Crime and crypto never sleep, and this was very evident over the past weekend. Hudson Rock revealed a hacker selling access to a compromised law enforcement portal, "KodexGlobal," on the dark web, potentially enabling fraudulent data requests from major platforms and endangering user privacy and financial security.
Another sophisticated scam involved deepfake technology to impersonate company executives, defrauding a multinational company of $25 million through manipulated video calls. Additionally, the SEC charged a crypto course instructor for misleading investors into putting $1.2 million into a non-existent hedge fund.
Hudson Rock Uncovers Sale of Compromised Law Enforcement Portal
A recent report from cybercrime solutions provider Hudson Rock unveiled a very concerning development in the realm of online security and law enforcement. A hacker is allegedly selling access to a law enforcement request account named "KodexGlobal" on the dark web forum BreachForums.
This account allows law enforcement agencies and regulators to securely communicate and request user information from companies under legal pretenses. The hacker's offer includes selling the entire account for $5,000 or providing Emergency Data Request (EDR) services for $300 each, targeting some of the most well known platforms like LinkedIn, Discord, Tinder, Binance, Coinbase, Chainlink, and SendGrid, among others.
The implications of this unauthorized access are pretty dire, as it could allow the hacker to fraudulently gather personal data on users of these platforms, potentially leading to identity theft, extortion, and big financial losses, particularly for people with crypto assets. Hudson Rock suggests that the hacker very likely obtained access through credentials stolen via Infostealer Infections, malware that compromises computers, including those owned by law enforcement personnel. The firm's researchers have identified more than 50 different sets of credentials for Google’s law enforcement system compromised by infections like these.
Surprisingly, this incident is a continuation of security concerns surrounding KodexGlobal and its users. In December of 2023, a very similar case was reported where a hacker tried to sell access to Binance’s law enforcement portal through KodexGlobal. Hudson Rock shared evidence of compromised law enforcement computers from Taiwan, Uganda, and the Philippines being used in global malware-spreading campaigns, leading to the breach of credentials.
AI Impersonates Executives in $25M Fraud
In other crypto crime news, deepfake technology was used to defraud a multinational company of over $25 million. The incident involved scammers impersonating several company executives during an online video meeting to deceive an employee into transferring company funds.
The elaborate scheme began when the employee received a fraudulent message from the company's chief financial officer, inviting them to discuss a confidential transaction over a video call. Throughout this call, the fraudsters used deepfake videos of company executives to authenticate their request, convincing the employee to execute 15 transactions totaling $25.5 million to five different bank accounts.
Acting Senior Superintendent Baron Chan of the Hong Kong police force’s Cyber Security Division revealed that the scammers likely used pre-existing footage of the executives, applying artificial intelligence to overlay fake voices onto the videos. This manipulation was so convincing that the participants appeared really to be the executives themselves. The fraudulent activity only came to light only after the employee wanted verification from the company's head office, by which time the massive sum was already transferred.
This incident not only signals a new trend in the use of deepfake technology for fraud but also coincides with global concerns over the misuse of AI. In the United States, the circulation of deepfake pictures, including those of celebrities like Taylor Swift, has drawn the attention of lawmakers, with plans to criminalize the production of deepfake content.
The Hong Kong police force's Cyber Security Division also launched a metaverse platform aimed at preparing people for any future digital challenges, specifically focusing on preventing technology crime.
Crypto Course Instructor Charged for $1.2M Investment Scam
Meanwhile, criminals played a role in another costly mistake in the crypto space. A crypto trading course instructor has been charged by the United States Securities and Exchange Commission (SEC) for misleading investors. Brian Sewell, the founder of Rockwell Capital Management, is accused of deceiving 15 of his own students into investing a total of $1.2 million in a hedge fund that, according to allegations, never existed.
From early 2018 to mid-2019, Sewell enticed his students with the promise of employing advanced AI and machine learning technologies to deliver very high returns on their investments. Despite these claims, it is alleged that the funds were left in Bitcoin (BTC) without any investment activities being taken at all. Tragically, the situation worsened when Sewell's digital wallet was hacked, resulting in the total loss of the invested funds.
The SEC's complaint details that Sewell never actually initiated the fund or employed the trading strategies he promoted. This case also prompted the SEC to issue a broader warning against scams in the crypto industry. This stance is echoed by the Commodities and Futures Trading Commission (CFTC), which also cautioned crypto investors against being enticed by the exaggerated returns promised by AI trading bots and similar technologies.
Rockwell Capital Management has agreed to repay the $1.2 million to the affected investors, along with an additional $402,000 in prejudgment interest. Should the court sanction the settlement, Sewell will be obliged to pay a civil penalty amounting to $223,229.