Kbank’s Upbit Customer Deposits Total $2.2B

Beosin Report: Crypto Rug Pulls Surpass DeFi Exploits in MayAccording to a recent report by blockchain security firm Beosin, losses from “rug pulls” or “exit scams” in the cryptocurrency space exceeded the amount stolen from decentralized finance (DeFi) projects during the month of May.The report, published on June 1 by Beosin Blockchain Security, revealed that rug pulls and scams resulted in losses of over $45 million across six incidents during the month. Beosin is headquartered in Chengdu, in China’s Sichuan province. The firm uses formal verification methods to secure smart contracts.In general there were 22 security incidents in the digital assets space over the course of the month. That overall figure accounts for losses totaling $20 million, and represents a vast improvement on the previous month.Three of the incidents were accounted for by security issues related to hardware wallets such as the Trezor and imKey wallets. Six were rug pulls/crypto scams, two were crypto crime incidents while another implicated a critical vulnerability relative to zero-knowledge proof technology.Photo by Tara Winstead on PexelsDeFi protocol attacksIn contrast, there were 10 attacks on DeFi protocols, amounting to $19.7 million in stolen funds. This figure represents a significant decrease of nearly 80% compared to April, and the losses from these types of exploits had been declining for two consecutive months, as per Beosin’s findings.The largest rug pull incident in May involved the alleged disappearance of $32 million associated with the crypto project Fintoch on May 24. Meanwhile, the largest attack on a DeFi platform was a $7.5 million breach targeting Jimbos protocol, according to Beosin’s report.Shifting hacker strategyBeosin noted a shift in the targeting strategy of hackers and scammers, who are now increasingly focusing their attacks on ordinary users rather than various project parties. To mitigate risks, the report recommended that crypto users enhance their anti-fraud awareness, conduct thorough due diligence before investing in projects, and learn how to improve the security of their digital assets.The report also issued a warning against using shared or public charging devices for mobile phones. Beosin highlighted the potential risks associated with these devices, as they could be manipulated to inject malicious programs that compromise private keys. This caution aligns with a similar advisory issued by the United States Federal Bureau of Investigation (FBI) in April.The FBI’s Denver office cautioned against using public USB ports, including those found at airports, due to the potential introduction of malware and monitoring software onto devices. Instead, they suggested carrying a personal charger and USB cord for use with electrical outlets.As the cryptocurrency landscape continues to evolve, it is crucial for users to remain vigilant and proactive in safeguarding their investments. With the rise of rug pulls and the ongoing threats in the DeFi space, staying informed, exercising caution, and adopting robust security measures are essential for protecting one’s digital assets in this rapidly changing industry.

Shots Fired in New OKX Ad CampaignGlobal crypto spot and derivatives exchange OKX has launched a daring ad campaign that sets US-based rival exchange Coinbase firmly in its cross hairs.The formerly Chinese and now Seychelles-based exchange has pushed out a global ad campaign along the following theme: “The system doesn’t need an upgrade; it needs a rewrite.” The ads were launched on Tuesday, pointing out the ills of the traditional, centralized financial system.Photo by Merakist on UnsplashCrypto exchange rivalryThe advert doesn’t explicitly call out its rival, Coinbase. However, it is nuanced in taking a subtle dig at the US-based exchange. Exactly two months prior, on March 9, Coinbase released its own ad campaign. Coinbase claimed in its ad that “it’s time to update the system,” with OKX’s subsequent commercial having been carefully worded to poke fun at the Coinbase commercial.With a number of high profile epic failures of crypto businesses over the past twelve months, including the fall of FTX, the remaining exchanges in the business have been tripping over themselves in an effort to convince the alternative asset-investing public that theirs is the safest platform upon which they can securely trade.In its sixty second commercial, OKX poses the question “why don’t we change everything?”, set up by its claim that the conventional finance system is broken.The last of the big spendersThere’s been a notable change of strategy in the marketing activities of crypto businesses since the height of the last crypto bull run. Gone are the marketing excesses exemplified most by the now bankrupt FTX exchange.FTX demonstrated itself to be a profligate spender on all manner and means of marketing, particularly during 2021 and 2022. It paid Wall Street investor and Shark Tank star Kevin O’Leary $15 million to be a spokesperson for the company. Similar deals were struck with a range of celebrities including former NBA star Shaquille O’Neal, NFL stars such as former New England Patriots quarterback, Tom Brady, and a host of others.At the height of its marketing opulence, the fraudulently run firm signed a $135 million sponsorship deal that provided it with the naming rights to the home stadium of the NBA’s Miami Heat. 2022's Super Bowl, one of the world’s largest single marketing opportunities, saw FTX and others pay out big on advertising spend.By contrast, this year’s Super Bowl was almost a complete washout as far as crypto business participation was concerned. Meanwhile, all of the celebrities that featured in FTX’s marketing activities have found themselves the subject of multi-million dollar class action lawsuits filed by FTX creditors.A more sobering marketing strategyDespite the reputational damage that crypto has suffered due to these high profile failures, firms like OKX and Coinbase have continued to maintain a responsible level of advertising and marketing activity.That’s best exemplified by OKX’s ongoing marketing relationships with McLaren’s Formula One racing team and Manchester City Football Club. In March, US-based crypto exchange Kraken announced a marketing partnership with the Williams Formula One racing team.Crypto.com is probably the only crypto firm that spent excessively during the last bull run yet has continued to maintain a relatively high level of marketing activity. Much of that may have been due to commitments it had made during a more buoyant market. Notwithstanding that, the firm did fall foul of the UK advertising regulator, who banned its NFT promotion in December 2022.

Strengthened KYC Spurs More Suspicious Transaction Reports from Korean Crypto ExchangesIn South Korea this year, there has been a significant surge in the number of suspicious transaction reports (STRs) related to cryptocurrencies, according to local news agency Yonhap.This increase is primarily attributed to cryptocurrency exchanges fortifying their Know Your Customer (KYC) procedures. This proactive response follows the controversy surrounding lawmaker Kim Nam-kuk’s significant virtual asset holdings, which were unveiled in May. His scandal came to light when a substantial amount of WEMIX tokens, valued in billions of Korean won, were transferred from the Bithumb exchange to the Upbit exchange. Upbit, deeming it a suspicious transaction, promptly reported the matter to the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC).Photo by ron dyar on UnsplashGrowing number of suspicious transaction reportsAs the scandal continued to gain traction, the political realm reached a consensus to conduct investigations into the cryptocurrency holdings of all lawmakers. Additionally, the National Human Rights Commission of Korea initiated the tracking of all lawmakers’ cryptocurrency holdings last month, a process set to span 90 days.Data received by lawmaker Yoon Young-deok on October 30 from the FIU reveals that the number of STRs originating from virtual asset service providers (VASPs) has reached 11,646 in the first nine months of this year. This figure has already exceeded last year’s total of 10,797 STRs.Under the current Act on Reporting and Using Specified Financial Transaction Information, commonly referred to as the Financial Transaction Reporting Act, VASPs are mandated to report to the FIU if they have reasonable grounds to suspect that a customer’s financial transactions are connected to illicit property, money laundering, or terrorist financing. The Act has been in full effect since October 2021.In 2021, a total of 199 reports were submitted under this Act. The number of reports surged to over 10,000 the following year, and in the current year, it continues to grow at an even faster rate. The FIU reviews and analyzes these STRs in accordance with Article 10 of the Financial Transaction Reporting Act. It forwards the relevant information to law enforcement agencies only when it is deemed necessary for the investigation of a specific criminal case.Enhanced but varied approaches by exchangesCrypto exchanges have bolstered their customer verification requirements, especially for customers deemed to have a high risk of involvement in money laundering, in accordance with the Financial Transaction Reporting Act. This entails the need for additional scrutiny of the source of funds and the purpose behind transactions. Notably, if customer verification appears suspicious, exchanges are mandated to confirm the authenticity of the information using reliable documents.However, it’s important to note that the enforcement decree accompanying this Act grants exchanges the flexibility to verify documents based on their own business guidelines. This autonomy has been provided to assist exchanges in effectively mitigating money laundering risks by taking into account their individual business rights and characteristics.For instance, Upbit, South Korea’s largest cryptocurrency exchange, has implemented a fraud detection system (FDS) powered by artificial intelligence to continuously monitor and identify fraudulent transactions. This initiative has earned Upbit recognition from the FIU as an outstanding organization for reporting suspicious transactions during the first half of this year.On the contrary, Bithumb has devised and applies internal guidelines dedicated to anti-money laundering (AML) measures. The exchange has instituted a streamlined customer verification process for customers who are assessed as having a low likelihood of being engaged in money laundering activities. However, this simplified process is not extended to individuals from countries that have not adopted the recommendations of the Financial Action Task Force (FATF).Korbit monitors information related to customer verification through a dedicated department. It declines transactions for customers who have not undergone sufficient verification and validation procedures.Coinone’s AML department examines customer transactions comprehensively. It maintains ongoing reviews of customer information, business operations, risk assessments, and the source of funds. If any of these aspects are found to be suspicious or inadequate, the AML department proceeds with additional customer verification, including the disclosure of the source of funds.Some raise concerns about the inconsistency in customer verification standards for AML and STRs across different exchanges. When one exchange flags a transaction as suspicious, another might see it as routine. Such discrepancies highlight the need for uniform guidelines. Addressing this, the Digital Asset eXchange Association (DAXA), consisting of Korea’s five leading currency exchanges — Upbit, Bithumb, Coinone, Korbit, and Gopax — has set up an AML division to devise standardized rules for STRs.