BEFORE THE EUROPEAN UNION COMMISSIONER FOR JUSTICE, CONSUMERS, & GENDER
EQUALITY
B E T W E E N:
CRYPTOCURRENCY VICTIMS
Claimants
-and-
BITCOIN VOLUNTARY ASSOCIATIONS, SOCIAL MEDIA, DOMAIN PRIVACY PROVIDERS, ET AL
Defendants
To: Commissioner Věra Jourová
Date: September 23, 2019
From: Dr. Jonathan Levy, Solicitor and Attorney for Cryptocurrency Victims
In Re: Cryptocurrency Victim Claims - A Request for Consultation and Remediation
Supplementary Reply by Victims to the Directorate’s Response
We hereby tender our supplementary response to the Directorates’ Reply of July 9, 2019
authored by Raluca Alexandra Prună.
We incorporate by reference:
Cryptocurrency Victims Communications of June and July 2019 and the Commission’s Reply
of July 2019.
1. The Commission has not yet responded to our follow up Communication of July 9, 2019.
On or about July 9, 2019, Cryptocurrency victims replied via electronic mail to Commissioner
Jourová and Ms. Prună. No reply to our July 9 communication (attached) has been received.
2. The Commission has not made Anti Money Laundering reports.
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The Commission has apparently failed to act or report the criminal organizations highlighted
in the previous two communications even though it has a general duty to do so. This amounts
to nonfeasance and permit criminals to operate with impunity and without fear of detection
within the EU even when their activities are reported at the highest levels.
These criminal organization continue to operate unhindered by EU or national authorities
including:
Bitblender.io
Doubly
Etherdelta.com
FinTech Mining
Zilton Capital
CryptoAllDay
MGM Markets
CCT Market
Global Coinhash
National courts are not equipped to handle cryptocurrency victim claims. This is proven by
the lack of viable remedies in any of the EU member nations. This complete lack of remedy
has led many cryptocurrency victims in desperation to be cheated yet again by criminals using
social media who falsely claim they can retrieve the victims’ funds from “the blockchain” in
exchange for an advance fee.
3. The impending Brexit further complicates the situation of victims.
Many crypto criminal operations may be traced to the United Kingdom. Without strong
protections in place; these victims’ claims will be lost as the United Kingdom withdraws from
the European Union and its consumer and data protection regimes. As noted infra, the United
Kingdom position is that cryptocurrency is an unregulated entity; this we believe violates
common EU rules on data protection, anti-money laundering and payment processing.
4. The following supplemental information and claims are also submitted for your
consideration:
I. The Position of the United Kingdom
The position of the United Kingdom is perhaps the most problematic from the standpoint of
cryptocurrency victims.
On July 31, 2019, the United Kingdom Financial Conduct Authority (FCA) published its
“Guidance on Cryptoassets.1” The vast majority of cryptoassets which the FCA classified as
1
Available at https://www.fca.org.uk/publication/policy/ps19-22.pdf
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exchange tokens and their derivatives - including Bitcoin and Ethereum - were found to be
outside the remit of the FCA, accordingly denying victims any meaningful access to assistance
with their claims against crypto criminals.
Additionally, the UK Foreign and Commonwealth Office (‘FCO’) continues to deflect any
attempts to penetrate the .IO top level domain, which is subject to a secret agreement
between the FCO and an English company, Internet Computer Bureau and its parent
company, the Irish private firm, Afilias Limited which in turn is a subsidiary of the US firm,
Afilias Inc. Time and time again .IO based crypto scams and criminal organizations have been
undisturbed by British law enforcement. The City of London Police, which has jurisdiction
over some forms of economic fraud in the United Kingdom, has reported an additional 230
instances of alleged fraud regarding .IO sites in 2018 down slightly from 328 reports in 2017;
there is no suggestion any of these reports led to prosecution.2 3 The control of the lucrative
.IO domain is further complicated by the Diego Garcia dispute; both the International Court
of Justice and United Nations General Assembly have taken the position that the UK should
vacate British Indian Ocean Territory, which would include the .IO Domain Registry and
Internet Administrator both of which are nominally based on Diego Garcia Island according
to the IANA (Internet Assigned Number Authority) Delegation Record for .IO.4
II. The Position of the European Union
The European Police Office (EUROPOL) has refused to respond to two requests by
Cryptocurrency Victims’ counsel under EU Regulation 1049/2001.
The first request made May 9, 2019 seeks the aggregate numbers of complaints and not
identifying information for these categories: crypto currencies (Bitcoin, Ethereum etc.),
complaints about initial coin or token offerings crypto currencies and other complaints in
which crypto currencies were a factor. EUROPOL has refused to acknowledge the request or
a follow up request for initial review.5
A second request made on June 26, 2019 to EUROPOL seeks all available information on
Bitmixing, Bitumbling, or Bitblending, which is the laundering of Bitcoins through services like
Bitmixer and Bitblender but not limited to them. EUROPOL has also refused to acknowledge
or respond to this request.6
As noted above, Cryptocurrency victims are also concerned that the EU Commission itself is
ignoring its own rules on anti-money laundering. Not only are the criminal organizations
listed supra still in operation cheating and swindling victims, but bitmixing which the EU
2
See: https://www.whatdotheyknow.com/request/547012/response/1411533/attach/html/4/FOI%20COL%2019%20120.docx.html
3
See: https://www.whatdotheyknow.com/request/488184/response/1178812/attach/html/3/18%20506.pdf.html
4
See: https://www.iana.org/domains/root/db/io.html
5
See: https://www.asktheeu.org/en/request/crypto_currency_related_complain#outgoing-13877
6
See: https://www.asktheeu.org/en/request/bitmixing#outgoing-14153
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admits is money laundering per se continues to be virtually based in an EU member’s (United
Kingdom) overseas territory, the British Indian Ocean Territory – see Bitmixing infra.
If counsel is unable to elicit even a basic response from EUROPOL and the EU Commission
cannot be bothered to make AML reports, what hope do cryptocurrency victims have under
the current EU policy?
III. Bitmixing
National authorities continue to ignore the laundering of cryptocurrency by criminals using
bitmixers and bitblenders which render the cryptocurrencies untraceable.
Cryptovictims’ counsel was able to effect the closure of the notorious site bitblender.co
through legal means, though no recovery of victim assets was possible. Despite ongoing legal
process in the British Indian Ocean Territory Supreme Court, bitblender.io and its progeny
mixers including smartmix.io, smartmixer.io, cryptomixer.io, anonymix.io, blender.io,
mixtum.io, privcoin.io, mixm.io, and others continue to operate without interference. The UK
FCO by its lack of oversight of the .IO domain is facilitating money laundering on a grand scale:
billions of Euros over the past three years, of which it has been repeatedly apprized.
This constitutes a flagrant violation of EU AML treaties and rules by an EU member state.
IV. Crypto Mining (Reserved)
It has long been suspected that many crypto mining ventures, particularly those like AWS
Mining (see claim by DC below) which allegedly operated mines in out of the way places like
Paraguay, Russia, and China, were in fact criminal pyramid schemes. EU residents have been
victimized by crypto mining scams and cloud mining scams to a large degree. Consumer
protection from these frauds is complicated by their multi-jurisdictional nature. We expect
significant claims to develop in this area and as such compensation should be reserved for
victims where cryptocurrency was both the object and means of the criminal behavior.
V. ICOs - Initial Coin or Token Offerings (Reserved)
A substantial claim involving TRIG coin or token is detailed infra. TRIG is typical of hundreds if
not thousands of so called ICO coins or tokens. For the most part, these coins are worthless
and were vehicles for organized crime pump and dump schemes. The criminal element that
formerly utilized penny stocks, boiler rooms, and binary FOREX moved over to cryptocurrency
based ICOs with disastrous consequences for victims. High pressure sales tactics were
unleashed on cryptocurrency victims. Various crypto exchanges facilitated this criminal
avalanche by listing ICOs with little or no oversight. A website, social media presence, and a
so-called whitepaper were usually the only requirements for an ICO. We expect significant
claims to develop in this area and as such compensation should be reserved for victims where
cryptocurrency was both the object and means of the criminal behavior.
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VI. Online Casinos (Reserved)
Cryptocurrency Victims’ counsel have been in touch with EU resident victims of
cryptocurrency-based casinos. It is highly likely that erstwhile gamblers using online
cryptocurrency-based casinos have been defrauded of hundreds of millions of Euros by
unlicensed gambling operations operated by organized crime syndicates. The criminals often
process payments through banks and financial service providers in Cyprus and Malta. We
expect significant claims to develop in this area and as such compensation should be reserved
for victims where crypto currency was both the object and means of the criminal behavior.
VII. Bank Fraud
Claimant VG below details the use of an unlicensed Internet bank (Sun Financial Bank) to
process victim payments and or to defraud victims. Additionally, claimant S** srl from our
communication of July 2019, reports that affiliates of the criminal organization AXECC.IO have
recently attempted to utilize forged Barclays Bank indicia to further defraud the victim. In
each case, national authorities and banks who were the subject of impersonation were
notified. In each case no action was initiated by national authorities (California and UK) nor
were the complaints acknowledged by the banks (Sun Trust and Barclays) impersonated. The
lack of action is directly related to the ambiguous position of national authorities regarding
cryptocurrency. Victims therefore have no remedy and criminals may operate with impunity
in violation of basic anti money laundering and banking fraud rules.
VIII. Additional Victim Claims and Statements
IB is a resident and citizen of the United States and was an investor in crypto currency. In
May 2019 he was contacted on the telephone by a representative of STSCrypto or
STSCrypto.com. STSCrypto falsely claims to be a crypto currency trading platform owned and
operated by a private German shell company: Capital Letter GmbH, Registration Number
HRB242418, Adolf-Kolping-Straße 16, 80336 München, Germany. STSCrypto is in fact a
criminal organization set up to defraud and extort crypto currency from individuals. The call
screener discovered IB was interested about investing in crypto currency and quickly put IB in
touch with a professional tout working for STSCrypto. The tout promised IB profits and by
means of false accountings induced him to transfer over €110,000 in crypto currency from
his Coinbase account. When the account showed a balance of approximately €140,000, IB
was subjected to a high-pressure pitch to upgrade the account and pay various fees. Based
on these misrepresentations, IB paid €10,000 in fraudulent fees. In an attempt to extort even
more money, the criminals at STSCrypto provided false blockchain transaction hash codes to
IB when he unsuccessfully attempted to withdraw funds. IB seeks compensation of €150,000
for his direct losses involving crypto currency.
SS is a citizen of India. In 2016 she was approached by a third party who induced her to invest
$500 worth of Bitcoin in a venture. The investment and the Bitcoin simply disappeared with
no way to trace the investment or payment due to the nature of Bitcoin and its blockchain.
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The current value of the Bitcoin invested is no less than €10,000 which is the amount of
compensation sought from the Bitcoin Voluntary Associations.
VG is a citizen and resident of Kosovo. In 2018 Mr. VG was induced by a criminal posing as an
American financial advisor utilizing a stolen copy of a US passport and false Instagram,
LinkedIn, and Facebook accounts to invest approximately €45,000 in crypto currency with a
fraudulent trading platform called 21st Options in a series of transactions based on false
accountings showing massive profits. 21st Options or 21stoptions.com purports to have
offices in California, Texas and Luxembourg utilizing a variety of phone numbers and
addresses based in the US, UK, Germany and Luxembourg. 21st Options claims: “Our HQ is in
Gde-Duchesse Charlotte, Luxembourg, and we're licensed by the CSSF. With us you can trade
over 400 forex and CFD financial instruments, including currency pairs, shares of your
favourite companies, crypto currencies, popular commodities and indices from around the
world. All trades are done using forex or contract for difference.” However, 21st Options is
not licensed by the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) and
is a purely criminal organization. When VG’s account showed a total of over €750,000 in
principal and profit, he sought to make a withdrawal. In a complex series of attempts
throughout 2018-2019, 21st Options demanded an advance payment fee of over €100,000
from VG. When VG refused to pay, the criminals attempted to extort the funds by claiming
the account would be donated to UNESCO due to violations of United States securities laws
and International Monetary Fund rules. 21st Options also attempted to persuade VG to
deposit funds at a false banking platform, Sun Financial Bank, https://sunfinportal.com. VG
reported these transgressions to numerous national authorities with no results. He seeks
return of his funds, lost profits, and damages for emotional distress in the amount of
€300,000.
DC is a Romanian resident and citizen who represents a group of 13 Romanian investors or
victims in the Australian based criminal organization AWS Mining Pty Ltd. or awsmining.com.
AWS Mining purports to be a crypto currency mining operation with operations in remote
locations in Russia, Paraguay, and China. It is unlikely any of these so-called mines exist as
crypto currency mining is unlawful in China and Russia and AWS is in reality a criminal pyramid
scheme. AWS Mining utilized crypto currency both as the bait and means of its criminal
operations. The Romanian victims invested at least €100,000 between August 2018 and
August 2019 on promises that their funds would double in 12 months. The criminals utilized
MLM (Multi-Level Marketing) tactics and a Telegram group in furtherance of the scheme. In
April 2019 the victims were falsely told there was a fire and their mining machines were
damaged in an attempt by the AWS crime firm to extort further funds. The DC group seeks a
refund of their crypto currency and lost profits totaling €200,000.
David H is a citizen and resident of the United Kingdom as previously noted in our
Communication of June 3, 2019. In addition to his losses to a criminal crypto trading platform,
he has since lost €500,000 on a failed and fraudulent crypto coin or token called Blocksafe
Trigger or TRIG which traded on the world’s leading cryptocurrency exchange Binance which
conducts business in Malta and Jersey. Binance failed to self-regulate or validate TRIG which
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conducted a successful pump and dump (P&D) operation netting tens of millions of Euros
from investors like David H in exchange for its worthless cryptocurrency-based coins or
tokens. Only after the successful sale of it coins or tokens to unwary investors did Binance
delist TRIG. Likewise, TRIG was also promoted and sold on the United States based Bittrex
Exchange. David H acquired his TRIG on both Binance and Bittrex. TRIG appears to have
operated from the United States or Puerto Rico and made the preposterous claim that its
purpose was to develop sensor-based defense technologies by offering a robust network
capable of hosting innovative solutions. The coin’s promoters also claimed: “They will be
meeting with the Air Force, filing patents, and attending various summits in the coming
months. The company announced that its intellectual property holding partner is planning to
go public in both Canada and the United States through a traditional stock offering.” In fact,
TRIG was delisted from most exchanges, and tried to fold the venture leaving the investors
with nothing. David H. seeks compensation of €500,000.
PM is a citizen and resident of the United States. Beginning in January 2019, he invested 10
BTC (Bitcoins) worth approximately €100,000 with an organization called Profitcoins or
profitcoins.io. Profitcoins claimed by using arbitrage trading it could increase a depositor’s
Bitcoins. When PM’s deposit grew to 30 BTC (Bitcoins), he attempted to make a withdrawal.
He repeatedly tried to make a withdrawal but never received anything because Profitcoins
was a criminal organization that utilized Bitcoin and false accounting to commit theft.
Profitcoins like many other crypto criminal firms utilizes and continues to utilize the .IO
domain owing to no enforcement of Anti Money Laundering rules by the UK FCO and has
registered a shell company with the UK Companies House called Profitcoins Ltd. in order to
provide a façade of legitimacy. PM also invested 30 BTC (Bitcoins) with a so-called crypto
cloud mining operation called Teslminer in 2017. The deposit value grew to an estimated
60BTC before Teslaminer and its deposits disappeared with no trace. PM seeks compensation
of no less than €500,000.
IX. Social Media
Social media also continues to be a contributor to the crypto crime problem. Telegram groups
in particular continue to be utilized by crypto criminals to defraud investors as in the case of
Doubly.io and others mentioned herein.
X. Bitcoin
The Bitcoin Voluntary Associations through their “full nodes” continue to operate in the
European Union as unlicensed payment services in violation of EU rules on Payment Services
and Anti Money Laundering. The full nodes also act as unlicensed transfer agents in relation
to the Bitcoin ledger. Bitcoin full nodes are required to charge a default Minimum Relay Fee
of .0005 Satoshi per transaction as determined by the Bitcoin Voluntary Associations. Some
full nodes however charge more. .Bitcoin 24-hour volume processed by the Full Nodes of the
Bitcoin Voluntary Association continues at a rate of at least € 10 billion. This is highly
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indicative of a unified scheme by the Bitcoin Voluntary Associations making them subject to
EU regulation as payment services and subject to AML and GDPR rules.
5. Conclusion
Cryptocurrency Victims are requesting the Commission substantively address the concerns
raised by the Cryptocurrency Victims and immediately enter into consultations regarding the
funding of a Cryptocurrency Victims Fund to be financed initially from the Nakamoto coins
fraudulently entered on the Bitcoin Voluntary Associations ledger and supplemented from
other sources including fees on daily transactions in cryptocurrency. Additionally, the
Commission is reminded that no organization is above the law and that nonfeasance of crypto
crime is never an answer. Finally, given the prevalence of crypto criminality in the United
Kingdom, the attitude of nonregulation and inexplicable aiding and abetting of crypto
criminals by the British Crown. Cryptocurrency Victims will escalate this matter to a more
formal legal procedure before the Brexit date of October 31, 2019 unless significant progress
is made by that time.
Respectfully Submitted,
Dr. Jonathan Levy7
Attorney & Solicitor
Legal Representative for Crypto Currency Victims
7
Dr. Jonathan Levy is a licensed attorney and European lawyer (Ireland). He holds a PhD in Political Science as
is a faculty member at Norwich University and a member of the Institute for National and International
Security (INIS). For English law matters, he is a consulting solicitor at the firm of Berlad Graham LLP.
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