Kwon’s trail and wanted him extradited.A legal battle ensued.On 31 December 2024, Montenegro extradited Kwon to the US to stand trial at a federal court in Manhattan, New York. Kwon, the once-crypto king, pleaded guilty in August 2025 to conspiracy to defraud, wire fraud, and other related charges. Nearly a year after his extradition, he was sentenced to 15 years in prison on December 11, with credit for time served in custody, including about 17 months in Montenegro.<h2>Do Kwon: Epic fraud</h2>The US judge described the TerraUSD fraud as “epic” and on a “generational scale”.Kwon expressed remorse in court.He and Terraform Labs had settled a separate civil case with the US securities watchdog, the SEC, for $4.55 billion, including an $80 million personal fine.But his legal woes are not over.The baby-faced entrepreneur may face additional charges in South Korea after serving his US sentence.

Do Kwon, recently sentenced to 15 years in prison, had risen from Stanford graduate to crypto star before his tokens, TerraUSD and sister coin Luna collapsed, wiping out billions of dollars in value. Here is his story

Do Kwon was sentenced earlier this month to 15 years in prison by a New York court for crimes associated with the fall of his cryptocurrencies TerraUSD and Luna. Kwon joins the hall of shame of crypto kings, queens and geniuses who were celebrated at the heyday of the digital currencies a decade ago, but manipulated their systems to defraud customers. Kwon was charged with money laundering and fraud, having been apprehended after a years-long manhunt. This is his story. Do Kwon: the baby-faced crypto genius Do Kwon, born in South Korea on 6 September 1991 as Kwon Do-hyung, went from software engineer to cryptocurrency entrepreneur after graduating from Stanford University with a degree in computer science. He cut his teeth at Microsoft and Apple before co-founding Singapore-based Terraform Labs with Daniel Shin in 2018, and serving as CEO. Terraform Labs developed the Terra blockchain, the Luna cryptocurrency, and the algorithmic stablecoin TerraUSD (UST), which was marketed as maintaining a $1 peg through an automated mechanism involving Luna. But before we move further, you need to know about the concept of stablecoins. https://www.wionews.com/videos/markets-in-numbers-2025-precious-metals-rise-crypto-worst-performing-asset-1766467180818/embed What are dollar-pegged stablecoins? Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged as equal to, or 1:1 with, the US dollar or other fiat currencies. The aim is to combine the benefits of crypto, such as fast and borderless transfers, with the stability of traditional money. The equal pegging to the dollar enabled stablecoins to be used in trading, remittances, and decentralised finance (DeFi) lending. Stablecoins were advertised as a “safe haven” during cryptocurrency volatility, something that Bitcoin, Ethereum, Dogecoin and others are notorious for. Also read: Why are crypto markets falling? Explained There are three main types of dollar-pegged stablecoins. The most common are fiat-collateralised cryptocurrencies. These dominate market capitalisation and are backed by 1:1 reserves of US dollars, usually in cash or treasuries held off-chain by a centralised issuer. Examples of such coins include Tether and USD Coin. The second type are crypto-collateralised. These are over-collateralised, sometimes up to 200 per cent, by other cryptocurrencies locked in smart contracts. If the collateral value drops, positions can be liquidated to maintain the peg. Examples include DAI from MakerDAO, which is backed by Ethereum and other cryptocurrencies. The third type are algorithmic stablecoins, which have minimal or no collateral. These use algorithms or incentives to adjust supply automatically through arbitrage operations, usually involving a more volatile “sister” tokens which absorbs price fluctuations. Fully decentralised, algorithmic stablecoins are the riskiest in volatile market conditions. Do Kwon’s TerraUSD, or UST, was one such algorithmic stablecoin. It worked on what is known as a “burn-and-mint mechanism” using the sister coin Luna. In reality, UST was not actually backed by dollar reserves. In the ‘burn and mint operation’, when UST was down in value to US dollars, users would ‘burn’ UST and ‘mint’ more Luna coins, and when Luna was down, they would mint UST and burn Luna, and so on. Also read: India, US coordinate real time to seize cryptocurrency assets worth $150 Million The massive fraud of Kwon Kwon misled investors in his crypto assets about the stability and mechanics of TerraUSD, falsely claiming that the dollar peg was purely maintained by algorithms. But the reality was different. The dollar was “depegged” in May 2021, meaning UST temporarily lost its one-to-one value against the US dollar. But to hide this, Kwon secretly made arrangements with a trading firm to buy millions of dollars’ worth of UST to artificially restore the dollar peg. This led to the inflation of Kwon’s cryptocurrency ecosystem, valued at $50 billion at its peak. The spectacular collapse of TerraUSD and Luna and crypto winter Crypto investments saw massive growth during the Covid pandemic. As the lockdowns eased, investments came down. In May 2022, Kwon’s crypto assets UST and Luna collapsed spectacularly, as a chain reaction of panic withdrawals contributed to the situation similar to run on the banks.. Nearly $40–50 billion in investor value was wiped out in days. Many retail investors lost their entire life savings. The collapse highlighted algorithmic stablecoins’ vulnerability, a case of fake confidence without sufficient underlying mechanisms. The fall of UST contributed to a broader crypto market crash known as “crypto winter”. It may have also partially caused the downfall of other firms like FTX, run by Sam Bankman-Fried. Firms such as Three Arrows Capital, Voyager were also affected. After the fall: Kwon’s life as a fugitive After the 2022 collapse, Kwon disappeared. Reports claimed he fled first to Singapore, then to the Balkans, using false passports. But in March 2023, his escape from the law ended. Kwon was arrested at Podgorica Airport in Montenegro while attempting to board a flight to Dubai using forged Costa Rican documents. He was given a short jail term in Montenegro for passport forgery. Already, both the US and South Korea were on Kwon’s trail and wanted him extradited. A legal battle ensued. On 31 December 2024, Montenegro extradited Kwon to the US to stand trial at a federal court in Manhattan, New York. Kwon, the once-crypto king, pleaded guilty in August 2025 to conspiracy to defraud, wire fraud, and other related charges. Nearly a year after his extradition, he was sentenced to 15 years in prison on December 11, with credit for time served in custody, including about 17 months in Montenegro. Do Kwon: Epic fraud The US judge described the TerraUSD fraud as “epic” and on a “generational scale”. Kwon expressed remorse in court. He and Terraform Labs had settled a separate civil case with the US securities watchdog, the SEC, for $4.55 billion, including an $80 million personal fine. But his legal woes are not over. The baby-faced entrepreneur may face additional charges in South Korea after serving his US sentence.

Do Kwon, recently sentenced to 15 years in prison, had risen from Stanford graduate to crypto star before his tokens, TerraUSD and sister coin Luna collapsed, wiping out billions of dollars in value. Here is his story&nbsp;

Crimes of Do Kwon: Freefall of South Korean crypto genius - fugitive life, forged passports and 15 years in jail

A UK court has sentenced a Chinese woman, dubbed the “Cryptoqueen,” for running a massive crypto Ponzi scheme that defrauded investors of millions.
Authorities uncovered a vast network of fake investments and digital currency scams that operated across countries.

Crypto Fraud: Chinese ‘Cryptoqueen’ Sentenced in UK | Court Jails Woman for Massive Ponzi Scheme

When British police raided a mansion near Hampstead Heath in 2021, they found something extraordinary. Besides racks of designer clothes, piles of shopping bags, and unopened Amazon boxes, they recovered hard drives containing more than 60,000 Bitcoin, worth over £5 billion. The woman in the mansion, Yadi Zhang – also known as Zhimin Qian – had been living under a false name, posing as an heiress. In reality, she was a fugitive who had fled China, accused of running one of that country’s biggest investment scams.<h2>The crypto queen of China, who was hiding in the UK</h2>Qian, 47, built her fortune by defrauding more than 100,000 Chinese pensioners through her company, Lantian Gerui, which claimed to mine cryptocurrency and invest in high-tech health products. In truth, it was a Ponzi scheme that used money from new investors to pay supposed profits to earlier ones, while Qian quietly transferred billions into her own accounts.&nbsp;<a href="https://www.wionews.com/videos/crypto-political-spend-rivals-big-oil-lobby-world-business-watch-wion-1761800916225/embed">https://www.wionews.com/videos/crypto-political-spend-rivals-big-oil-lobby-world-business-watch-wion-1761800916225/embed</a><h2>The “Little Flower” persona of Chinese crypo queen</h2>Qian crafted an image of a poetic visionary who wrote about love, patriotism and caring for the elderly. Her followers called her “Little Flower.” Her company’s events drew thousands, filled with patriotic music and promises of effortless wealth. “Get rich while lying down,” was her slogan. As in most Ponzi schemes, investors initially received small daily payouts that convinced them it was real. Many even borrowed heavily to invest more.<h2>Chinese crypto queen's ponzy scheme collapse&nbsp;</h2>When the scheme began to collapse in 2017 and Chinese authorities launched an investigation, Qian fled the country using a fake passport and arrived in London, according to police. She rented a mansion for £17,000 a month, and hired a personal assistant to convert her cryptocurrency, claiming to be the daughter of a diamond baron.Also read: <a href="https://www.wionews.com/business-economy/why-are-crypto-markets-falling-1760706709071">Why are crypto markets falling? Explained</a><h2>Inside Qian’s diary: delusions of grandeur</h2>Qian’s diary, later seized by British police, revealed even bigger ambitions. She planned to buy a castle in Sweden, befriend a British duke, and even become the “queen” of Liberland – a self-proclaimed microstate on the Danube. In London, she spent her days gaming, shopping online and lying in bed, living the dream her investors had paid for.Also read: <a href="https://www.wionews.com/india-news/india-us-coordinate-real-time-to-seize-cryptocurrency-assets-worth-150-million-1757086955195">India, US coordinate real time to seize cryptocurrency assets worth $150 Million</a><h2>The mistake that exposed the Chinese crypto queen in UK</h2>Her downfall came when she tried to buy another luxury property in north London. Her assistant could not explain the source of the funds, raising suspicions that triggered a money-laundering investigation. British police raided her Hampstead home in 2021 and uncovered the enormous crypto cache – one of the largest ever seized in the UK.<h2>Guilty plea and sentencing for China crypto queen</h2>Arrested in York in 2023, Qian initially claimed she was escaping political persecution. But when faced with overwhelming evidence, she pleaded guilty to money-laundering offences. She remains in custody and is due to be sentenced at Southwark Crown Court this week.<h2>Victims left behind, and might never get paid</h2>While Qian will face British justice, thousands of her victims in China may never recover their losses. Many elderly investors lost their life savings; one man told the BBC he lost both his marriage and his retirement funds. Others were left unable to afford food or medical care. If victims cannot prove ownership of the stolen funds, the remaining billions could ultimately revert to the UK government.

Zhimin Qian, a Chinese “Crypto Queen,” duped 100,000 pensioners in a £5bn Bitcoin scam, fled to London, and now faces sentencing in the UK for one of the world’s largest crypto frauds. This is her story


When British police raided a mansion near Hampstead Heath in 2021, they found something extraordinary. Besides racks of designer clothes, piles of shopping bags, and unopened Amazon boxes, they recovered hard drives containing more than 60,000 Bitcoin, worth over £5 billion. The woman in the mansion, Yadi Zhang – also known as Zhimin Qian – had been living under a false name, posing as an heiress. In reality, she was a fugitive who had fled China, accused of running one of that country’s biggest investment scams. The crypto queen of China, who was hiding in the UK Qian, 47, built her fortune by defrauding more than 100,000 Chinese pensioners through her company, Lantian Gerui, which claimed to mine cryptocurrency and invest in high-tech health products. In truth, it was a Ponzi scheme that used money from new investors to pay supposed profits to earlier ones, while Qian quietly transferred billions into her own accounts. https://www.wionews.com/videos/crypto-political-spend-rivals-big-oil-lobby-world-business-watch-wion-1761800916225/embed The “Little Flower” persona of Chinese crypo queen Qian crafted an image of a poetic visionary who wrote about love, patriotism and caring for the elderly. Her followers called her “Little Flower.” Her company’s events drew thousands, filled with patriotic music and promises of effortless wealth. “Get rich while lying down,” was her slogan. As in most Ponzi schemes, investors initially received small daily payouts that convinced them it was real. Many even borrowed heavily to invest more. Chinese crypto queen's ponzy scheme collapse When the scheme began to collapse in 2017 and Chinese authorities launched an investigation, Qian fled the country using a fake passport and arrived in London, according to police. She rented a mansion for £17,000 a month, and hired a personal assistant to convert her cryptocurrency, claiming to be the daughter of a diamond baron. Also read: Why are crypto markets falling? Explained Inside Qian’s diary: delusions of grandeur Qian’s diary, later seized by British police, revealed even bigger ambitions. She planned to buy a castle in Sweden, befriend a British duke, and even become the “queen” of Liberland – a self-proclaimed microstate on the Danube. In London, she spent her days gaming, shopping online and lying in bed, living the dream her investors had paid for. Also read: India, US coordinate real time to seize cryptocurrency assets worth $150 Million The mistake that exposed the Chinese crypto queen in UK Her downfall came when she tried to buy another luxury property in north London. Her assistant could not explain the source of the funds, raising suspicions that triggered a money-laundering investigation. British police raided her Hampstead home in 2021 and uncovered the enormous crypto cache – one of the largest ever seized in the UK. Guilty plea and sentencing for China crypto queen Arrested in York in 2023, Qian initially claimed she was escaping political persecution. But when faced with overwhelming evidence, she pleaded guilty to money-laundering offences. She remains in custody and is due to be sentenced at Southwark Crown Court this week. Victims left behind, and might never get paid While Qian will face British justice, thousands of her victims in China may never recover their losses. Many elderly investors lost their life savings; one man told the BBC he lost both his marriage and his retirement funds. Others were left unable to afford food or medical care. If victims cannot prove ownership of the stolen funds, the remaining billions could ultimately revert to the UK government.

Zhimin Qian, a Chinese “Crypto Queen,” duped 100,000 pensioners in a £5bn Bitcoin scam, fled to London, and now faces sentencing in the UK for one of the world’s largest crypto frauds. This is her story &nbsp;

Chinese Crypto Queen in London: She duped thousands of China’s elderly, fled to the UK with billions – and got caught

An estimate from the US Federal Bureau of Investigations (FBI) indicates that consumers lost over $5.6 billion last year as a result of crypto fraud. This is a 45% increase from 2022.

FBI: Crypto fraud increased 45% last year to $5.6 billion

Hong Kong Securities and Futures Commission (SFC) warned of a scam using deepfakes of Elon Musk touting a cryptocurrency trading platform called "Quantum AI". Watch in for more details!

Hong Kong-based fraud crypto exchange uses deepfakes of Elon Musk

India's Enforcement Directorate (ED) has exposed a digital currency scam totalling $360 million based on a joint international operation with inputs from the Federal Bureau of Investigation (FBI). Watch in for more details!

India: ED arrests FBI-wanted man in $360 mn crypto fraud

Fraudsters in the north Indian state of Himachal Pradesh allegedly defrauded multiple crypto investors of more than $24 million&nbsp;(Rs 200 crore) over five years, beginning in 2018. This period was marked by the rise in investor interest in cryptocurrencies.&nbsp;

 
The suspects, thought to be part of a criminal syndicate, enticed individuals with promises of high returns within a short timeframe by encouraging investments in KRO and DGT coins. They adopted a Ponzi-style scheme, luring initial investors to engage more investors to recruit others into the scheme.&nbsp; 
 
The matter was brought to light in the state legislature, or Vidhan Sabha, by independent legislator Hoshyar Singh, estimating the amount swindled in Kangra and Hamirpur alone to be over $24 million&nbsp;(Rs 200 crore), as reported by PTI.

Also read: <a href="https://www.wionews.com/india-news/delhi-police-registers-anti-terror-case-against-newsclick-raids-journalists-amid-china-funding-row-641971">Delhi Police registers anti-terror case against NewsClick, raids journalists amid China funding row</a>

The exact amount of the fraud is yet to be ascertained, said Deputy Inspector General of Police, Northern Range, Abhishek Dhullar, who heads the SIT, said on Monday (Oct 2).

 
So far, five people have been apprehended in connection with the fraud, but the mastermind is still at large, police said.&nbsp;

 
The frauds kept control of their operation using a combination of misinformation, deception, and threats to maintain control over their scheme and continued extorting money from unsuspecting investors by manipulating the prices of their coins, Dhullar added.

Also read:<a href="https://www.wionews.com/india-news/sanatana-dharma-is-the-only-religion-rest-all-sects-methods-of-worship-says-yogi-adityanath-641928">&nbsp;Sanatana Dharma is the only religion, rest all sects, methods of worship, says Yogi Adityanath</a>

The first coin they released was the "Korvio Coin," also known as KRO coins.

 
They demanded a one-time activation fee from the buyers and guaranteed them high returns. The scammers employed three to four cryptocurrencies over five years.

<h2>What is cryptocurrency?&nbsp;</h2>

Cryptocurrency is a type of digital money that operates as a means of exchange through a blockchain-based computer network and is not supported or maintained by any central authority, such as a bank or government.

<h2>Modus operandi</h2>

A Ponzi scheme is a specific kind of investment fraud in which returns are given to previous investors using the money that new investors have supplied rather than actual gains.

In Himachal, the fraudsters&nbsp;encouraged investors to keep recruiting new members, which created a cycle where money from new investments was used to pay returns to earlier investors and these initial investors got huge returns and became brand ambassadors of the scheme.

In order to list their coins and influence their pricing, the scammers also created bogus websites.

<h2>Investigation so far</h2>

"We are close to nabbing the kingpins of cryptocurrency scams in Himachal Pradesh and have mapped their assets and are conducting a financial investigation," Director General of Police Sanjay Kundu told PTI. 
 
&nbsp;"My advice to people is not to fall prey to the cryptocurrency fraudsters," he added.

 
In recent years, there have been several scams involving cryptocurrencies, including the well-known 2021 Squid coin hoax, in which the coin's creators allegedly made off with $23 million. 
 
(With inputs from agencies) 
&nbsp;

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Fraudsters in the north Indian state of Himachal Pradesh allegedly defrauded multiple crypto investors of more than $24 million (Rs 200 crore) over five years, beginning in 2018.

Fraudsters in the north Indian state of Himachal Pradesh allegedly defrauded multiple crypto investors of more than $24 million (Rs 200 crore) over five years, beginning in 2018. This period was marked by the rise in investor interest in cryptocurrencies. The suspects, thought to be part of a criminal syndicate, enticed individuals with promises of high returns within a short timeframe by encouraging investments in KRO and DGT coins. They adopted a Ponzi-style scheme, luring initial investors to engage more investors to recruit others into the scheme. The matter was brought to light in the state legislature, or Vidhan Sabha, by independent legislator Hoshyar Singh, estimating the amount swindled in Kangra and Hamirpur alone to be over $24 million (Rs 200 crore), as reported by PTI. Also read: Delhi Police registers anti-terror case against NewsClick, raids journalists amid China funding row The exact amount of the fraud is yet to be ascertained, said Deputy Inspector General of Police, Northern Range, Abhishek Dhullar, who heads the SIT, said on Monday (Oct 2). So far, five people have been apprehended in connection with the fraud, but the mastermind is still at large, police said. The frauds kept control of their operation using a combination of misinformation, deception, and threats to maintain control over their scheme and continued extorting money from unsuspecting investors by manipulating the prices of their coins, Dhullar added. Also read: Sanatana Dharma is the only religion, rest all sects, methods of worship, says Yogi Adityanath The first coin they released was the "Korvio Coin," also known as KRO coins. They demanded a one-time activation fee from the buyers and guaranteed them high returns. The scammers employed three to four cryptocurrencies over five years. What is cryptocurrency? Cryptocurrency is a type of digital money that operates as a means of exchange through a blockchain-based computer network and is not supported or maintained by any central authority, such as a bank or government. Modus operandi A Ponzi scheme is a specific kind of investment fraud in which returns are given to previous investors using the money that new investors have supplied rather than actual gains. In Himachal, the fraudsters encouraged investors to keep recruiting new members, which created a cycle where money from new investments was used to pay returns to earlier investors and these initial investors got huge returns and became brand ambassadors of the scheme. In order to list their coins and influence their pricing, the scammers also created bogus websites. Investigation so far "We are close to nabbing the kingpins of cryptocurrency scams in Himachal Pradesh and have mapped their assets and are conducting a financial investigation," Director General of Police Sanjay Kundu told PTI. "My advice to people is not to fall prey to the cryptocurrency fraudsters," he added. In recent years, there have been several scams involving cryptocurrencies, including the well-known 2021 Squid coin hoax, in which the coin's creators allegedly made off with $23 million. (With inputs from agencies) ×

India crypto fraud: Himachal Pradesh investors lose $24mn in a series of 'rug-pulls'

US&nbsp;authorities said on Wednesday that they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange&nbsp;Bitzlato&nbsp;Ltd for allegedly processing $700 million in illicit funds.&nbsp;Anatoly Legkodymov, a Russian national living in China, was arrested in Miami on Tuesday on charges that he operated the exchange as an unlicensed money exchange business that "in his own words, catered to 'known crooks'," a top Justice Department official said.

Prosecutors said&nbsp;Bitzlato&nbsp;exchanged more than $700 million in cryptocurrency with Hydra Market, which they described as an illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents and money laundering services that US&nbsp;and German law enforcement shut down in April 2022.

"Whether you break our laws from China or Europe or abuse our financial system from a tropical island — you can expect to answer for your crimes inside a United States courtroom," Deputy Attorney General Lisa Monaco told reporters at a news conference at the Justice Department.

Bitzlato&nbsp;also received more than $15 million in ransomware proceeds, prosecutors said. It was not immediately possible to contact Hydra Market for comment.

“Despite it being a small name, it carries a lot of weight," said Chen Arad, the chief operating officer at Solidus Labs, a crypto market surveillance company.

"Small actors are not safe and they carry just as much risk as any big-name exchange (or) platform," he said.

Authorities described Legkodymov as the cryptocurrency exchange's cofounder, saying the 40-year-old Russian helped run the company from the Chinese city of Shenzhen. Legkodymov did not immediately respond to an email with questions, and messages left on&nbsp;Bitzlato's automated Telegram support chat service were answered with the phrase, "Oops, sorry."

Bitzlato&nbsp;has processed $4.58 billion worth of cryptocurrency transactions since May 3, 2018, prosecutors said, adding a substantial portion constitutes "the proceeds of crime".

It also broke rules requiring significant vetting of customers and failed to meet requirements aimed at preventing money laundering, authorities said. Archived versions of&nbsp;Bitzlato's website noted that the site's clients could register using "only your email".

Prosecutors said&nbsp;Bitzlato&nbsp;knowingly serviced US&nbsp;customers and conducted transactions with U.S.-based exchanges using US&nbsp;online infrastructure. For at least some period of time, it was being managed by the defendant while he was in the United States, they said.

The charges were filed in conjunction with the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), which said it has prohibited certain transmittals of funds involving&nbsp;Bitzlato&nbsp;by any covered financial institution after labelling&nbsp;Bitzlato&nbsp;Ltd a "primary money laundering concern" related to Russian illicit finance.

"Identifying&nbsp;Bitzlato&nbsp;as a primary money laundering concern effectively renders the exchange an international pariah," Deputy Treasury Secretary Wally Adeyemo said at the news conference.

Adeyemo said&nbsp;Bitzlato&nbsp;has repeatedly facilitated transactions for Russian-affiliated ransomware groups, including the gang behind Conti, which he said has links to the Russian government and Russia-connected Dark Net markets.

Cari Stinebower, a former Treasury Department official now a partner at law firm Winston &amp; Strawn, said the penalties imposed are akin to those under Section 311 of the US&nbsp;Patriot Act and will make&nbsp;Bitzlato&nbsp;untouchable by US&nbsp;and foreign banks.

"None of the mainstream financial institutions will deal with an entity identified as a primary money laundering concern," she said.

"While US&nbsp;financial institutions will refuse to engage in business with&nbsp;Bitzlato, (one would expect that) other financial institutions will follow suit," she added. "The impact will be to freeze&nbsp;Bitzlato&nbsp;out of the global financial sector almost immediately."

By midday Wednesday,&nbsp;Bitzlato's website was replaced by a notice saying that the service had been seized by French authorities "as part of a coordinated international law enforcement action."

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US authorities said on Wednesday that they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing $700 million in illicit funds.

US authorities said on Wednesday that they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing $700 million in illicit funds. Anatoly Legkodymov, a Russian national living in China, was arrested in Miami on Tuesday on charges that he operated the exchange as an unlicensed money exchange business that "in his own words, catered to 'known crooks'," a top Justice Department official said. Prosecutors said Bitzlato exchanged more than $700 million in cryptocurrency with Hydra Market, which they described as an illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents and money laundering services that US and German law enforcement shut down in April 2022. "Whether you break our laws from China or Europe or abuse our financial system from a tropical island — you can expect to answer for your crimes inside a United States courtroom," Deputy Attorney General Lisa Monaco told reporters at a news conference at the Justice Department. Bitzlato also received more than $15 million in ransomware proceeds, prosecutors said. It was not immediately possible to contact Hydra Market for comment. “Despite it being a small name, it carries a lot of weight," said Chen Arad, the chief operating officer at Solidus Labs, a crypto market surveillance company. "Small actors are not safe and they carry just as much risk as any big-name exchange (or) platform," he said. Authorities described Legkodymov as the cryptocurrency exchange's cofounder, saying the 40-year-old Russian helped run the company from the Chinese city of Shenzhen. Legkodymov did not immediately respond to an email with questions, and messages left on Bitzlato's automated Telegram support chat service were answered with the phrase, "Oops, sorry." Bitzlato has processed $4.58 billion worth of cryptocurrency transactions since May 3, 2018, prosecutors said, adding a substantial portion constitutes "the proceeds of crime". It also broke rules requiring significant vetting of customers and failed to meet requirements aimed at preventing money laundering, authorities said. Archived versions of Bitzlato's website noted that the site's clients could register using "only your email". Prosecutors said Bitzlato knowingly serviced US customers and conducted transactions with U.S.-based exchanges using US online infrastructure. For at least some period of time, it was being managed by the defendant while he was in the United States, they said. The charges were filed in conjunction with the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), which said it has prohibited certain transmittals of funds involving Bitzlato by any covered financial institution after labelling Bitzlato Ltd a "primary money laundering concern" related to Russian illicit finance. "Identifying Bitzlato as a primary money laundering concern effectively renders the exchange an international pariah," Deputy Treasury Secretary Wally Adeyemo said at the news conference. Adeyemo said Bitzlato has repeatedly facilitated transactions for Russian-affiliated ransomware groups, including the gang behind Conti, which he said has links to the Russian government and Russia-connected Dark Net markets. Cari Stinebower, a former Treasury Department official now a partner at law firm Winston & Strawn, said the penalties imposed are akin to those under Section 311 of the US Patriot Act and will make Bitzlato untouchable by US and foreign banks. "None of the mainstream financial institutions will deal with an entity identified as a primary money laundering concern," she said. "While US financial institutions will refuse to engage in business with Bitzlato, (one would expect that) other financial institutions will follow suit," she added. "The impact will be to freeze Bitzlato out of the global financial sector almost immediately." By midday Wednesday, Bitzlato's website was replaced by a notice saying that the service had been seized by French authorities "as part of a coordinated international law enforcement action." WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

US arrests crypto exchange Bitzlato cofounder on charges of laundering $700 million illicit funds

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