Tech 12 April 2019Neil Mathew
Connecticut man gets jail time over Bitcoin phishing scheme
One of the consistent criticisms about cryptocurrency markets that many believe has prevented institutional money from flowing into the sector is the fact that there are many crypto investors and traders that have had their funds hacked in various ways. Several days ago, a resident of New Haven, Connecticut, was sentenced to a year and one day of imprisonment for his involvement in a Bitcoin phishing scheme.
The 37-year old, named Michael Richo, was charged with fraud and money laundering offenses, the U.S. Attorney’s Office for the District of Connecticut announced. In addition to the prison time, he was ordered to forfeit over $350,000 in cash, various electronic devices, and an array of other assets that he purchased through his criminal proceeds. He was also ordered to pay a $10,000 fine, as well. Richo used a “phishing scheme” to steal cryptocurrency from other users, prosecutors said.
He was able to accomplish this on the dark web, where he posted fake links on various forums and stole the usernames and passwords of the individuals who clicked the links. With this information, Richo was able to monitor the Bitcoin balance of the victim before withdrawing it for himself. He was able to obtain over 10,000 stolen credentials through the scheme, and made over $365,000. He profited after transferring the Bitcoin into fiat currency, or U.S. dollars, through various cryptocurrency exchanges.
The FBI got involved and Richo was arrested in October 2016. He pleaded guilty several months later in July 2017. Richo will also undergo three years of supervised release after his prison time, as well.
This is not the first time that an individual has been able to make a significant amount of money through “Bitcoin phishing,” although it should be noted that these scams usually involve an organized crime ring of various cyber criminals. Notably, security researchers at Cisco concluded that one particularly adept group of Bitcoin phishers were able to net tens of millions of dollars through Bitcoin phishing in 2018. Specifically, researchers believe the group made somewhere around $50 million over the period of three years.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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