Bitcoin scams have been going on ever since the cryptocurrency was first invented with hacks and fraud becoming a small part of the industry. More than a decade after it was first made public, bitcoin scams have only grown in complexity and magnitude.
According to news reports, two Canadian nationals have been sentenced by a Portland Court to 2 years in prison for conspiring to commit wire fraud and money laundering in a scheme to steal bitcoin from an Oregon resident.
Karanjit Singh Khatkar and Jagroop Singh Khatkar were two brothers living in Surrey, British Columbia. In addition to their two years in prison, they will also serve three years’ supervised release. The case that brought them down was in connection to their nefarious activities between October 2017 and August 2018.
The defendants had used a fake Twitter handle ‘HitBTCAssist’ to fool people into thinking they were the support handle for Hong Kong-based cryptocurrency exchange HitBTC. The culprits hit jackpot when they were able to draw enough information from the victim to access her HitBTC and Kraken accounts. They also gained access to the victims email address so that they could confirm all the 2FA processes.
Kraken and HitBTC were unaware of these proceedings and both the cryptocurrency exchanges were functioning normally while the scam was going on. According to the Department of Justice, the perpetrators made away with 23.2 Bitcoin which was split evenly between Karanjit and Jagroop. The report from the Attorney’s office said:
“Two days after illegally accessing the victim’s account, Karanjit Khatkar bought a Mercedes-Benz with $56,598 in Canadian dollars. The Khatkars also traveled to casinos. Karanjit Khatkar gambled with tens of thousands of dollars while staying at high-end casinos in Las Vegas, Nevada.”
The party soon ended when they were both detained separately last year. Karanjit Khatkar was arrested on 18 July 2019 on arrival at McCarran International Airport in Las Vegas and later ordered to be detained for trial. Jagroop willingly handed himself over to the police on December 16, 2019. On the same day, the brother pleaded guilty to all charges brought against him.
Authorities have become effective in catching cryptocurrency criminals, and the story of the Khatkars has become one of many such cases. The 23-and 24-year-olds were asked to pay $142,349 as a prepayment refund and another $42,162 as a sentencing penalty. The $183,511 fine may not be the biggest figure in the world, but it was still enough to send a signal to Bitcoin fraudsters.
The decisions come in the wake of the Coronavirus and the total takedown of financial markets. It was still a hopeful sign that regulators were making efforts to combat fraud in the industry and to boost confidence among investors around the world.