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U.S. government agencies published a detailed breakdown this week of one of the North Korean government’s crypto-related cybercrime tools.

‘AppleJeus’ is designed to operate and appear as legitimate-looking crypto trading software, targeting would-be victims who seek to trade cryptocurrencies. First deployed in 2018, AppleJeus has been masked by a series of official-sounding names.

Those names include Celas Trade Pro, JMT Trading, Union Crypto, Kupay Wallet, CoinGoTrade, Dorusio and Ants2Whale.

Details of AppleJeus and the ways in which it is used to illicitly take control of computers were published in a report on Wednesday, drawing on a report developed by the Federal Bureau of Investigation (FBI), the Cybersecurity and Infrastructure Security Agency (CISA), and the Treasury Department.

The report comes on the heels of a significant indictment of three North Korea-tied hackers. On February 17, U.S. prosecutors charged three North Korean hackers for a vast array of attacks and thefts — including over $100 million of funds stolen from crypto companies. That action followed other attempts to staunch North Korea-linked cyberattacks. Last August, the U.S. Department of Justice also attempted to retrieve funds from 280 crypto accounts connected to such activities.

The report details HIDDEN COBRA, characterized as “malicious cyber activity by the North Korean government” centered around cryptocurrency attacks and thefts. The report indicates that cybercriminals operating within the so-called Lazarus Group have stolen and laundered hundreds of millions worth of cryptocurrency since January of last year.

The hackers targeted individuals and companies, such as crypto exchanges and financial service firms, and ultimately committed criminal acts in 32 countries across all continents except Africa.

“It is likely that these actors view modified cryptocurrency trading applications as a means to circumvent international sanctions on North Korea — the applications enable them to gain entry into companies that conduct cryptocurrency transactions and steal cryptocurrency from victim accounts,” states the report.

Once a user downloads the affected software, AppleJeus malware would infect a victim’s computer with a remote administration tool. This would allow malicious actors to then control the afflicted computer. Hackers could then spread malware across the victim’s network and gain access to stored information.

According to the report, the approach by which Hidden Cobra participants spread different versions of AppleJeus evolved over time.

“Initially, HIDDEN COBRA actors used websites that appeared to host legitimate cryptocurrency trading platforms to infect victims with AppleJeus; however, these actors are now also using other initial infection vectors such as phishing, social networking, and social engineering techniques to get users to download the malware,” the report stated.

Hidden Cobra exploits affected these countries since January 2020: Argentina, Australia, Belgium, Brazil, Canada, China, Denmark, Estonia, Germany, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Luxembourg, Malta, the Netherlands, New Zealand, Poland, Russia, Saudi Arabia, Singapore, Slovenia, South Korea, Spain, Sweden, Turkey, the United Kingdom, Ukraine, and the United States. Sectors harmed were finance, energy, technology, industry, telecommunications, and government.

If users suspect they have been affected by AppleJeus, the report recommends victims generate new keys or move funds out of compromised crypto wallets, expel affected hosts, run anti-malware scans on infected computers, and notify either the FBI, CISA, or Treasury Department.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Some executives in the crypto industry are sounding the alarm about the developing potential for systemic risk to the crypto market due to retail trading activity.
• But not everyone agrees that the retail crypto market is overleveraged.

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British auction house Christie’s will allow bidders to pay in ETH, the native cryptocurrency of the Ethereum network, during its sale beginning February 25, which will feature the work of digital artist Beeple. 

Beeple has been producing a new work of art every single day since May 2007, creating 5,000 new pieces since then. The collection of art, titled “Everydays: The First 5000 Days,” is being called “one of the most unique bodies of work to emerge in the history of digital art.”

The sale will be hosted on a standalone lot, marking the first time Beeple’s work will be sold at a major auction house. It will also mark the first time non-fungible token (NFT) art is sold at an auction house. The sale is a result of Christie’s partnership with NFT marketplace MakersPlace. 

Christie’s told Bloomberg that ETH will be accepted specifically for this auction. The sale will start on February 25, with bidding to open at $100. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

BitPay has reached a settlement deal with the Office of Foreign Assets Control (OFAC) over alleged sanctions violations.

The crypto payments firm will remit $507,375 related to digital currency transactions between U.S. merchants and users who appeared to be located in Ukraine, Cuba, North Korea, Iran, Sudan and Syria. 

OFAC alleges BitPay’s “deficiencies” in its sanctions compliance program led to about 2,102 transactions from 2013 to 2018 that could be considered violations. The digital currency payments were equivalent to $129,000.

OFAC has determined that those apparent violations “were not voluntarily self-disclosed and were non-egregious.” Most of the individual transactions were less than $100 and related to online hosting services and gaming, according to BitPay. The firm said it views this as a testament to its compliance program at the time.

While BitPay did screen merchants against OFAC’s blocked persons list (SDN List), it didn’t screen data related to buyers, according to OFAC. 

“BitPay failed to exercise due caution or care for its sanctions compliance obligations when it allowed persons in sanctioned jurisdictions to transact with BitPay’s merchants using digital currency for approximately five years, even though BitPay had sufficient information to screen those customers,” said the settlement statement.

A BitPay spokesperson said the firm has made an effort to beef up its compliance program both during the five-year period the violations took place and after.

“BitPay has steadily enhanced its already rigorous compliance program to both fulfill its regulatory obligations and to be an example of doing business right in the evolving blockchain payments space,” said BitPay.

OFAC’s statement also sought to remind other digital currency businesses that they are bound by the regulator’s sanctions standards.

“This action highlights that companies involved in providing digital currency services—like all financial service providers—should understand the sanctions risks associated with providing digital currency services and should take steps necessary to mitigate those risks.” said the statement.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto startup The Graph has announced that it will offer support for four additional Layer 1 blockchains: Polkadot, NEAR, Solana and Celo.

The four blockchains will join The Graph’s currently supported chains Ethereum, IPFS, and POA. According to the startup, the new chains were chosen based on several key characteristics, which included ease of integration, the number of developers and applications as well as community input. The Graph’s hosted service saw queries increase to over 11 billion in January 2021, according to a press statement shared with The Block.

“The Graph adding support to these Layer 1 blockchains is an important milestone in the evolution of Web3,” said Eva Beylin, director of The Graph Foundation. “Developers can choose whichever chain best suits their needs and it will also help current Ethereum developers build interoperable applications.”

The Graph’s indexing protocol aims to organize all the information on the blockchain in a more efficient way and helps developers of Ethereum-based applications run their front-end operations. The protocol can be used to find and retrieve data from Ethereum, similar to the way other indexing tools can be used to do the same for traditional, centralized databases.

The Graph first announced it had begun exploring providing support for additional first-layer blockchains, including Bitcoin, Polkadot and NEAR, in January.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Robinhood founder Vlad Tenev and Citadel Securities boss Ken Griffin will call for a reduction in trade settlement times when they appear in front of Congress on Thursday.

In witness testimony published ahead of the hearing, Tenev blamed the prevailing two-day settlement period for the disruption experienced by retail traders on the Robinhood platform in late January — much of it connected to the trade of stock for gaming retailer GameStop, calling it a source of unnecessary risk. The Congressional hearing kicks off at midday.

“There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time,” he said. Such a change, he argues, would allow Robinhood to cope better with periods of acute volatility.

Griffin’s testimony also called for a modernizing of the process, although he said settlement times should be shortened to one day rather than reduced to zero.

The key actors in the recent GameStop trading frenzy are set to testify in front of congress today alongside Reddit CEO Steve Huffman, Melvin Capital CEO Gabe Plotkin, WallStreetBets ringleader Keith Gill and former FINRA regulator Jennifer Schulp.

Settlement cycles were thrust into the limelight in January when retail investors, coordinated around the subreddit WallStreetBets, piled into the shares of struggling game retailer GameStop, successfully driving up the price and bashing hedge funds that were short the stock.

But the sharp increase in trading volumes of that stock and others on the Robinhood platform caused the startup to temporarily halt trading in certain shares, drawing outrage from users. Robinhood had been hit by higher capital requirements from DTCC, the clearinghouse, to provide cover in case trades failed during the two-day settlement period. Robinhood ultimately ended up raising $3.4bn from investors in a matter of days.

Since then, DTCC and other key actors involved in the post-trade process have weighed in on whether further cuts to settlement times would be wise.

Michael McClain, managing director at DTC Settlement Services, told The Block the company has been exploring a move to T+1 or T+1/2 (a half-day settlement period) with a wide range of asset managers, banks, brokers and regulators “to achieve greater reductions in margin requirements and costs.”

He added, however, that based on feedback from these parties over the past six months, DTCC does not believe the industry is ready for instant settlement.  

“Industry participants perceive the barriers to this change, such as challenges with predictive financing, real-time reconciliation and current workflows in the institutional trade processing lifecycle as outweighing the benefits,” he said.

Bob Cortright, chief executive of DriveWealth, a brokerage infrastructure firm focused on supporting retail investing for firms like Revolut and MoneyLion, said that the current financial system is simply not set up to handle the massive increase in trading volumes that these companies have brought about.

“I think there’s a perfect storm that was created over this last year,” Cortright said. “It’s more than just this settlement issue. The settlement issue is what caused the collapse, but there’s a lot of compounding things around it.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The latest digital yuan test in Beijing featured automatic teller machines that could convert China’s central bank digital currency to physical cash and vice-versa.

The Chinese capital is the latest city to conduct a real-world digital yuan test. The $1.5 million trial took place during the Lunar New Year holiday in early February. 

As part of the test, the Industrial and Commercial Bank of China (ICBC) debuted eight ATMs in two of its branches in Beijing that had the icon of e-CNY (electronic Chinese yuan) on them.

A video clip from local business media Financial News offers a first-hand look at how the conversion between digital yuan and physical cash works in practice.

The feature is an integral part of the digital yuan framework that China is building ahead of a formal launch of its Digital Currency / Electronic Payment system.

Based on the video clip, the eight ATMs sport a feature called ‘digital transaction.’ By selecting the feature, users can choose whether they want to convert cash into digital yuan or the other way around.

The banker demonstrating the function suggested that to deposit cash, customers must first type in the phone numbers they used to activate their digital yuan wallets. The process then takes a few seconds to credit the balance to the users’ mobile wallets.

To convert digital yuan into cash, users must scan a QR code on the ATM screen using their digital yuan wallet app and then type in the cash amount that they want to withdraw. After a few seconds, the teller machine delivers the requested cash.

Hardware e-CNY wallet

Another new feature from the Beijing test — compared to previous ones conducted in Shenzhen and Suzhou — was the option to use digital yuan hardware wallets, including a regular one and an advanced version with fingerprint verification.

Images from China Economy Daily show that the hardware looks similar to the card-based prototype that was introduced in a Shanghai test in a limited environment.

The pitch is that the hardware wallet will be useful for senior citizens and others who aren’t savvy with mobile phones and applications, although, just like a traditional wallet, it carries the risk of getting lost or stolen.

According to China Economy Daily, the Postal Savings Bank of China debuted a more advanced version of the card-based wallet that features fingerprint verification. Only the card owner can use it to pay for goods in digital yuan after verifying their fingerprints on the card itself, the outlet added.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.