Jim Cramer addresses Coinbase's rally in August (1:34)
A Brooklyn man has been sentenced to four to 12 years in prison for stealing nearly $16 million from approximately 100 Coinbase users.
The phishing and social engineering scheme ran for more than a year, the Brooklyn District Attorney’s Office announced on Sept. 23.
Coinbase is an American cryptocurrency exchange that lets users buy, sell and store digital assets like Bitcoin, Ethereum and other cryptocurrencies.
Phishing is a type of cyberattack where someone pretends to be a trusted company, in this case Coinbase, to trick people into handing over their money or personal information.
Related: Tesla gains $122M on Bitcoin without buying a single coin
How the scam worked
Ronald Spektor, 23, of Sheepshead Bay, Brooklyn, contacted Coinbase users posing as a company representative and told them their accounts had been compromised by a hacker.
He then convinced them to transfer their funds to a new wallet that they believed was under their own control. But it was actually accessible by Spektor, according to the DA’s office.
Once the funds were moved, Spektor emptied the wallets and laundered the stolen cryptocurrency. He swapped it across multiple exchanges before routing it to gambling services, online storefronts and cash-out points where it could be converted to other currencies, gift cards or cash, prosecutors said.
Victims came from across the United States and from all walks of life, with some losing over $1 million each, the DA’s office said.
Popular on TheStreet Roundtable:
U.S. Treasury yields hit multi-decade highs, sending Bitcoin lower
AI expert reveals the jobs most likely to survive automation
Billionaire Tim Draper takes aim at Apple, Meta’s Bitcoin-free balance sheets
A digital trail that led home
According to investigators, Spektor operated under the handle @lolimfeelingevil on Telegram, where he ran a channel called “Blockchain enemies” and openly bragged about his heists.
Recovered messages showed he claimed to have made millions through scamming and admitted to losing $6 million gambling with stolen cryptocurrency.
The Brooklyn DA’s Virtual Currency Unit traced the scheme through transaction records, blockchain analysis and digital forensics recovered from multiple search warrants.
Spektor’s home IP address was linked to multiple wallets from which cryptocurrency was stolen, the office said. When online allegations of fraud surfaced against him, he disposed of a hardware wallet and bought a new one, according to text messages recovered from his phone.
Spektor pleaded guilty to the full 31-count indictment on Sept. 2, including first-degree money laundering, grand larceny and criminal possession of stolen property.
He was ordered to forfeit cash, crypto and personal property worth over $500,000 and make restitution of nearly $16 million.
Related: Analyst who predicted 2021 crash admits he was wrong about Bitcoin