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The crypto industry is facing a fresh wave of crime, driven by a rise in politically backed meme coins and legal loopholes that continue to shield malicious actors.
Blockchain investigator ZachXBT, known for tracking on-chain fraud, warned in a recent post on X that crypto-related crimes have entered a “supercycle”, with fraudulent activities becoming more sophisticated and widespread.
His comments come amid a broader industry reckoning, as high-value hacks, phishing schemes, and the misuse of decentralised protocols threaten to undermine trust in the space.
According to ZachXBT, one of the major reasons behind the crime surge is the way courts continue to side with exploiters of smart contracts due to obsolete legal frameworks.
In many cases, those who manipulate decentralised systems walk free because judges interpret code-based exploits as fair use rather than theft.
He also highlighted the role of influencers and key opinion leaders (KOLs) who promote fraudulent crypto projects without facing any consequences.
In jurisdictions where failing to disclose paid advertisements is illegal, enforcement remains weak or non-existent.
ZachXBT estimated that regulators could have made between $50 million and $100 million in fines over the years by holding such individuals and projects accountable.
In a tweet, he remarked that “if you ever wanted the opportunity to extract from the industry, there’s not been much of a better time,” referencing the sense of lawlessness currently dominating the ecosystem.
He added that over half of all transaction volume in certain protocols involves stolen funds, and yet teams continue to collect fees without scrutiny.
While blockchain technology allows for full transaction transparency, which helps trace illicit funds, ZachXBT said that it also enables crime by giving bad actors insight into network activity and vulnerabilities.
North Korean-linked groups such as Lazarus have allegedly taken advantage of this.
ZachXBT suggested that laundering groups and OTC brokers have successfully processed stolen funds from platforms like Bybit, DMM Bitcoin, and WazirX.
These operations often go undetected for extended periods due to the volume and complexity of transactions involved.
He also claimed that a shadow market, dubbed “Black U,” has emerged on the Tron blockchain, with an estimated value between $5 billion and $10 billion.
Much of this activity is suspected to involve laundering operations that are difficult to track despite blockchain records.
ZachXBT’s warning coincides with mounting evidence of damage. According to blockchain security firm CertiK, more than $2.1 billion has been lost to crypto attacks in 2025 so far.
In May alone, cybersecurity company PeckShield reported 20 significant crypto hacks amounting to $244.1 million in stolen assets.
Although this marks a 39.29% decrease from April, the scale of ongoing theft remains alarming.
The recent rise in data leaks has further exposed user vulnerabilities, highlighting the need for stronger protections.
ZachXBT concluded his remarks by questioning whether systemic change would only occur after large-scale losses force regulators to act.
For now, the combination of speculative mania, regulatory gaps, and unchecked promotion continues to create a fertile environment for crypto-related crime.
El Salvador is seeking a $1.4 billion loan from the International Monetary Fund (IMF) and in return, the body is requesting that the Central American nation review its Bitcoin (BTC) law.
The loan negotiations has been ongoing for a while to help El Salvador urgently meet its fiscal commitments and debt payments. Notably, the request of the IMF has remained the same during this period: make a reform to Salvadoran cryptocurrency law. However, Nayib Bukele, the President of El Salvador has no plans of heeding to this request.
The IMF’s most recent warning came a few days ago through Julie Kozack, the Communications Director of the Fund who talked about the risks associated with BTC. It appears that if El Salvador does not make the requested changes to its Bitcoin law, the Fund will not consider its $1.4 billion loan appeal
This request from the IMF is not surprising as the financial agency has been particularly against El Salvador as it relates to the use of BTC as a legal tender. The IMF decided to use the loan negotiation as another avenue to ask El Salvador to reconsider its Bitcoin stance.
Since at least September 2021, the IMF has spoken out against El Salvador’s use of the coin as a legal tender. The financial agency strongly believes that the use of this leading cryptocurrency poses a threat to financial stability and economic health given its highly volatile nature.
In 2022, El Salvador received a recommendation from the financial agency, asking that it halt its use of Bitcoin as legal tender in the country for reasons bordering on the financial risks attached to it. This required that El Salvador alter its Bitcoin law. Ever since, the pressure from the IMF has continued to mount but El Salvador has remained committed to its Bitcoin strategy.
El Salvador’s Vice President Felix Ulloa emphasized the government’s unwavering commitment and went as far as citing the recent spot Bitcoin ETF endorsement from the U.S. Securities and Exchange Commission (SEC) as a pivotal factor. Considering how important the $1.4 billion loan is to the Central American country and how crucial it upholds its Bitcoin strategy, it’s not yet certain if El Salvador will give in to the request of the IMF.
With El Salvador’s BTC holdings currently in huge profit amid the massive BTC price rally this year, the resolve to alter its laws regarding the coin might prove to be more unlikely. As it stands, only time will tell whether Nayib Bukele will give in to the request.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
In the latest development, Bitcoin miner Marathon Digital Holdings stated that it has received a subpoena from the US Securities and Exchange Commission in their ongoing investigation of the Montana Data Center involving the potential violations of securities laws.
In its filings on Wednesday, May 10, Marathon Digital said: “The Company received an additional subpoena from the SEC on April 10, 2023, relating to, among other things, transactions with related parties. We understand that the SEC may be investigating whether or not there may have been any violations of the federal securities law. We are cooperating with the SEC”.
This is another subpoena sent to the company and its executives, after the first received in the quarter ending September 2021. The Las Vegas-based Bitcoin miner also restated its annual report and said in February this year that it had found accounting errors in financial statements for several quarters after the firm received comments from the US securities regulator.
Marathon Digital (NASDAQ: MARA) is one of the largest publicly-traded crypto mining companies in the Us as per computing power. Marathon’s stock has been closely trading in sync with the movement in the Bitcoin price.
Being one of the biggest crypto miners in the US, Marathon is also holding a large amount of BTC on its balance sheet. However, the company was offloading some of its Bitcoins during the crypto winter of 2022 to meet the operational costs. In fact, this year in January, Marathon sold twice more Bitcoins than it minted during that period.
However, with the bitcoin price making massive gains this year in 2023, the MARA stock is already up by more than 200% year-to-date. On the yearly chart, the stock price is trading almost flat. This shows that Marathon has managed to recuperate the loss in its stock price incurred during the crypto winter of 2023.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Despite the lack of clarity in the rules, the SEC chairman has reiterated that any attempt to create new laws will unsettle the status quo.
Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC) has revealed in his latest hearing with the House Appropriations Committee that the country has a law that is well suited for the crypto industry. As reported by The Block, Gensler said the current Securities law also applies to crypto entities and that there is no need for additional legislation.
“If Congress were to act, though I don’t think we need these authorities, not to undermine inadvertently through definitions of what’s in or out, or in essence allowing for conflicts that we don’t allow,” Gensler said.
Gary Gensler has led a very productive life working as a civil servant and while he is at the helm of affairs at the SEC, he has also served as the Chairman of the Commodity Futures Trading Commission (CFTC) in time past. Having a good knowledge of the operational and regulatory principles of both agencies, Gensler said the SEC alongside its overseers are in the best position to define what a security is.
“I think there is one agency – the Securities and Exchange Commission, overseen by two committees – the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that,” Gensler later said.
The crypto ecosystem in the United States is a very unsettled one as industry leaders have continued to call out the SEC and lawmakers for the undefined laws governing the crypto ecosystem. Stakeholders are particularly furious with the SEC for the series of enforcement actions that has been introduced against Kraken Exchange, Paxos Trust, and even Coinbase Global Inc (NASDAQ: COIN) thus far this year.
The accusation is that the regulator does not provide clarity on what makes asset security with some of the crackdowns bound to lead to legal brawls.
According to the SEC Chairman, any foreign securities trading platform needs to come under the registration of the American market.
“If you’re touching US investors, selling these tokens to US investors then you come under either the securities laws or the laws under the CFTC”, Gensler said.
Despite the lack of clarity in the rules, the SEC chairman has reiterated that any attempt to create new laws will unsettle the status quo.
“I think many of the legislative vehicles would if adopted, would undermine the securities remit,” he said.
Some pro-crypto US Senators including Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo are working on a Bill that will change the entire landscape for crypto regulation as they look to pitch the CFTC to be the dominant regulator for the nascent industry.
While it remains unclear what the regulatory approach will be if this Bill scales through and becomes a law, for now, Gensler believes the industry has what it needs to come under the remit of the law.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
The office of the NYAG recently filed a lawsuit against crypto exchange KuCoin for “disregarding our laws and putting investors at risk.”
New York Attorney General (NYAG) Letitia James has sued KuCoin (KCS) as part of a broader crackdown against digital currencies. On Wednesday, the NYAG’s office filed a lawsuit against the crypto exchange for allegedly violating securities and commodities laws in New York. The NYAG now seeks to block access to KuCoin in the state.
James’ petition read:
“One by one, my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk. Today’s action is the latest in our efforts to rein in shadowy cryptocurrency companies and bring order to the industry. All New Yorkers and all companies operating in New York have to follow our state’s laws and regulations.”
In addition, the Democrat lawyer and politician also explained in the filing:
“KuCoin operated in New York without registration, and that is why we are taking strong action to hold them accountable and protect investors.”
Despite disapproving KuCoin, Attorney General James claimed that Terra (LUNA), TerraUSD (UST), and Ether (ETH) are securities. Her stance on the listed digital currencies aligns with a previous similar position taken by the Securities and Exchange Commission (SEC).
The petition read:
“ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers to provide profit to the holders of ETH.”
As a result, KuCoin was also required to register before selling LUNA, UST, or ETH.
The NYAG lawsuit stated that KuCoin falsely represented itself as a crypto exchange. According to the petition, the crypto exchange operates more like a securities and commodities broker-dealer. By forcing KuCoin to geo-fence its website, considering IP addresses and GPS location, the NYAG seeks to block company access.
The timing of the NYAG lawsuit is peculiar due to the attention regulators have given to staking services lately. For instance, the SEC fined leading exchange Kraken $30 million for allegedly violating securities laws with its staking product. Meanwhile, SEC Chair Gary Gensler previously suggested that the regulatory agency could sanction Ether. According to Gensler, BTC is the only digital currency the SEC considers a non-security.
Attorney General James’ move is the latest crackdown effort on the crypto industry, particularly in New York. The state has some of the strictest crypto laws in the US. For example, New York State authorities sued crypto exchange CoinEx last month for failure to register as a securities and commodities broker-dealer.
KuCoin once claimed to be the “most advanced and secure cryptocurrency exchange” before falling victim to a $150 million hack in 2020. However, the Seychelles-based exchange still ranks high (5th position) on CoinGecko’s list of exchanges based on “trust score.” It is also the 12th largest crypto exchange based on 24-hour trading volume.
As a virtual currency trading platform, KuCoin lets investors buy and sell crypto via its website and app. In addition to ETH, LUNA, and UST, the exchange also sells unregistered securities, such as its lending and staking product, KuCoin Earn.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
The European Union’s parliament, commission, and council are all set to begin the talks on the controversial anti-money laundering rules for cryptocurrency transactions on Thursday, according to CoinDesk.
This will be the last stage towards the passage into law of measures that many industry experts have dubbed to be a privacy killer and stifle innovation.
Thibault Schrepel, a blockchain law expert, told CoinDesk, “it could constitute an unfair intrusion into personal affairs that could invite a legal challenge.”
Why It Matters: Once enforced, the legislation would require cryptocurrency providers to verify customer details and report any suspicious transactions to the authorities. The rules would also cover transactions from unhosted or self-hosted cryptocurrency wallets – addresses that are in the custody of private users.
The law is being designed to bring cryptocurrencies such as Bitcoin BTC/USD, Ethereum ETH/USD, and Dogecoin DOGE/USD in line with AML requirements for normal payments of over EUR 1000.
This came after the European Parliament lawmakers backed applying tough money-laundering rules to the industry, arguing the rules were needed to curb crime as part of an EU anti-money laundering package.
Coinbase Global Inc COIN CEO Brian Armstrong had then called the proposals “anti-innovation, anti-privacy, and anti-law enforcement” in a Twitter thread.
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