‘Bitcoin Queen’ Receives Sentence in Fraud Case

Each week, Information Security Media Group compiles cybersecurity incidents involving digital assets. This week’s highlights include the sentencing of the “Bitcoin Queen,” the co-founder of Samourai Wallet, a review of the Balancer hack, Coinbase’s €21 million penalty, and a mistrial in a $25 million Ethereum exploit case. Additionally, Spanish authorities have detained a crypto influencer for fraud, while China has accused the U.S. of a substantial bitcoin heist.

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Zhimin Qian, a 47-year-old Chinese national often referred to as the “Bitcoin Queen,” has been sentenced to 11 years and eight months for her role in laundering proceeds from a £5.5 billion cryptocurrency fraud. Between 2014 and 2017, she orchestrated a large-scale investment scam, deceiving over 128,000 investors in China and promising exorbitant returns as high as 300%.

When the scheme unraveled, Qian converted the illicit earnings into Bitcoin and fled to the UK under a false name. The British authorities subsequently seized 61,000 Bitcoin, marking it as the largest cryptocurrency confiscation in the U.K.

Working with partners from Chinese law enforcement and the National Crime Agency, the London Metropolitan Police described this investigation as one of the most intricate financial crimes in recent times.

The decentralized finance platform Balancer published a preliminary report detailing a November 3 incident where attackers exploited a rounding bug in its batchSwap feature, leading to over $128 million being drained from its liquidity pools on major blockchains, including Ethereum and Arbitrum. The vulnerability allowed attackers to manipulate liquidity levels, drawing assets below safe thresholds.

In response, Balancer collaborated with security firms such as Hypernative and SEAL 911 to contain losses and recover stolen funds. The protocol paused affected operations to mitigate further risks. Their loss estimates remain unverified pending ongoing audits.

The Central Bank of Ireland imposed a fine of €21.46 million on Coinbase Europe for inadequate monitoring of transactions related to anti-money laundering and terrorism financing. Between April 2021 and March this year, configuration errors in Coinbase’s systems resulted in more than 30 million transactions, valued at €176 billion, remaining unchecked for an entire year.

Following the investigation, Coinbase filed several delayed suspicious activity reports. While the company admitted to violating Irish anti-money laundering laws due to inadequate controls, it attributed the issue to coding mistakes that have since been rectified. The imposed penalty awaits confirmation in the High Court.

Keonne Rodriguez, co-founder of the Samourai Wallet, has been sentenced to five years in prison for operating a cryptocurrency mixing service that facilitated the laundering of vast sums. Additionally, he faces a $250,000 fine.

Prosecutors accused Rodriguez, along with co-founder William Lonergan Hill, of developing a feature called “Whirlpool” designed to obscure transaction origins. The pair promoted this service, encouraging users to clean illicit proceeds.

Both defendants pled guilty to the charges after initially contesting them earlier this year.

A mistrial was declared in the prosecution of brothers Anton and James Peraire-Bueno, who faced charges related to a $25 million exploit of the Ethereum network. The Southern District of New York alleged that the brothers used MEV-Boost software to execute a rapid “sandwich attack.” They argued that their actions fell within acceptable strategies typical for Ethereum validators.

Despite the jurors’ agreement on the facts, they were divided on the application of the law, prompting Judge Jessica G. Clarke to declare the mistrial. This case has drawn commentary from figures such as Coin Center’s Peter Van Valkenburgh, who criticized the prosecution’s approach.

Spanish authorities have arrested Álvaro Romillo, founder of the alleged Ponzi scheme Madeira Invest Club, after determining he posed a flight risk. The scheme purportedly swindled around 3,000 investors out of €260 million by promising high returns on investments in digital assets, luxury vehicles, and gold.

Investigators discovered a bank account linked to Romillo’s operations, leading to substantial asset seizures. He faces substantial prison time if convicted of his charges.

In a recent assertion, China’s National Computer Virus Emergency Response Center accused the U.S. government of stealing more than 120,000 Bitcoin, valued at approximately $13 billion, from the LuBian mining pool in December 2020. This mining entity, once among the largest on the Bitcoin network, ceased operations following the incident.

Chinese authorities claim this theft is linked to Bitcoin seized in an investigation involving a Chinese national charged with financial crimes, revealing the complex geopolitical tensions surrounding cryptocurrency finance.