Fraud and Scams

Wallet Key Saved in an Online Note App… The rest of the $300K is History

  • The U.S. government is attempting to acquire the 300,900 USDT tokens that were reported stolen by two Binance users.
  • Chinese business associates bought the tokens on Binance and transferred them to a wallet which was hacked in four minutes.
  • The government alleges the tokens are a result of fraud and must be forfeited.

The U.S. government is seeking to close a case of $300,900 in stolen USDT which is the result of fraud. Tether froze the stolen USDT during April of this year. This is after two Chinese citizens announced the theft two months after it was taken. A court order understood the tokens were transferred to a government-controlled USDT wallet. This is under an attempt from a third party to obtain the tokens. The stolen USDT now rests with a California judge, who will determine who the rightful owners should be.

Tokens Lost After Private Key Kept on Unencrypted Evernote App

Two Chinese business partners Shixuan Cai and Lin Jian Chen acquired 300,900 USDT tokens from Binance. They then sent the tokens to a newly created crypto wallet during February. Chen then saved the wallet keys to Evernote. The non-cryptographic app that was the undoing of Ian Balina back in 2018.

Hackers were swift to take advantage of the slip, tracking down the private key and rinsing Cai and Chen of their tokens just four minutes after they had hit their wallet. It took the pair until the next morning to notice the hack, but incredibly another two months to report the stolen USDT to Tether and the Los Angeles Police Department (LAPD) in early April.

Tether Freezes Tokens

Tether acted by freezing the stolen USDT. Nine days later they received a request to lift the freeze. Tether identified the individual and passed his details on to the LAPD, who began discussions with the individual over the stolen USDT.

The man, who called himself Kamil claimed he was a third business partner of Chen and Cai. He said that they had asked him to move the funds to an exchange to sell as they weren’t adept enough at doing it themselves (on which point he may have been right).

The LAPD refused the request and reported it to the United States District Court for The Central District Of California, where the judge issued a seizure notice for the stolen USDT. Tether duly complied and sent the funds to a U.S. Secret Service USDT wallet in July.

Government Wants its Cut – and More

The U.S. government claims that the 300,900 stolen USDT tokens should be confiscated. The sum “constitutes or is derived from proceeds traceable to a violation of 18 U.S.C. § 1030 (Fraud and related activity in connection with computers).”

If Chen and Cai do end up losing their money to the government, it will be a costly lesson in proper wallet management – which involves not leaving your private keys written on anything that someone could access with a little digging and a VPN.

Leave a Comment

Leave a Reply