The grand jury of the United States has indicted two Russian nationals, Daniel Potekhin and Dmitrii Karasavidi, for allegedly defrauding three cryptocurrency exchanges and their customers, amounting to $16.8 million in different cryptocurrencies, as per released by the US Department of Justice on Wednesday.
The perpetrators seemingly crisscrossed the plan in 2017. To execute their crimes, the duo used “phishing” and “spoofing” tactics, it typically involved the creation of fake web domains and fake identities to trick investors and steal their login and steal their login and personal information. The frauds have reportedly accounted for over $1.9 billion in losses in 2019, worldwide.
Millions have been Phished
According to the allegations, Potekhin has created over 13 fake web domains for an unnamed US-based crypto exchange to do his alleged crimes. He has persuaded 150 customers of the business to input their user identification and passwords on those fake domains, efficiently stealing the information from their existing accounts.
Using the victims’ stolen credentials, Potekhin and Karasavidi have accessed their accounts and withdraw their cryptocurrencies without authorization. They have also used the victims’ details to create more fictitious accounts and used these to remove even more considerable sums of cryptocurrencies from them without permission, the document adds.
Aside from that, the criminal duo also has allegedly used a sophisticated market manipulation scheme; it has started July 2017; it has utilized the stolen credentials of the same crypto exchange for manipulation attacks that have targeted three customers.
In the court document, it was detailed the manipulation process that followed: Potekhin and Karasavidi have used fictitious accounts to purchase GAS, a token that allowed the users to transact on the Ethereum network, before the manipulation.
On October 29, 2017, the duo used three cooperated victim accounts – with a cumulative value of over $5 million at that time – to purchase GAS at the same time, their funds amounting to massively inflated costs.
The duo, with their co-conspirators, have then converted manipulated and artificially highly valued GAS tokens to Bitcoin and other digital currencies, which has caused the used value of GAS to plummet rapidly and cause the number of GAS tokens on the victim accounts to be insignificant. This has allegedly led to losses of efficiently $5 million loss to the three victims, the document has said.
Next catch after more frauds
The accusations have alleged other similar fraud schemes between October 2017 and March 2018; these have resulted in theft attacks targeting customers of two other crypto exchanges. The alleged fraudsters were able to gain over $11 million with the loots and then $16.5 million overall, the document states.
However, their luck didn’t run too long. The US authorities were able to track some of the illegal funds to Karasavidi’s crypto accounts, and then perpetuate identities. During press time, Potkhin and Karasavidi have been charged on five counts, fluctuating from wire fraud to market manipulation.
A part of the stolen money has been returned. The document says that the US Secret Service has custody of $6 million and several million dollars’ worth of different cryptocurrencies linked with the crime.
On the other hand, US Attorney David Anderson cautioned against the users stashing large amounts of money on crypto exchanges. He explained, “The security of digital currency exchanges is only as good as your own vigilance. While law enforcement will do everything within our power to protect you, you must also protect yourself.”