Europol Announces Arrest Of Suspected $11 Million IOTA Thief

Police across Europe have worked together to succesfully arrest the suspect behind a multi-million dollar IOTA theft, according to a press release from Europol.

The law enforcement agency said authorities in Germany and the United Kingdom managed to arrest an anonymous 36-year old man who allegedly stole around €10 million in IOTA (roughly $11,386,000).The suspect was detained by police who carried out a search warrant in the UK city of Oxford. A number of computers and electronics were seized during the arrest

According to Europol, the suspected thief managed to steal IOTA from at least 85 victims in a long-running theft scheme that started back in January 2018.

Police Investigated And Closed In On The Suspect Across 2018

Authorities began to devote time to the case after the Hessen State Police received a number of notices from citizens about stolen cryptocurrency.

A deeper investigation revealed fraud around the website Iotaseed.io, which had a malicious seed-generator running on it. The website allegedly offered to help IOTA users make the 81-digit-long passwords. However, analysis showed the website was operating fraudently, and in fact simply made passwords that were logged by the hacker.

After secretly collecting wallet seeds from August 2017-January 2018, he started to steal money on January 19th, 2018. Zdnet said some of the first thefts were not detected because a DDoS attack against IOTA servers was keeping administrators busy.

In summer 2018, German police notified their British counterparts that a possible suspect was living in the United Kingdom. The suspect has been charged with fraud, theft, and money laundering and is facing extradition to Germany.

Cryptocurrency Thefts Continue To Make News

While authorities seemed to have cracked the case concerning the stolen IOTA, officials are not having as much luck so far getting to the bottom of the hack on New Zealand-based exchange Cryptopia. CryptoGlobe reported on an analysis by Elementus.io that asserted the hack and theft was unusually widespread and had a longer duration than usual hacks.

Some of the unique nuances of the situation have led some to speculate the was an exit scam, but there is not any sort of public evidence at this point in time to support this claim.

Binance CEO Changpeng Zhao took to Twitter last week to again plug the exchange’s decentralized exchange in light of news about exchange hacks.  

Blockchain-Enabled Chinese Yuan Could Increase Governmental Oversight, Investor Argues

The Chinese government has been closely studying blockchain technology in order to determine whether the immutable distributed ledger can be used to streamline routine business processes.

However, Chinese authorities have expressed concerns regarding the use of cryptocurrencies in financing illicit activities and potentially disrupting the country’s $12 trillion economy by facilitating capital flight.

People’s Bank of China Considering Blockchain-Based Yuan

While China’s government has attempted to restrict transactions involving cryptocurrencies, the People’s Bank of China (PBoC) has reportedly been conducting research to determine the feasibility of launching a blockchain-based Chinese yuan (CNY) since 2014.

This, according to Dovey Wan, a founding partner at Primitive Ventures, a “market cycle agnostic” investment firm which has invested undisclosed amounts into various cryptoasset projects such as ZCash (ZEC) and DFINITY.

Wan, who earned her Masters in Information Systems from Carnegie Mellon University, wrote in a blog post published on CoinDesk on May 17, 2019 that the digital yuan, or Renminbi (RMB), initiative may potentially allow the Chinese government to exercise greater control over the nation’s local and international economy.

M0 Versus M2

As explained by Wan, digital fiat currencies allow financial institutions to more effectively create credit flows which increase M2, the broad money supply. Meanwhile, blockchain-based digital currencies impact a base currency measure, referred to as M0.

Blockchain-enabled digital currencies could potentially allow central banks to “bypass commercial banks” in order to directly control money creation and supply channels. This would structurally centralize the central financial institution’s power and role in formulating monetary policy, Wan argued.

Chinese Government Will Most Likely Use Permissioned Network

According to Wan, the PBoC is looking at various types of network design for a digital, blockchain-powered RMB. She believes that it will most likely be a permissioned network in which the nodes will be managed by major Chinese financial institutions, including the PBoC.

This indicates that transactions involving a digital yuan would only be seen by Chinese banks, and not the nation’s citizens.

Blockchain-Powered Currencies Enable “Better Coordination Paradigm”

One of the main reasons for using blockchain technology, Wan noted, is to take advantage of “a better coordination paradigm” when compared to “traditional currency supply management, which is heavily dependent on bookkeeping,” Wan wrote.

Moreover, Wan thinks blockchain’s immutable nature and private-key cryptography can prohibit users from entering fraudulent transactions and also prevent users from counterfeiting currency notes.

A blockchain-based yuan could also assist the Chinese government in more carefully monitoring the spending history of the nation's residents. This would allow the government to "accurately assess creditworthiness" and detect illegal activities such as money laundering and tax evasion, Wan noted.