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  • The U.S. Department of Justice has announced that two Russian hackers have been charged with crimes related to “an alleged conspiracy to defraud three cryptocurrency exchanges and their customers of cryptocurrency valued … at a minimum of $16.8 million in cryptocurrency.” Danil Potekhin (aka cronuswar) and Dmitrii Karasavidi (aka Dmitriy Karasvidi) allegedly stole at least $16,876,000 in fiat money and cryptocurrency from users of crypto exchanges Poloniex, Binance, and Gemini.

    These two hackers accused created several web domains that mimicked the three legitimate cryptocurrency exchanges in 2017. Using phishing and spoofing tactics, they fraudulently obtained the login credentials of more than 150 exchange users, such as email addresses, passwords, and other personal information, which enabled them to access the victims’ accounts at the legit exchanges.

    Besides stealing victims’ cryptos, they engaged in price manipulation of the GAS cryptocurrency in what the indictment document describes as “a sophisticated market manipulation scheme that began in July 2017 using the stolen customer credentials.” Using funds valued at over $5 million in the accounts of three victims, they bought a large amount of the GAS token, causing its price to skyrocket. The pair quickly converted tokens into bitcoin and other cryptos, making the price of GAS to plummet, leaving the victims with worthless coins.

    The defendants then laundered the theft proceeds “and attempted to conceal the nature and source of the digital currency by transferring them in a layered and sophisticated manner through multiple accounts,” the DOJ said. “Ultimately, a significant amount of the stolen digital currency was deposited into Karasavidi’s account.”

    They have been charged with conspiracy to commit computer fraud and abuse, computer fraud, conspiracy to commit wire fraud, money laundering conspiracy, and two counts of aggravated identity theft, the Justice Department explained.

    “The statutory maximum penalty for all the charges against the defendants is 59 years imprisonment,” said Dave Anderson, U.S. Attorney for the Northern District of California.

    The U.S. Attorney also looks for the forfeiture of cryptocurrencies and dollars allegedly traceable to the defendants’ crimes. In addition to more than $6 million in U.S. dollars, law enforcement seized BTC and ETH in December 2017, worth over $12.62 million at the time. Many other cryptocurrencies were seized in August last year, such as BTC, valued at about $2.60 million in total at the time. All seized assets are now in the custody of the U.S. Secret Service.

     

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