This Week in Crypto – OneCoin Crypto Scam, North Korean BTC Whale, BTC Privacy Issues

OneCoin Crypto Scam Ringleader Nabbed

The FBI arrested the OneCoin ringleader at LAX (Los Angeles International Airport). The US government alleges Konstantin Ignatov was one of the masterminds who instigated the start of the crypto pyramid scheme that was worth billions.

Around the world, OneCoin has faced fines and actions toward criminal prosecutions (especially India), where there have been 22 promotors already charged.

China has followed suit and filed charges against any promoters of OneCoin, as well as several banks dishing out warnings against the scheme.

OneCoin Crypto ScamIn the beginning, OneCoin was claiming to be the one crypto which was revolutionary. However, it was found to be using a SQL database instead of utilizing the blockchain.

Ignatov was charged with ‘conspiracy to commit wire fraud,’ and his sister faces more charges of money laundering, wire fraud, and securities fraud. At present, she is still at large.

It was found, the sister is, in fact, the primary owner and promoter of the scam, but Ignatov was assigned full power of attorney when he was seized back in February.

If anyone still invests in OneCoin, they have not done their research. However, there was a new video uploaded on YouTube that was promising an exchange for OneCoins.

North Korean BTC Whale Maybe Stashing Millions

Industry experts are speculating that North Korea could be holding upward of $670 million in crypto assets.

What is more of a shock is these are not owned by the nation. It has since later been found these stockpiles are a way of avoiding sanctions and are easier to get across borders.

One other speculative snippet is these funds were bolstered by hackers who broke into crypto exchanges and netted millions as a result.

The Lazarus hacker group has had the finger pointed at them as being responsible for some of the worst hacks over the past year.

North Korean BTC WhaleCoinCheck, Yapizon, Bithumb, Coinis, and YouBit are some of the platforms that are possible targets, while Lazarus has not been found responsible for the most recent attacks on Bancor, Zaif or Conrail.

To top these are the reports of the ever-increasing crypto swindles that are occurring. One such scam was a startup called “Marine Chain Platform,” and marketed itself as a way of tokenizing vessels and ships.

It was found to be nothing of the sort, and after checking the domain registry, web pages, and LinkedIn profile, the website content was found to be plagiarized from

It was here that the person responsible for Marine Chain has close ties to the country of North Korea.

US Marshals Disposing of Bitcoins at Auction

Many cryptocurrencies are seized from illegal enterprises, but now the US Marshals Service is looking for assistance to find the best methods of storing, liquidating or in some cases returning the cryptocurrencies which have been seized in financial crimes.

FedBizzOpps actually posted a (potentially) available position where duties will include creating custody services for a broad range of digital assets. On the list of responsibilities was the ability to auction these assets.

The US Marshals Service appears to be expecting more of these cryptos to be seized and is seeking a firm to help with best practices when it comes to wallet storage and disposal.

At present, the position is vague on its expectations form the successful firm, and there is no indication of volumes involved.

Some Bitcoin whales take advantage of these auctions to secure extra crypto’s, but from two previous sell-offs, the interest waned between the first and the second. In the second auction, there was only one-fifth of the parties that took place in the beginning.

One thing for sure is, if the right firm lands this position, then Marshal auctions can be more frequent, and the big whales can take advantage of the extra exposure.

Over Half of BTC Transactions Still Have Privacy Issues

Since the Bitcoin Lightning Network began, there is an overall improvement of the privacy aspect of these BTC transactions, but there is still a privacy flaw in over half of the transactions conducted (54%).

These issues go back to the re-use of addresses

The reuse ration was calculated by, this gave them an accurate picture of the trends where Bitcoin addresses are reused.

Their formula was able to pick out already used addresses from newly created ones, and from this, they were able to calculate the percentages.

From a peak in address reuse in 2013, it dropped from over 77% to around 41% in December 2017. With a look to the current date, reuse has climbed again to approximately 53%.

It has been previously seen as immoral to reuse addresses because it is a sign of weakened privacy for the person following along the blockchain as well as the person using the address at the present time.

Ethereum Wallet Fees Blown backWallet Fees Blown back to Ethereum Creator

With what appeared to be a ‘sustainable’ way of funding crypto wallet development was blown back at the Ethereum creator Vitalik Buterin.

He says crypto wallets should be charging small flat fees and not a percentage. This would do away with an incentive to “not optimize gas fees.”

These fees could generate up to $2 million per year in funding for client/ wallet developers.

Although, he did say that wallet developers were still free to charge Zero fees. It was noted that Ethereum was not to have a way of circumnavigating these fees for any scheme to be successful.

Buterin says these small fees won’t bother a majority of users, but immediate praise wasn’t bestowed on his idea.

One further issue was mentioned in the discussion, and this was not all clients are based on the wallet in use.

There are significant numbers of clients who use a separate back-end. Under the proposal, these types of clients wouldn’t be eligible for any subsidy.

Buterin has talked of additional fees for the network previously and previously mentioned using an EOS style account creation fee, alongside charges for storage on the network.

Currently, the average cost of sending transactions on the Ethereum network is less than 10 cents (according to Bitinfocharts).

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