A Canadian teenager has been arrested for allegedly stealing $37 million worth of cryptocurrency ($46M Canadian) via a SIM swap scam, making it the largest virtual cash heist affecting a single person yet, according to police.
Together with the FBI and the US Secret Service Electronic Crimes Task Force, Hamilton Police in the Canadian province of Ontario launched a joint probe to investigate the breach of a US resident's mobile phone account.
The victim was reportedly targeted with a SIM swap attack – their phone number was hijacked and ported to a different phone belonging to the attacker. The miscreant was then able to enter personal accounts via two-factor authentication requests and obtain details of the victim's cryptocurrency wallet. From there, millions of dollars were siphoned off, it's claimed.
"The joint investigation revealed that some of the stolen cryptocurrency was used to purchase an online username that was considered to be rare in the gaming community," according to a statement from Hamilton Police.
"This transaction led investigators to uncover the account holder of the rare username," it confirmed.
The teen was arrested for theft and possession of property. Police have seized over $5.5 million worth of cryptocurrencies in the case so far.
US government to hawk cryptocurrency to recover funds for defrauded investors
Meanwhile, the Department of Justice and the US Attorney's Office for the Southern District of California will start selling off $56 million worth of cryptocurrency to liquidate assets from a sham cryptocurrency startup accused of running a Ponzi-like scheme.
BitConnect and its founder Satish Kumbhani, 35, and lead promoter Glenn Arcaro, 44, were sued by the Securities and Exchange Commission for lying to investors about an automated cryptocurrency trading bot. The pair promised to generate return profits of as much as 40 per cent, and were given $2 billion worth of Bitcoin.
The digital coins weren't traded, but were funneled into personal accounts belonging to Kumbhani and Arcaro, it was alleged. Arcaro pleaded guilty to conspiring to swindle Bitconnect investors on 1 September and surrendered his assets.
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Now, the DoJ and the US Attorney will begin selling off his Bitcoin. It's the largest single amount yet recovered from a cryptocurrency fraud case by the government. The money will go towards compensating the defrauded investors.
"With entry of the court's interlocutory sale order, the government will begin the process of seeking to make whole victims of the BitConnect scheme by selling the cryptocurrency and holding the proceeds in US dollars," the DoJ confirmed this week.
"The government will maintain custody of the seized proceeds in cryptocurrency wallets and intends to use these funds to provide restitution to the victims pursuant to a future restitution order by the court at sentencing."
Arcaro is due to be sentenced on 7 January and faces up to 20 years in prison, while Kumbhani's current whereabouts are believed to still be unknown. The FBI and IRS Criminal Investigation are continuing to investigate the alleged crime. ®