Fraud Chronicles Roundup – March 6, 2014

BITCOIN Creator Unmasked, While Hacker Attacks Continue

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Bitcoin digital currency continues to dominate this week’s news. A hacker attack on Flexcoin targeted users coins and resulted in the Alberta digital exchange shutting down. The CEO of the First Meta exchange was found dead from unnatural causes with rumors of suicide, and Newsweek unmasked the true identity of bitcoin’s inventor, previously known only under the pseudonym Satoshi Nakamoto. In the wake of last week’s Mt Gox exchange shutdown following another hacker attack, the digital currency is reeling.

  • Canadian police investigating after bitcoin bank Flexcoin folds. The Alberta-based bitcoin digital bank reports hackers targeted their online wallet and stole 896 bitcoins (valued at approximately $600,000). Flexcoin says that bitcoin stored in their offline “cold storage facility” were not affected and will be returned to customers. The owners of the bitcoins hacked and stolen are reportedly unlikely to retrieve their money. Flexcoin is incorporated in Alberta and registered to a single director at a rented mailbox. (Reuters, 4 Mar 2014)
  •‘s website currently shows the message:

    • On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet. The attacker made off with 896 BTC, dividing them into these two addresses:
    • As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.
  • Failed bitcoin bank blames technical flaw. Flexcoin reports that the attacker bombarded digital exchange with thousands of simultaneous requests to transfer coins from one user account to another. Once an attacked account was emptied, the process was repeated on other accounts. Flexcoin’s terms of service state that bitcoins on its system are not insured and that Flexcoin is not liable to users for losses. (GlobalNews, 5 Mar 2014)
  • American CEO of bitcoin exchange found dead in Singapore. Autumn Radtke was CEO of First Meta bitcoin currency exchange. Her death has been classified by police as “unnatural” although foul play is not suspected. The company’s website currently shows a message stating, “Autumn was an inspiration to all of us and she will be sorely missed.” (Global News, 6 Mar 2014)
  • The Face Behind Bitcoin Newsweek claims to have located the real Satoshi Nakamoto in California. Until now, the reclusive inventor of the bitcoin virtual currency was identified only as Satoshi Nakamoto – the name was believed to be a pseudonym for someone living in Tokyo. In fact, Newsweek investigative journalist   reports that Bitcoin’s inventor is a “64-year-old Japanese-American man whose name really is Satoshi Nakamoto”. Nakamoto has had a career “shrouded in secrecy, having done classified work for major corporations and the U.S. military.”  

Do you have a news, court or regulatory body information on an interesting fraud case?   Comment on this posting or Tweet @fighting_fraud to share your Web links of publicly available fraud news and case information.

Vanessa G. Oltmann

Education and integrity – the best weapons against fraud and corruption

Author: V. G. Oltmann

V. G. Oltmann, MBA, CPA, CGA, CFI - Professor, Vancouver Island University 2002 - 2013 - Board Member, Association of Certified Forensic Investigators of Canada (ACFI): 2010-2013 - LinkedIn Profile:

28 thoughts on “Fraud Chronicles Roundup – March 6, 2014”

  1. What Peter Mansbridge’s CAPP speaking fee says about his news judgment.

    This article poses an interesting ethical question pertaining to Peter Mansbridge, the chief correspondant for CBC News, accepting a fee for speaking at the Canadian Association of Petroleum Producers’ (CAPP) Investment Symposium last December. Here is the article from March 3, 2014:

  2. One Canadian company is the most corrupted organization according to the world blacklist. Montreal-based SNC-Lavalin Group Inc (TOR: SNC), appears on the list right after an internal investigation found that there had been $56 million of improper payments made to undisclosed foreign agents.


    This article accepts the notion that organizational corruption is inevitable, including in non-government organizations. It discusses how corruption can harm the trust, image, brand and overall fabric that makes up a NGO. The article also gives some suggestions and tips for NGOs on how to encourage an anti-corruption practice within organizations.

  4. This article is very interesting even though it is from the United States. It goes into detail discribing how lawyers employed the Department of Justice are responsible for over 650 ethical violations from 2002-2013. These violations included misleading the court, intentionally violating ethical policies, and abusing clients. This article bring light to a corrupt American Justice System, and can be found at :

    Thank You

  5. I’ve heard a lot about the Enron scandal but it was interesting to read specifically about the accounting firm behind the scandal. What used to be one of the “Big Five” accounting firms, Arthur Andersen fell to its demise after the Enron scandal, even though the charges were overturned in court. This article explains the reason for this is that Andersen “became more devoted to collecting hefty fees than keeping the books straight”.

  6. This is an article from the Harvard Business Review which talks about the ethics of leadership at Ford when they released the Ford Pinto model during the 1970’s; this car resulted in deaths because of an engineering flaw but the article says leadership thought it cheaper to pay lawsuits than delay production.

  7. Breaking News!

    I just came across this article that was released this morning!

    “Repeal of early parole violates rights, Supreme Court rules
    Ruling means all those sentenced prior to March 28, 2011, may qualify for accelerated parole”

    The fact that this has gone through is very pertinent to our course and also scary! In the article it talks of how Judith Slobbe is one of three white collar criminals that will be able to apply for early parole, as inmates only need to serve 1/6th of their prison time.

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