Human-Targeted Fraud

ZachXBT alleges on social media and Telegram that the scammer, known by the alias Haby (Havard), carried out operations starting in late 2024. Haby reportedly stole 21,000 XRP (approximately $44,000) and an additional $560,000 through Bitcoin wallets.

Leaked group chats reveal that by February 2025, Haby was boasting a wallet balance of $237,000. Videos show the scammer actively conducting social engineering calls and sharing contact information, with his flashy lifestyle compromising operational security.

ZachXBT has called on Canadian authorities to intervene. Haby’s lack of remorse toward victims and the abundance of evidence make the case relatively straightforward, though Canadian law enforcement rarely prosecutes such cyber crimes.

1/ Meet Haby (Havard), a Canadian threat actor who has stolen $2M+ via Coinbase support impersonation social engineering scams in the past year blowing the funds on rare social media usernames, bottle service, & gambling. pic.twitter.com/bBqrV7GmPi

— ZachXBT (@zachxbt) December 29, 2025

Tracking Stolen Crypto

On December 30, 2024, Haby shared a screenshot showing 44,000 USD worth of XRP stolen from a Coinbase user. The funds were sent to the XRP address rN7ddvk4DrGHZUrBfNARJEEAbPkky9Mwcz. A few days later, Haby posted another screenshot from his Exodus wallet, exposing his Telegram and Instagram accounts. ZachXBT matched past balances to identify a second XRP address.

This new address was linked to approximately $500,000 in two additional Coinbase support frauds. Investigations revealed Haby converted the stolen XRP to Bitcoin via instant transactions. Time analysis helped ZachXBT identify Haby’s Bitcoin address. The traced chain revealed multiple addresses were used, and further investigation uncovered three more Coinbase support scams, generating over $560,000 for the scammer.

Human Psychology in Web3

The case illustrates a growing security crisis in the crypto ecosystem. Scammers now target human psychology as much as technical vulnerabilities. North Korean actors attempting over $300 million in fake meetings and Ponzi schemes in India confirm this trend.

Crypto users must remain vigilant beyond technical security measures, as trust and haste remain the scammers’ most potent tools.

Social engineering losses in 2025 mark new breaking points for Web3 security, emphasizing that user caution is unavoidable.

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Kwon pleaded guilty to charges of fraud and conspiracy to commit wire fraud. Engelmayer noted that when UST lost its peg in May 2021, Kwon falsely claimed that an algorithm had restored its value, while secretly arranging for a trading firm to purchase millions of dollars in UST to artificially inflate its price. The judge also criticized Kwon’s mocking behavior on social media, citing a Twitter post where he belittled investors.

Court Proceedings and Kwon’s Flight Attempts

During the trial, Engelmayer reviewed Kwon’s attempts to evade the law. Kwon traveled on false passports to Serbia and Montenegro before being caught en route to Dubai. The court described this as “despicable,” especially since he publicly encouraged retail investors to hold UST while he and close associates exited their positions.

Following the sentencing, Jay Clayton, head of the Southern District of New York for the U.S. Department of Justice, stated: “Do Kwon devised complex schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit. Once exposed, he conducted a deceptive PR campaign, laundered proceeds from illegal schemes, and attempted to seek political protection abroad. Fraud is fraud, and our office will relentlessly pursue justice for investors, regardless of where perpetrators flee.”

In August, Kwon admitted to conspiring to commit commodities fraud, securities fraud, and wire fraud connected to Terraform Labs’ operations. In court, he acknowledged that he knowingly participated in a plan to defraud UST buyers. Kwon also expressed remorse: “I want everyone to know I have spent all my time thinking about what I could have done differently and what I can do now. It has been four years since the incident, and I haven’t seen my family in three. I want to serve my restitution in my own country.”

Investors and Legal Implications

Judge Engelmayer deemed the defense’s requested five-year sentence “utterly unreasonable.” He said even the government’s suggested 12-year term would not sufficiently deter Kwon or future fraudsters.

Factors considered in the court’s decision included:

• Total funds lost and number of victims

• Kwon’s attempts to evade the law

• Misleading and mocking conduct on social media

• Deceiving investors while protecting personal positions

The Terraform collapse is now recorded as one of the largest scandals in crypto history, and Kwon’s sentence sets a significant precedent for the digital asset industry.

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Palafox’s $200 Million Bitcoin Ponzi Scheme  

Praetorian Group International (PGI) CEO Ramil Ventura Palafox lured investors by promising daily returns between 0.5% and 3%. He falsely claimed that PGI engaged in high-volume Bitcoin trading. In reality, the company recycled funds from new participants to pay earlier investors.  

From December 2019 to October 2021, more than 90,000 investors deposited at least $201 million into PGI. This included $30.3 million in cash and 8,198 BTC worth $171.5 million at the time. At least $62.7 million in investor losses were recorded. 

Luxury Spending with Investor Funds  

Court documents revealed that Palafox used investor money for personal luxuries instead of trading. Key expenses included:  

• $3 million on 20 luxury cars (Porsche, Lamborghini, Bentley, McLaren, Ferrari)  
• Over $6 million on homes in Las Vegas and Los Angeles  
• $329,000 on luxury hotel penthouses  
• Millions on designer goods from Gucci, Cartier, Rolex, and Hermès  
• At least $800,000 in cash and 100 Bitcoin transferred to a family member  
• These lavish purchases highlighted how investors’ funds fueled a fraudulent lifestyle.  

Court Proceedings and Sentencing  

According to the U.S. Department of Justice, Palafox pleaded guilty to wire fraud and money laundering. He is scheduled to be sentenced on February 3, 2026, in Virginia. He faces up to 40 years in prison, though federal judges typically impose sentences below the maximum.  

Under his plea deal, Palafox agreed to pay $62.7 million in restitution. Prosecutors compared the case to notorious Ponzi schemes like BitConnect, PlusToken, and OneCoin. Experts emphasized that the real issue is fraudulent behavior, not Bitcoin itself.  

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Chris Larsen Transferred $175 Million in XRP 

Blockchain analysis platform ZachXBT detected that Larsen moved a total of 50 million XRP across four different wallets between July 17-23. Larsen sent about 40 million XRP to known addresses belonging to crypto exchanges and third-party services. Additionally, he distributed 10 million XRP evenly between two new wallets. 

Despite this, Larsen’s wallets still hold 2.81 billion XRP, approximately $8.4 billion worth of tokens. XRP is a key asset used in Ripple cross-border payment network and is actively traded in the market. Recently, XRP’s price surged to $3.40 before experiencing a correction exceeding 12%. Larsen’s transfers to exchanges are generally interpreted as an intention to cash out. His XRP holdings represent approximately 4.6% of the total market capitalization, and a sale of this magnitude could create significant selling pressure in the market.

Increase in Ripple XRP Fraud Warnings 

These large transfers by Larsen come at a critical time when XRP-based scams are on the rise. Ripple CEO Brad Garlinghouse warned users on X about fake XRP campaigns. 

Garlinghouse pointed out that scammers target users with fake giveaways and phishing attacks on YouTube. Fraudsters impersonate Ripple officials using deepfake videos and fake airdrops to steal wallet information, leading to loss of assets. 

Ripple official account also reminded: 

“Ripple or our executives will never ask you to send XRP. Be cautious.” 

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The post Ripple Founder Executes $175 Million XRP Transfer!  appeared first on Coin Engineer.

Increasing Security Concerns for Bitcoin Holders 

With the growing adoption of BTC, long-term investors have started to attract attention. Early Bitcoin holders, known as “OG,” are becoming potential targets. Jesse Posner, co-founder of Vora, stated that long-term investors could face serious security threats. 

“Extreme bitcoinization will make those holding crypto for a long time the most attractive targets in the world,” Posner explained. 

Malmi proposed an organization named “Bitcoin Mossad” to ensure the security of OG investors and take precautions against potential threats. He suggested that such an organization might be appropriate in countries like El Salvador, where BTC is recognized as legal tender. 

Maybe we need a "never forget, never forgive" type organization as a deterrent. Bitcoin Mossad hosted by El Salvador?

— Martti Malmi (@marttimalmi) June 2, 2025

However, OG investors face high risks due to their assets, making them targets of cyber attacks, fraud attempts, and even physical threats. As Bitcoin’s popularity and value increase, so does the likelihood of these individuals becoming targets. Therefore, protecting OG investors is critical for the healthy growth of the crypto ecosystem. 

Responsibility of Security Companies and Marketing Strategies 

Alex Stanczyk, CEO of Swan BTC, emphasized that security companies should be cautious with their marketing strategies. Stanczyk noted that offering unrealistic security promises can be misleading and lead to greater risks. Transparency and realism in marketing security solutions are crucial. 

With BTC‘s global adoption increasing, investor security has become more important than ever. The “Bitcoin Mossad” proposal highlights the need for new strategies to address security vulnerabilities and protect OG investors. In the crypto world, OG refers to early entrants and respected pioneer investors. Increasing security measures and raising awareness among investors will be critical for the sector’s sustainability in the future. 

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Crypto scams have been rapidly increasing recently. In particular, the zero-value transfer phishing method is threatening investors. In this method, scammers manipulate users’ wallet histories with zero-value token transfers. Users, mistaking fake addresses for legitimate ones, accidentally send their assets to scammers.  

An investor fell victim to two separate zero-value transfer scams within three hours, losing 843,000 USDT and 1.75 million USDT. According to Cyvers’ report dated May 26, 2025, this method employs a sophisticated onchain phishing tactic. Scammers exploit the token transferFrom function to add zero-value transactions to wallets, causing users to copy incorrect addresses. Additionally, between 2022 and 2024, 270 million address poisoning attempts were detected on Ethereum and BNB Chain. Of these, 6,633 were successful, resulting in losses of 83.8 million dollars.  

ALERTOur system has detected~2.6M $USDT loss from a targeted address poisoning scam involving zero-value transfers. A single victim was repeatedly scammed by the same attacker address.

First, the victim lost 843K $USDT.
About 3 hours later, the same victim sent 1.75M… pic.twitter.com/WWVlrZvavK

— Cyvers Alerts (@CyversAlerts) May 26, 2025

Address Poisoning and Security Measures  

Address poisoning is another method frequently used by scammers. In this technique, scammers create fake addresses that closely resemble legitimate wallet addresses. For example, they mimic the first and last characters of an address to deceive users. In one incident, an investor sent 71 million dollars’ worth of Wrapped Bitcoin to a fake address, but the scammer returned the funds. However, in similar cases, losses are often unrecoverable.

According to CertiK’s 2025 report, phishing attacks in 2024 caused losses exceeding 1 billion dollars. Users should carefully verify addresses before transactions. Using hardware wallets, enabling two-factor authentication, and updating software only from trusted sources enhance security. Additionally, conducting small test transactions can prevent significant losses.  

For instance, Scam Sniffer reported a 771,000-dollar loss due to address poisoning in February 2025. Users should regularly check their wallet histories and report suspicious transactions.  

Crypto Scam: 20 Million USDT Theft  

In a notable case, on August 1, 2023, a scammer successfully stole 20 million USDT through a zero-value transfer phishing attack. According to PeckShield’s report, the victim (wallet address: 0x4071…9Cbc) intended to send funds to 0xa7B4BAC8f0f9692e56750aEFB5f6cB5516E90570. However, the scammer used a similar fake address (0xa7Bf48749D2E4aA29e3209879956b9bAa9E90570) to deceive the investor. After the investor sent 10 million USDT from Binance to another address, the scammer intervened, manipulating the transaction history with a fake zero USDT transfer. As a result, the victim sent 20 million USDT to the scammer’s address.

Tether blacklisted the fake address approximately one hour after detecting the scam. This swift response drew attention in the crypto community. ZachXBT questioned Tether’s speed, suggesting that a “serious player” might be behind the incident. This event highlights that zero-value transfer scams caused over 40 million dollars in losses in 2023.  

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Court Ruling in Mango Markets Case 

U.S. District Judge Arun Subramanian overturned fraud and market manipulation convictions against Avraham Eisenberg, accused of a $110 million fraud in Mango Markets. The court ruled there was insufficient evidence that Eisenberg made serious misrepresentations to the platform. This weakens the government’s case and acquits Eisenberg of one charge. Eisenberg had inflated the MNGO token price by over 1300% in a short time and used those gains as collateral to withdraw $110 million from Mango Markets. 

Record Inflows into Bitcoin ETFs 

U.S.-based spot Bitcoin ETFs recorded a total inflow of $2.75 billion this week, about 4.5 times the $608 million inflow the previous week, according to Farside data. BlackRock’s IBIT fund notably saw $430.8 million daily inflows for eight consecutive days. In contrast, Grayscale’s GBTC fund experienced outflows of $89.2 million, and ARK 21Shares’ ARKB fund saw $73.9 million withdrawn. 

Trump’s Crypto Dinner Under Investigation 

Thirty-five members of the U.S. House of Representatives sent a letter on May 22 to the Department of Justice requesting an investigation into Trump’s memecoin investors dinner. They asked Edward Sullivan to probe whether the event violated federal bribery laws or the U.S. Constitution’s “Foreign Emoluments Clause.” 

Most attendees were reportedly foreign nationals linked to crypto exchanges, according to Bloomberg. The letter stated: 

“U.S. law prohibits foreign persons from contributing to U.S. political campaigns. However, the $TRUMP memecoin, including the promotion of a dinner promising special access to the president, opens the door for foreign governments to buy influence with the president without disclosing their identities.” 

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Seed Phrase Trap: Social Engineering at Its Worst

Ed Suman, a 67-year-old former fabricator for top artists like Jeff Koons, spent decades in the art world before shifting his focus to cryptocurrency investing. Over time, he amassed 17.5 Bitcoin (BTC) and 225 Ethereum (ETH) — the core of his retirement portfolio — stored safely in a Trezor Model One hardware wallet.

But in March, he received a text message that appeared to be from Coinbase, alerting him to suspicious account activity. He replied, and shortly afterward, a man calling himself “Brett Miller from Coinbase security” called him.

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The caller seemed legitimate, even referencing Suman’s use of a hardware wallet. Over the phone, he walked Suman through a supposed “security procedure,” which required him to enter his seed phrase into a site that perfectly mimicked Coinbase’s interface.

A second scam call came nine days later. After following the same process again, all of Suman’s crypto was gone.

Real Data Breach at Coinbase Raises Alarms

Coincidentally or not, Coinbase recently disclosed a data breach where attackers bribed Indian customer support contractors to access private user data — including names, account balances, and transaction histories.

Roughly 1% of monthly users were affected, including Sequoia Capital’s managing partner Roelof Botha. While no funds were confirmed stolen from him, the incident highlights growing concerns over third-party vulnerabilities.

Coinbase has since fired the compromised contractors and is planning to compensate affected users with a budget between $180 million and $400 million.

Hardware Wallets Are Not Foolproof

Suman’s tragic loss is a painful reminder: Seed phrases should never be entered into any website, regardless of how authentic it looks. The biggest threat in crypto isn’t always technology — it’s human manipulation.

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Eric Council Jr. created fake identity documents and seized the SIM card linked to the SEC’s account. The company activated the new SIM card for the line associated with the SEC’s X account. Council received password reset messages through this line. He then accessed the X account and shared a fake Bitcoin ETF approval announcement.

This post quickly pushed Bitcoin’s price up within hours. Investors believed the announcement and acted accordingly. However, SEC Chair Gary Gensler promptly stated that the account had been hacked. Gensler warned investors about misinformation. The next day, on January 10, 2024, the SEC officially announced the Bitcoin ETF approval. Bitcoin’s price continued to rise following this news, eventually more than doubling to $103,876.

14 Months in Prison and Strict Conditions for Release

In June 2024, the FBI raided Council’s home. Authorities found searches like “Is the FBI watching me?” on his computer. This indicated the attack was deliberate and planned. Officials arrested Council in October. The court sentenced him to 14 months in prison and a $50,000 fine. Additionally, the judge banned him from accessing the dark web. He will remain on supervised release for three years and cannot engage in any identity fraud attempts.

U.S. Attorney Jeanine Pirro gave a clear message regarding the case:

“These schemes damage market trust. SIM swap fraud targets ordinary citizens and government agencies alike. No one should think they won’t get caught. Law enforcement will find you, bring you to justice, and make you pay.”

Digital Security is Essential for Everyone

This incident impacted not only major institutions like the SEC but also individual investors. Verifying the accuracy of news in the crypto market is crucial. Not every post on social media should be trusted. Investors should only consider official statements.

Moreover, it’s vital not to underestimate security vulnerabilities in the investment world. Ultimately, this case reminds us how critical digital identity security is. Social media account protection has become a key part of financial safety. In particular, government institutions must implement tighter safeguards.

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Hopes for Leniency Dashed

Mashinsky’s defense argued for a lighter sentence — 366 days — citing his clean record, military service, and guilty plea. However, federal prosecutors pushed for a 20-year term, stating that Mashinsky targeted retail investors, not institutions. This fact ultimately led the court to impose a harsher penalty.

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Trump’s Pardon Legacy Fails to Influence Outcome

Former President Donald Trump previously pardoned high-profile crypto figures like Ross Ulbricht and BitMEX executives, raising hopes in some circles for clemency. Yet this case proved different. Despite arguments comparing him favorably to Sam Bankman-Fried, the court delivered a severe verdict.

With figures like Changpeng Zhao seeking clemency and others like Roger Ver and SBF under legal scrutiny, this ruling sets a precedent that crypto fraud, regardless of innovation or intent, will not be tolerated.

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