USDCrackdowns & Courts This Week: SEC Shifts, Crypto Frauds, Big Arrests
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South Korea Cracks Down on 14 Unregistered Crypto Exchanges in App Store
On April 14, 2025, South Korea's Financial Intelligence Unit (FIU) directed Apple to restrict access to 14 unregistered crypto exchanges, including KuCoin and MEXC, due to non-compliance with local digital asset regulations. These platforms did not register under laws requiring adherence to anti-money laundering measures. Non-compliant exchanges face severe penalties, including up to five years in prison or fines up to 50 million Korean won (approximately $35,000). The FIU aims to protect consumers and combat financial crime while emphasizing the need for clear compliance frameworks as South Korean banks advocate for partnerships with crypto firms.
Mastermind of $190M Braiscompany Crypto Ponzi Scheme Sentenced to Record 128 Years
Joel Ferreira de Souza, the mastermind behind the Braiscompany cryptocurrency Ponzi scheme, received a record 128-year prison sentence for leading a money laundering operation that defrauded over 20,000 investors of R$1.1 billion ($190 million). His son, Victor Augusto Veronez de Souza, was sentenced to 15 years, and broker Gesana Rayane Silva to 27 years and 10 months, totaling over 40 years. The founders, Antônio “Neto” Ais and Fabrícia Farias Campos, were sentenced to 88 and 62 years, respectively. The scheme, promising 8% monthly returns, collapsed in early 2023 after payment delays began in 2022, prompting federal police action.
Oregon AG Sues Coinbase Over Unregistered Crypto Sales Following SEC Case Dismissal
Oregon Attorney General Dan Rayfield has filed a securities enforcement action against Coinbase, alleging the exchange facilitated the sale of unregistered cryptocurrencies to Oregon residents, which posed risks of fraud. This lawsuit follows the SEC's earlier dismissal of similar charges against Coinbase in February 2025 under the Trump administration, marking a shift from the Biden-era approach. Rayfield criticized Coinbase for lacking consumer protection measures. Meanwhile, there is growing bipartisan support in Congress to regulate the crypto industry comprehensively, with legislation expected by August. Coinbase's legal team denounced Oregon's actions as politically motivated obstruction of progress in the crypto sector.
Judge Pauses 18-State SEC Lawsuit, Signals Potential Resolution Amid Leadership Change
Judge Gregory Van Tatenhove of the Eastern District of Kentucky paused an 18-state lawsuit against the SEC for 60 days, citing the SEC's indication that the case could be resolved amid a leadership transition. The lawsuit, initiated by state attorneys general, accuses the SEC of overstepping its authority in regulating crypto without proper rulemaking. The SEC under new Chair Paul Atkins is shifting away from an enforcement-heavy agenda, dismissing lawsuits against major crypto firms like Coinbase and Kraken. A dedicated crypto task force is working on clearer guidelines for the industry, signaling a more favorable regulatory environment.
Court Grants 60-Day Pause for SEC-Ripple Appeal Amid Settlement Talks
An appellate court has granted a 60-day pause in the SEC's ongoing case against Ripple Labs, allowing for settlement negotiations to proceed. This decision, approved on April 16 by the US Court of Appeals for the Second Circuit, results from a joint request by both parties. The SEC initially filed the lawsuit in December 2020, leading to a federal court ruling in August 2024 that held Ripple liable for $125 million, prompting appeals from both sides. Ripple's CEO, Brad Garlinghouse, indicated on March 19 that the SEC would drop its appeal, and Ripple plans to withdraw its cross-appeal, expecting a $75 million refund. The recent shift in SEC leadership, with Paul Atkins confirmed as chair, may impact regulatory approaches towards crypto firms. The SEC must submit a status report by June 15, with further developments contingent on ongoing settlement discussions.
Chinese Fraudsters Jailed for $6 Million USDT Scam Targeting Indian Investors
Nine Chinese fraudsters were sentenced to prison for defrauding Indian investors of approximately $6 million through a fake USDT investment scheme. Operating from Heze, Shandong Province, the group exploited social media and chat apps to gain victims' trust, promising returns of 8% to 15% on investments as low as 1,000 Rupees. The fraud involved creating a deceptive investment platform, SENEE, and sharing fake lifestyle images to appear legitimate. The mastermind, He Moutian, and his team used overseas servers to evade detection. The court emphasized vigilance against online scams, which frequently promise “easy money” and quick returns.
Phantom Technologies Sued Over $500K Theft Due to Wallet Security Flaw
Phantom Technologies is facing a lawsuit filed on April 14, 2025, in New York, alleging gross negligence after a security flaw allowed hackers to steal over $500,000 from users' wallets. The lawsuit claims private keys were stored in unencrypted browser memory, enabling attackers to exploit the integrated Swapper feature without bypassing multi-factor authentication. The case raises concerns about crypto wallet security, implicating partner exchange OKX in unauthorized swaps. Phantom Technologies denies the allegations, asserting users control their funds and highlighting their commitment to security education. This incident emphasizes the need for enhanced security measures and regulatory standards in the crypto industry.
U.S. Secret Service and Canada Launch "Operation Avalanche" to Combat $4.3M Ethereum Phishing Scam
The U.S. Secret Service, in collaboration with Canadian authorities, has launched "Operation Avalanche" to combat an Ethereum "approval phishing" scam that has resulted in losses of $4.3 million. This operation involved identifying compromised digital wallets on the Ethereum blockchain and alerting their owners. The initiative brought together securities regulators, police agencies, crypto platforms, and blockchain analysts to disrupt the scheme. Special Agent Matt McCool emphasized the ongoing efforts to safeguard victims and recover stolen assets. Approval phishing scams trick individuals into granting access to their wallets, allowing perpetrators to steal their funds.
This article has been refined and enhanced by ChatGPT.
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