Blockchain & Cryptocurrency , Cryptocurrency Fraud , Fraud Management & Cybercrime

Cryptohack Roundup: Trump Boosts Crypto

Every week, ISMG rounds up cybersecurity incidents in digital assets. This week, Trump issued an executive order on digital assets, Brazil halted the World ID project from collecting biometrics, Binance's CZ lands an "intern" position, KuCoin pleaded guilty in the United States, and France investigated Binance.

See Also: 2021 Analysis of Geographic Trends in Cryptocurrency Adoption and Usage

U.S. President Donald Trump signed last Thursday an executive order backing the digital assets industry. The order declares that it's U.S. policy promotes "legitimate dollar-backed stablecoins worldwide" but prohibits establishment within the United States of a Federal Reserve-backed digital coin.

The order also establishes a working group on digital asset markets within the National Economic Council that will review existing crypto regulations with an eye to suggesting changes. The order reverses President Joe Biden's March 2022 order on digital currency, which emphasized research and caution.

The order caught the attention of European Central Bank board member Piero Cipollone, who on Friday urged Euro zone banks to promote their own stablecoins, Reuters reported.

Brazil's data protection authority ordered Tools for Humanity, the company behind the World ID project, to stop compensating citizens with crypto or financial incentives in exchange for their biometric data.

The watchdog issued Friday a ruling barring TFH from offering services in Brazil starting the following day. The decision follows a month-long investigation into the eye-scanning-for-crypto initiative, which launched in the country in November 2024.

Regulators determined that financial compensation could undermine valid user consent for the collection of sensitive biometric data. The agency raised concerns about the impact on vulnerable populations and the inability to delete biometric data once it has been collected.

TFH, co-founded in 2019 by OpenAI CEO Sam Altman, developed the World ID project as a universal digital identity and financial network.

Former Binance CEO Changpeng Zhao will take an "active role" in investment activities at YZi Labs - formerly Binance Labs - after serving four months in U.S. prison on money laundering charges, Fortune reported.

The rebrand signals a shift in focus for YZi Labs, expanding beyond crypto into AI and biotechnology. Co-Founder Ella Zhang, who previously led Binance Labs, will return as head of the rebranded investment firm.

Zhao's official title remains unclear, though the firm's website has him as an "intern." YZi Labs will continue investing in Web3 startups while exploring AI and biotech opportunities.

The move follows Binance's $4 billion settlement with the U.S. Justice Department in late 2023 over Bank Secrecy Act violations.

Crypto exchange KuCoin agreed to pay approximately $300 million in fines and forfeitures as it pleaded guilty in the United States to operating an unlicensed money-transmitting business and violating anti-money laundering laws, Reuters reported. The Department of Justice charged KuCoin and its founders in March 2023, alleging failures to implement AML controls, properly verify customer identities and file suspicious activity reports. The Commodity Futures Trading Commission filed a parallel civil action.

As part of its plea deal, KuCoin will exit the U.S. market for at least two years. The company said its services in non-restrictive markets remain unaffected.

France Launches Criminal Probe Into Binance Over Money Laundering

French authorities opened a judicial investigation into Binance over alleged money laundering, tax fraud and drug trafficking, according to a Tuesday statement from the Paris public prosecutor's office.

Authorities allege that Binance failed in its obligations to prevent financial crimes. Investigators are also scrutinizing Binance's promotional activities, alleging that it marketed services to French customers before securing regulatory approval. A Binance spokesperson rejected the allegations. The exchange vowed to fight any charges and highlighted its compliance advancements, citing recognition from U.S. agencies such as the FinCEN, DOJ and OFAC.

The probe builds on prior investigations into Binance's compliance failures. In June 2023, French regulators examined the exchange over suspected illegal client solicitation and money laundering, while a 2022 probe scrutinized its KYC procedures.