06.12.2021

Cryptocurrency fraudster received 15 years in prison for stealing $ 16 million

The 47-year-old Swede was sentenced to 15 years in prison for defrauding cryptocurrency investors and stealing $ 16 million in digital assets. This was reported by the US Department of Justice.

Roger Niels-Jonas Karlsson has pleaded guilty to securities fraud, electronic means fraud and money laundering. Karlsson bought luxury homes, a racehorse and a resort in Thailand after potential investors poured money into his scheme called Eastern Metal Securities.

The topic of scammers demanding cryptocurrency for ransom is not new. First of all, they make their choice in favor of digital assets due to their decentralized basis, which means that no one can block a certain address with coins on the account.

In addition, advanced users can obfuscate the tracks using so-called decentralized mixers, which mix coins from different users and then send them to new addresses. At the same time, less experienced scammers also send funds to ordinary cryptocurrency exchanges – they are most often blocked.

A striking example of the situation with the payment of 116 bitcoins happened in the summer of 2020. Then the scammers blocked important data from a group of COVID-19 researchers from the University of California.

How cryptocurrency scammers work

Carlsson’s fraudulent platform lured investors into buying “shares” in a suspicious investment program, while the transactions themselves were made in Bitcoin and other cryptocurrencies. The culprit has promised “astronomical profits” to anyone who contacts his platform.

That is, in fact, he simply created a pyramid that existed thanks to the emergence of new users. It was the influx of funds that made it possible to make payments and ensure the profitability that was originally announced. At the same time, the author of the scheme was used to cryptocurrencies out of a desire to remain unnoticed and cover their own tracks.

He accepted payments through the Coinbase exchange, while managing to obfuscate the traces of cryptocurrency transactions on the blockchain. As a result of Karlsson’s actions, at least 3,500 people have already suffered . He confessed to the charges and was extradited to the United States from Thailand, where he was at the time of his arrest.

The situation in an interview with Decrypt was commented on by special agent of the Criminal Investigations Department of the US Internal Revenue Service Kelly Jackson. Here is a quote from him, in which the expert shares the details of the case.

We were pleased to share our experience in tracking virtual currency in this investigation, reducing the belief in anonymity associated with these transactions.

Kelly’s comment has an interesting connotation – he hinted that transfers in Bitcoin are very easy to track, and much easier than cash transfers. Earlier this was also confirmed by the former head of the CIA Michael Morell.

Since all transactions of each user are recorded on a transparent and public blockchain, this makes monitoring them quite simple. We wrote more about this in a separate article. We recommend that you familiarize yourself in order to better understand what is happening in the cryptocurrency industry.

However, the arrest of Karlsson is just a drop in the ocean compared to what the scale of criminal activity in the cryptosphere really is. The day before, he even became the subject of discussion in a telephone call between US President Joe Biden and Vladimir Putin. Biden said America will “take whatever action” it takes to combat hacker groups and ransomware malware.

A bit of context: this year there has been a series of hacker attacks in the United States, the most recent of which was directed against Kaseya and the thousands of organizations using its software. A Russian cybercriminal organization called REvil has demanded $ 70 million in bitcoin, promising to unlock information important to Kaseya. This group was also behind the May attack on meat processing company JBS, which ultimately paid a $ 11 million ransom .

Putin Biden President of the United States of the Russian Federation

Joe Biden and Vladimir Putin

REvil is not state-owned, but that doesn’t matter to Biden. Here is a quote from the President of the United States, in which he voiced his attitude to the topic.

I made it very clear to Putin that the United States expects the Russian government to act against hackers, since they conduct their operations from their territory.

According to Biden, the two countries began to actively cooperate to regularly discuss such issues. This means that there is a possibility that this interaction will end with new initiatives.

We believe that the current verdict will be another warning for cryptocurrency scammers who want to capitalize on the gullibility of novice investors. While there are many such cases of deception, over time, as the digital asset industry matures and is regulated, their number will decline. In turn, this will affect the reputation of the coins, because now they will not scare newbies. Therefore, it remains to be hoped that hackers and other dishonest members of the community will change their attitude towards their activities.

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