This week has been a busy one for the crypto industry, especially against the law.
The WazirX hacker has nearly laundered the entire $230 million while the exchange continues struggling to repay investors.
Binance assisted Indian authorities in tracking down four individuals connected to the ~$50 million Fiewin scam.
The US Department of Justice was also sued for improperly remitting the $4.3 billion settlement collected from Binance in the 2023 lawsuit.
The world of Web3 and crypto has no shortage of legal battles and this week is no different.
In the last few days, the crypto world has seen hackers, law enforcement, and government agencies clash in the usual hacks, fraud, and regulatory enforcement action.
So far, some of this week’s highlights include an interesting update on the WazirX hack, Binance’s crackdown on a ~$50 million scam and a massive $4.3 billion lawsuit against the US Department of Justice.
Here are all the key updates:
This week, reports show that the unknown hacker behind the massive $230 million WazirX hack has been quite busy lately.
Data from Arkham intelligence shows that this malicious actor has laundered nearly all of the funds stolen. This now leaves less than 10% in their wallet, just waiting to disappear into thin air.
Recall that in July during what is now known as India’s largest hack in history, one of the exchange's multi-sig wallets got hit.
During the incident, millions in cryptocurrency were siphoned off including over $100 million in Shiba Inu and $52 million in Ether.
The WazirX hacker dashboard
Current data shows that only $6,167,914 worth of several cryptocurrencies remain in the wallet.
The Arkham Intelligence dashboard also shows that this hacker mostly used Tornado Cash to launder nearly $224 million.
Interestingly, over $50 million was moved in August alone, with the last transaction happening on 25 September with 3,792 ETH ($10 million).
So far, Tornado Cash has faced increasing scrutiny considering how it has emerged as a major choice for hackers.
Recall that earlier in May, one of the tool’s developers, Alexey Pertsev was sentenced to 64 months in prison over money laundering charges.
So far, the $230 million taken from WazirX represents over 45% of the exchange's reserves from 24 June.
This has left it struggling with financial and reputational damage.
It has also been embroiled in a legal battle with Binance, in which the hacked exchange claims that the CEX giant should be responsible for repaying investors as well.
Overall, WazirX is no closer to repaying its creditors and traces of the stolen $230 are almost completely gone.
Interestingly, while Binance has successfully distanced itself from the WazirX incident, it has also been busy in other ways.
The exchange recently helped Indian Authorities arrest four individuals involved in a gaming app scam.
Per reports, this scam was known as “Fiewin” and defrauded victims of a staggering $47.6 million.
Fiewin was an online betting app that was marketed as a gaming platform.
Eventually, it locked user funds in a honeypot scam, making it impossible for them to withdraw.
The scheme then funneled the stolen funds through several crypto exchanges in an effort to hide its trails.
India’s Enforcement Directorate (ED) collaborated with Binance’s Financial Intelligence Unit to trace the movement of the funds.
This is also not the first time that Binance has helped authorities in India.
Last year, the exchange helped to uncover the E-Nugget scam, in the ongoing effort to combat crypto crime.
Meanwhile, on the other side of the world, the US Department of Justice is in another legal issue of its own.
Per reports, the agency is being sued over its handling of funds from Binance’s massive $4.3 billion settlement.
The US Department of Justice is being sued
Recall that this amount was collected from the CEX as a fine for its violations of U.S. sanctions.
Its CEO, Changpeng Zhao was also sentenced to four months behind bars, as well as a $50 million penalty.
The DOJ’s investigation into Binance also came from allegations that the exchange provided services to Russian clients despite sanctions imposed by the U.S. in 2022.
However this week on 25 September, four individuals comprising of victims or family members of victims of state-sponsored terrorism filed a case against the DOJ.
Within the lawsuit, they claimed that the agency had not sent the appropriate share of the penalty into the “Victims of State Sponsored Terrorism” Fund.
For context, the DOJ is required by law, to remit 100% of the proceeds collected from cases like Binance’s into the fund.
It is also required to send 75% of civil penalties collected to the fund, which was created to compensate victims of state-sponsored terrorism.
However, the agency has failed to do so and has only allocated around $898.6 million so far.
Plaintiffs now allege that the department's diversion of $1.5 billion into a separate fund for crime victims is illegal.
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