The crypto market has been through its usual ups and downs, with more crime cases.
Monero transactions were traced for the first time in history, leading to the arrest of 18 people.
A backdoor was discovered in the Cosmos Protocol, likely built by North Korean agents.
A teenager took his own life after allegedly being encouraged by an AI chatbot.
Tigran Gambaryan, the Binance executive detained in Nigeria, is finally free.
Can Monero transactions be traced? Last week’s events show that it can.
“privacy cryptos” like Monero (XMR) have been marketed from the start as being virtually untraceable.
Mid-last week, Japanese authorities traced Monero transactions for the first time in history and even arrested 18 people in a massive fraud case.
In other news, investigators found a major backdoor in the Cosmos protocol that North Korean agents purportedly built—the same country the notorious Lazarus group hails from.
Disturbing news surfaced last week about a teenager who "fell in love" with an AI chatbot and tragically took his own life shortly after.
Finally, Tigran Gambaryan, the Binance executive who had been held in custody for nearly a year, left the country to be reunited with his family.
Here are some of the biggest events in crypto from last week that you can't afford to miss.
It turns out that Monero transactions can be traced after all.
According to reports, Japanese authorities arrested a whole gang of 18 scammers last week.
They did this by analyzing Monero transactions and tracing their origin and destination to get to the hackers.
The investigators reportedly scanned nearly a thousand money laundering transactions of about 100 million yen ( or around $670,000).
The group's suspected leader, Yuta Kobayashi, has been under investigation since August for stealing credit card information and using it to "obtain illegal profits."
The investigation started soon after Japan established its National Police Agency's Cyber Special Investigation Unit.
Kobayashi and the gang's arrest also marks a growing trend of physical crypto theft, in which bad actors approach victims and either con or threaten them with violence to steal crypto.
Last week, one of the Cosmos protocol's modules was found to have been built by North Korean agents.
According to internal developer Jacob Gadikian, in a 16 October post on Twitter (X), this module is known as the Liquid Staking Module (LSM).
There are no links yet between the supposed "North Korean hackers" who built this module and the Lazarus Group.
However, the notorious Lazarus Group, which has stolen billions of dollars in crypto and fiat since 2016, also hails from this country.
According to Cosmos co-founder Eric Buchman in a tweet, Cosmos had no idea that this possible "backdoor" existed and was "lucky" to have discovered it on time before it was exploited.
AI Chatbots have become increasingly popular over recent years, especially since the release of the first version of ChatGPT in November 2022.
Similar bots have launched in the last two years, including Google's Gemini, Microsoft's Copilot, and Anthropic's Claude.
However, other relatively lesser-known chatbots have also hit the market, including one from Character.ai, which provides chatbots with an almost endless sea of personalities from movies, anime, and so on.
Last week, the mother of a 14-year-old boy, Sewell Setzer, sued Character.ai after her son’s suicide, claiming that the company’s chatbots lured him into a sexually abusive relationship and also encouraged him to end his own life.
According to Setzer's mother, in the lawsuit, her son spoke to several AIs, including one who claimed to be a licensed psychotherapist/adult lover.
One of these chatbots, who had the personality of the Game of Thrones Character Daenerys Targaryen, also reportedly asked Setzer whether he "had a plan" to kill himself.
Encouraging a child to kill himself
Setzer replied that he did but had some doubts. To which "Daenerys" responded
“That’s not a reason not to go through with it.”
Soon after this, Setzer shot himself in the head. The teen was reportedly diagnosed with Asperger's syndrome as a child, and his mother/attorneys allege that Character.ai "intentionally designed [Character.ai] to be a hypersexualized product before knowingly marketing it to children like Sewell.”
Last week, a group of five fraudsters were arrested for stealing $21.6 million from over 40,000 investors and spending it all on lavish lifestyles.
Austrian news outlet Heute reported that the group allegedly sold these investors multiple scam investments, including the EXW Wallet and the EXW crypto token.
The group also reportedly blew all the money on a shark tank, private jet rides, luxury cars, and up to $100,000 on prostitutes in Dubai.
Five were sentenced to prison.
On 23 October, after two months of trial and 300 hours of negotiations, Judge Claudia Bandion-Ortner eventually handed down the sentences.
Two of the defendants were sentenced to five years in prison, another two to 30 months, and the last one to 18 months in jail.
After eight months in a Nigerian prison, Tigran Gambaryan, Binance's head of financial crime compliance, eventually left the country.
Gambaryan and another executive, Nadeem Anjarwalla, were arrested on 25 February after both flew into Abuja, the country's capital, to discuss the crypto exchange's activities.
Finally left the country.
Nigerian authorities detained Anjarwalla and Gambaryan after noticing "suspicious flows" of money through Binance-Nigeria (the exchange's local branch).
In March, only a month after detention, Anjarwalla escaped custody and fled to Kenya.
Gambaryan, on the other hand, stayed on until October last week, during which time his family suggested that his health had deteriorated steadily over the year.
Gambaryan has now left the country after reports of pneumonia and malaria, as well as a herniated disc that could require surgery.
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