A Brooklyn man was indicted on Friday for allegedly stealing nearly $16 million from users of cryptocurrency exchange Coinbase.
Brooklyn District Attorney Eric Gonzalez identified the defendant as Ronald Spektor, 23, of Sheepshead Bay. Spektor allegedly contacted about 100 users purporting to be a Coinbase representative, claimed that their assets were at risk from a hacker, and convinced them to transfer their money to a new cryptocurrency wallet. He then allegedly emptied out those accounts and laundered the assets by sending them to online swapping and mixing services as well as cryptocurrency gambling entities, according to Gonzalez.
"He allegedly tricked many unsuspecting people to transfer their life savings to wallets he controlled, blew their hard-earned money gambling online, and then bragged about his successful thefts," Gonzalez said in a statement.
For the past year, the DA’s Virtual Currency Unit was investigating the Coinbase phishing scheme that resulted in approximate loss of $15.9 million from about 100 users. Over 70 users were interviewed for the investigation, Gonzalez said.
Victims told the DA's office that a purported Coinbase representative contacted them and informed them that their assets were at risk from a hacker and needed to be moved to a new wallet. The users, believing they were communicating with a real Coinbase representative, unwittingly moved their crypto assets to a wallet that they were led to believe was under their sole control, but was actually accessible by the defendant.
The investigation further revealed that the stolen assets were then allegedly laundered by swapping them multiple times through different crypto exchanges until they were eventually consolidated at “cash-out points” where they could be converted to other types of cryptocurrencies, wagered in bets, converted to cash, and used to purchase gift cards or digital assets, according to prosecutors. Large portions of the stolen assets in this case were allegedly sent to gambling services and various online storefronts.
Spektor was identified to be responsible for the scheme based on transaction records, blockchain analyses, digital forensic and evidence recovered from multiple search warrants, Gonzalez said. The defendant’s own home IP address was allegedly linked to multiple wallets that cryptocurrency was stolen from.
The investigation also revealed that Spektor allegedly used online forums to recruit others to work for him as social engineers, or hackers, and bragged about his criminal exploits.
The DA's investigation revealed that Spektor allegedly used the handle @lolimfeelingevil on the encrypted messaging app Telegram, where he ran a channel called “Blockchain enemies” in which he openly bragged about his heists. He also allegedly used the encrypted apps like Discord.
Investigators allege that recovered messages show that he wrote, using slang terms, that he lost $6 million dollars of cryptocurrency by gambling and implied that he has made millions of dollars’ worth of cryptocurrency through scamming.
In addition, text messages recovered from his phone show that after becoming the subject of online allegations of fraud, he allegedly made sure to dispose of a cryptocurrency hardware wallet and have a new one purchased, the DA said.
The victims lived all across the country. A California resident reported losing over $1 million and a Virginia resident reported losing over $900,000.
About $105,000 in cash and approximately $400,000 in cryptocurrency were seized from the defendant in the course of the investigation and the DA’s Office is working to access more alleged stolen cryptocurrency assets.
The DA's office now has more resources to combat white collar crime because overall crime in the borough is lower, Gonzalez said during a press conference. The Virtual Currency Unit, established about two years ago, has shut down hundreds of fraudulent crypto investment websites that have proliferated and scammed Brooklyn residents.
These cons are usually conducted by scammers overseas, so it is rare that there's an indictment of this type within the city, Gonzalez said.
"In this case, it's different," he said. "In this case, the alleged scammer is not an international citizen but a citizen of the United States. He lives right here in the borough of Kings, and he did his alleged crimes in Brooklyn."
The DA offered the following tips to avoid falling victim to phishing scams:
- Coinbase and most other companies will never call customers or ask to transfer crypto to a “safe wallet”
- Don’t trust caller ID, sender names or lookalike domains that can be spoofed.
- Only contact Coinbase and other companies through in-app support channels.
- Slow down. Scammers rely on urgency and pressure. Verify independently, consult with other, don’t move money in a rush.
- Use strong account protections, like two factor authentication or security keys where available.
