On Sep. 16, 2020, a U.S. federal grand jury sanctioned two Russian hackers for their involvement in a sophisticated multi-year crypto phishing spree.
The illicit campaign that took place throughout 2017 and 2018 targeted customers of two U.S.-based exchanges and one foreign-based exchange. Officials estimate the losses at about $16.8M.
Unsealed indictment documents reveal details about the crypto theft perpetrated by Russian nationals Danil Potekhin and Dmitrii Karasavidi. The hackers allegedly used a combination of phishing messages and fake sites to siphon digital currency from users at top exchanges.
Prosecutors said that the hackers directed victims to website clones for Poloniex, Binance, and Gemini exchanges. They then tricked traders into entering their usernames and passwords into the spoofed websites.
Potekhin and Karasavidi used the stolen credentials to direct users’ Bitcoin and Ethereum into their intermediary accounts created using fake identities.
The defendants also carried out a market manipulation scheme, where they inflated the value of a cheap altcoin (GAS) by buying massive quantities using stolen funds. Once the coins’ price went up, the defendants then proceeded to dump and use the proceeds to buy Bitcoin.
The US Justice Department has now proceeded to freeze all property and interests of these persons. It has also traced and seized some of the digital assets stolen from exchanges.
U.S. Cybercrime Department Acts Amid Flurry of Crypto Hacks
The recent indictment of alleged Russian hackers comes amid a flurry of activity from the Justice Department’s cybercrime prosecutors.
It seems that the cybercrime department is ramping up enforcement efforts against crypto hackers who are carrying out increasingly complex scams.
As reported on Sep. 10, U.S. officials shut down yet another Russia-linked operation that used 23 crypto addresses to transfer funds for election interference.
Days before that crackdown, the authorities raided the home of a hacker who was involved in July’s high profile Twitter hack that targeted BTC users.
On Sep.3, a US judge convicted a man accused of running a Ponzi scheme dubbed BitClub that promised investors high crypto returns with minimal risk.
To protect users, the U.S. Financial Crimes Enforcement Network issued an alert in 2019 over the skyrocketing crypto fraud.
Are Hackers Targeting Crypto Exchanges?
The growing danger emerging from sophisticated crypto attackers is blatant as such incidents seemingly explode globally. Unfortunately, yesterday’s indictment against Russian nationals is the latest evidence that attackers are increasingly aiming to exploit crypto exchanges.
That attack managed to steal about $10M from 142 Binance accounts, $5.24M from 158 Poloniex users, and $1.17M from 42 Gemini clients.
Last month, U.S. officials revealed that North Korean hackers also infiltrated various undisclosed exchanges and siphoned approximately $272K in June 2019.
This worrying trend may lead to exchanges implementing more stringent KYC and AML requirements to protect users.