Nine people have been arrested across Europe in connection to a cryptocurrency money laundering scheme which scammed upwards of $689m (€600m) from victims.
Eurojust, the European Union’s (EU) judicial cooperation authority, confirmed the arrests of the suspects from Cyprus, Germany and Spain between October 27-29 over their involvement in crypto money laundering and fraudulent activity.
During the arrests, Eurojust officials seized €800,000 in bank accounts, €415,000 in cryptocurrency, and €300,000 in cash.
Authorities from Belgium, Cyprus, France, Germany and Spain worked cooperatively with Eurojust’s investigation to take down the network, which started following several complaints from victims in regards to potentially fraudulent crypto scams.
According to Eurojust, the members of the money laundering network created dozens of fake crypto investment platforms, disguised as legitimate websites.
These scam websites promised high returns on investing in crypto and attracted victims via social media advertising, cold calling, fake news articles and fake testimonials from high-profile crypto investors and globally recognised celebrities.
When it came to victims transferring cryptocurrency to these platforms, they were not able to recover their money. This then allowed those connected to the network to launder the crypto via blockchain technology.
Crypto crime still lingers
Despite Europe providing widespread regulatory clarity over its crypto sector through the introduction of the Markets in Crypto Assets (MiCA) framework last year, crime within the sector remains a concern.
Chainalysis CEO Jonathan Levin recently spoke to The Financial Times, revealing many decentralised finance (DeFi) infrastructures which do not rely on intermediaries, such as banks, can leave customers’ assets vulnerable to fraud and other financial crimes.
“Everyone in on-chain finance is just focused on (increasing value of the sector), rather than the security that’s actually locked on these platforms,” said Levin.
Several days after the European money laundering network was uncovered by Eurojust, DeFi protocol service Balancer was hacked on November 3, leading to $128m being stolen.
Balancer stated it was the subject of an “exploit” to its Balancer V2 central hub, which houses liquidity and hotels all tokens for Balancer pools. Its manageUserbalance service did not appropriately check permissions before leading to the hack.
