The “DogeReaper” vulnerability was revealed by the “Department Of DOGE Efficiency” on Dec. 4. In Australia, regulators proposed stricter AML/CTF rules to better the oversight of crypto activities, and also fined Kraken’s Australian operator $5.1 million for regulatory breaches. Meanwhile, a California court ordered over $5 million in penalties against the people involved in the IcomTech Ponzi scheme. The scheme defrauded investors by misappropriating funds under the guise of crypto mining and trading.
Dogecoin Faces Security Crisis
A serious vulnerability in the Dogecoin (DOGE) network was exploited, which caused 69% of its nodes to crash. Andreas Kohl, co-founder of the Bitcoin sidechain Sequentia, claimed responsibility for the exploit, and stated that he used an old laptop in El Salvador to execute the attack. Before the incident, data from Blockchair revealed that Dogecoin had 647 active nodes. After the exploit, the number of active nodes dropped to 315.
Kohl attributed the attack to a vulnerability identified by researcher Tobias Ruck. The exploit, nicknamed “DogeReaper,” was revealed by the “Department Of DOGE Efficiency,” which is an account on X, on Dec. 4. The account described the vulnerability as a powerful tool capable of crashing any Dogecoin node remotely.
They compared it to the fictional “Death Note” from Japanese manga, where writing a name in the notebook causes a person to die of a heart attack. Similarly, the DogeReaper exploit allowed an attacker to target a node’s address, causing it to crash due to a segmentation fault.
Segmentation faults happen when a program attempts to access unauthorized memory, which prompts the operating system to terminate the program for safety reasons. With Dogecoin nodes being publicly identifiable, the exploit poses a huge threat to the network. The account warned that a malicious actor could have potentially halted the entire Dogecoin network for days, which would have suspended transactions and block production.
Despite the potential severity of the vulnerability, Coinbase deemed its impact low and awarded Ruck a $200 bounty for reporting the issue.
Australia Proposes Stricter Crypto Oversight
Australia is not taking any chances when it comes to protecting its people against crypto crimes. In fact, Australia proposed stricter Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) rules to boost oversight of the cryptocurrency industry and combat financial crime.
The Australian Transaction Reports and Analysis Center (AUSTRAC) introduced the draft rules after recent amendments to the AML/CTF Act passed by parliament in November. These changes were made to close regulatory gaps, increase oversight of high-risk sectors, improve customer due diligence (CDD) measures, and enforce stricter reporting and compliance requirements for businesses.
The proposed reforms expand regulatory oversight to sectors deemed high-risk, like cryptocurrency exchanges, legal services, and real estate businesses. Businesses will be required to implement stricter CDD processes, monitor suspicious transactions, and ensure transparency in cross-border asset transfers. Additionally, the framework mandates adherence to the Travel Rule for international transactions, requiring detailed information on the origin and destination of transfers.
Another goal of the proposal is to reduce compliance burdens by introducing an outcomes-based compliance model. This approach allows businesses to tailor compliance efforts to their size, structure, and risk profile while maintaining stringent standards. The draft framework retains necessary exemptions from the previous regime through the AML/CTF General Rule 2025 and the AML/CTF (Exemptions) Rule 2007, while eliminating outdated requirements.
AUSTRAC invited stakeholders, including financial institutions, legal practitioners, and crypto exchanges, to provide feedback on the draft rules during the consultation period, which will be open from Dec. 11 to Feb. 14, 2025.
Australia is taking the safety of consumers very seriously. On Dec. 6, AUSTRAC launched a task force to ensure compliance among crypto ATM providers. This is a major step toward reducing the criminal misuse of cryptocurrency in the country.
Kraken Australia Fined for Regulatory Breaches
Australia’s Federal Court even recently imposed an 8 million Australian dollar ($5.1 million) fine on Bit Trade, the Australian operator of the Kraken cryptocurrency exchange. This was done after a legal victory by the Australian Securities and Investments Commission (ASIC).
Justice John Nicholas delivered the judgment on Dec. 12, and ordered Bit Trade to pay the fine within 60 days and cover court costs. The penalty stems from Bit Trade’s failure to meet design and distribution obligations and its operation as a credit facility without a proper license.
The fine far exceeded Bit Trade’s proposed $2.5 million, which the court deemed inadequate. A Kraken spokesperson shared his disappointment with the ruling, and believes there is a need for clearer crypto-specific legislation in Australia to address regulatory uncertainties affecting investors and businesses. Kraken suggested the ruling could slow down growth in the Australian economy.
The case centered on Bit Trade’s offering of a “margin extension” product, which allowed users to trade crypto or fiat with leverage without the required target market determination (TMD). ASIC Chair Joe Longo criticized the absence of a TMD, and believes it is very important when it comes to ensuring financial products are not inappropriately marketed to consumers. Longo revealed that over 1,100 Australians used the product, incurring over $7 million in fees and interest while losing more than $5 million collectively. One investor alone lost nearly $4 million.
Justice Nicholas described Bit Trade’s actions as serious violations driven by revenue maximization. He also stated that the margin extension was provided without regard to compliance with corporate laws until ASIC’s intervention. Even after becoming aware of the need for a TMD, Bit Trade still offered the product to retail clients without the necessary adjustments.
ASIC called the decision a major milestone, and it was the regulator’s first penalty against a crypto entity for failing to have a TMD.
Court Fines IcomTech Fraudsters
A California court also recently ordered five people who were involved in the IcomTech Ponzi scheme to pay more than $5 million for fraud and misappropriation of funds. The default judgment found David Carmona, Juan Arellano Parra, Moses Valdez, and David Brend liable for violations of the Commodity Exchange Act and CFTC regulations. Marco A. Ruiz Ochoa agreed to a consent order. The ruling stemmed from a May 2023 lawsuit by the Commodity Futures Trading Commission (CFTC).
The scheme defrauded 190 victims in the United States and abroad, and solicited over $1 million by falsely claiming to invest in Bitcoin (BTC) and other cryptocurrencies through a fake mining and trading platform. Instead, the perpetrators misappropriated approximately $8.4 million of the victims’ funds by December of 2022.
Each of the four people were ordered to pay a $1 million civil monetary penalty, and along with Ochoa, approximately $1 million in restitution to victims, totaling over $5 million. All five individuals were permanently barred from registering with the CFTC or trading in CFTC-regulated markets.
The mastermind, Carmona, was sentenced to 10 years in prison in October for conspiracy to commit wire fraud. Rodriguez, who was another key figure, was sentenced to eight years in late October, Brend received a 10-year sentence in December, and Ochoa was sentenced to five years in January.
IcomTech operated between 2018 and 2019, and promised investors 100% returns every six weeks. The perpetrators also hosted very extravagant expos in the U.S. and internationally, arriving in luxury cars and wearing high-end clothing to project success and lure more unsuspecting investors.
This article was originally Posted on Coinpaper.com
