$18 Million: Binance Freezes Crypto Accounts 'Indirectly Linked' to Troubled Russian Exchange, WEX

  • Accounts indirectly linked to controversial crypto exchange, WEX, have been frozen by Binance.
  • 93,000 Ether (ETH) was transfered to Binance by WEX-linked wallets, and users are concerned that their funds might be unrecoverable.

Malta-based digital asset exchange, Binance, has reportedly frozen accounts that received over 93,000 Ether (ETH) from two different crypto wallets. The accounts have been suspended because they are believed to be linked to the controversial World Exchange Services (WEX).

Crypto Accounts Frozen

Leah Li, the global PR manager at Binance, confirmed on October 25th that the accounts were under investigation as WEX users had informed Binance’s management team that they had been unable to make withdrawals from WEX.

The users of the troubled Russian exchange also told Binance that they had been closely monitoring the accounts - as they were keeping track of incoming and outgoing transactions.

According to the WEX users, two wallets linked to the Russian exchange had moved large amounts of ether to Binance (via 25 transactions during the months of August and October). The users are now concerned that they might not be able to get their money back, because it appears that their funds have been transferred to Binance.

User Funds "Unavailable"

As CryptoGlobe reported recently, there have now been at least 35 police reports filed against WEX exchange because many users have not been able to withdraw their funds from the crypto trading platform for over three months.

WEX users have also complained about the exchange’s management and its customer service department. As covered, a crypto trader had claimed in August that he deposited $11,000 in litecoin (LTC) on WEX, however, he was told by the exchange’s representatives that his funds were not “available.”

The crypto investor had also said he was “100% confident” that his funds were unrecoverable - implying that they had been stolen.

Hundreds Of Frustrated Users

Notably, complaints against WEX continue to increase as there are reportedly hundreds of frustrated users that have expressed concerns about the exchange’s operations in various Telegram chat groups.

According to Coindesk, there is a Telegram group with over 400 members that is focused on filing police reports against WEX. There’s also another chat group with over 1,000 active members who are trying to retrieve their funds from WEX.

An estimated 93,000 ETH (appr. $18 million) may be at risk - as these funds have been moved to Binance. There might also be more user funds that could potentially be stolen as WEX’s users have been unable to withdraw most of the crypto assets from the exchange.

Commenting on the situation, Binance PR representative, Leah Li said: 

[We are] not familiar with the specific situation at WEX, [however], we always investigate user claims thoroughly and we will suspend account access if any unusual activity is detected. We are [also] encouraging users who may be impacted to file reports with local law enforcement and ask them to send us case numbers or official notices/letters of investigation. So far, we haven't been provided with any notices yet.

Leah Li

$200 Million Stolen By Crypto Scammers in Brazil in Fraudulent Investment Scheme

A gang of criminals in Brazil have reportedly stolen more than $200 million from around 55,000 local residents. According to The Next Web, the criminals promoted a fraudulent crypto-related scheme which involved operating an unregistered financial services firm. The fraudsters promised unsuspecting investors around a 15% return on their invested capital, local news outlet Correio Do Povo confirmed.

Nearly $250 Million Allegedly Stolen

Brazil’s Federal Revenue Service revealed that the scammers raised approximately 850 million Brazilian Reals ($210 million) by February 2019 from unsuspecting investors. Notably, local police officials believe the fraudsters could have stolen up to R$1 billion (appr. $250 million).

Brazil’s Federal Police department and the nation’s Federal Revenue Agency have now managed to shut down the fraudulent cryptocurrency scheme. Referred to as Operation Egypto, the cryptocurrency scam is currently being investigated - as authorities have issued 10 arrest warrants.

Investing In Cryptoassets Is Not Illegal In Brazil

Brazilian law enforcement agencies have also executed 25 search and seizure orders across eight different cities in the South American country. As confirmed by local sources, the criminals had set up their fraudulent crypto business in the Brazilian city of Novo Hamburgo.

Clarifying that investing in cryptoassets is not illegal in Brazil, Eduardo Dalmolin, a senior official at the nation’s Office of Corruption and Financial Crimes, remarked:

The problem with this company is that it was acting without authorization.

Using Investors’ Money To Buy Luxury Items

After conducting an extensive investigation, Brazilian authorities reportedly found that the accused had not been making investing in cryptocurrencies. Instead, they were using the investors’ money to buy luxury items including expensive cars, real estate, and fancy jewelry. The scammers also reportedly invested small amounts in fixed rate, low-yield investments.

Brazilian police officials have managed to seize the scammer’s assets which include an undisclosed amount of cash, several real estate properties, 36 luxury cars, among other things.

Drug Trafficking And Money Laundering Using Bitcoin

Currently, the accused are also being investigated for their alleged involvement in financial misappropriation, money laundering, fraudulent management, and orchestrating a large-scale organized crime.

Earlier this year, Brazilian police officials arrested a man who was allegedly involved in operating a drug trafficking ring and engaging in money laundering using bitcoin. After investigating the matter, authorities managed to seize more than R$250,000 (appr. $63,000) worth of mining hardware used to mine the pseudonymous cryptocurrency.