US indicts two over socially engineered $230M+ crypto heist

Two individuals are in cuffs and facing serious charges in connection to a major theft of cryptocurrency worth more than $230 million from a single victim.

Malone Lam, 20, and Jeandiel Serrano, 21, of Miami and Los Angeles respectively, are alleged to have carried out a scam between August and September and used the stolen funds, which were laundered sloppily, to buy luxury cars, watches, jewelry, international travel, VIP nightclub services, rental homes, and designer handbags.

The indictment [PDF], unsealed on Thursday, doesn't go into any great detail about the criminal incident at the heart of the case, other than claiming the pair allegedly contacted the victim directly and stole more than 4,100 Bitcoins from them. 

The stolen cryptocurrency tokens were then moved around various exchanges and mixers, with the help of some VPN use, in an attempt to mask their route to the cyber thieves' wallets.

Peel chains were used as part of this laundering process, the Department of Justice (DoJ) said. These involve making many small transactions from a wallet and passing the funds through to different exchanges where they are then converted to other cryptocurrencies, such as Ethereum, Monero, and sometimes fiat currency too.

The idea here is that the multitude of transactions and their low value makes it less likely that the exchange will zero in on them due to suspected money laundering. It also makes investigating the trail of funds more difficult for blockchain investigators.

Cryptocurrency exchanges are, due to the nature of their business and what criminals use crypto for, often used for the laundering stolen digital assets such as Bitcoin and are therefore subject to stringent measures from financial regulators to stamp down on such malfeasance.

Not much was revealed about the victim, other than that they resided in Washington, D.C. where the case is currently being handled by the US Attorney's Office, the FBI, and IRS.

The news comes mere days after the FBI released a report examining the state of crypto-related scams in the US, which net cyber scum $5.6 billion a year, by its reckoning.

Trust-based scams are the most common. Often, the scammer will spend weeks and sometimes months before beginning the actual scam phase of their endeavors. They'll spend a great deal of time on dating apps and social media, typically, building a relationship with the victim before convincing them to engage in some sort of phony investment which of course concludes with the victim's assets being stolen.

There are also the more violent types of crypto-related crime, as evidenced by the recent conviction of a Florida man and a band of his thug friends who invaded the homes of elderly people across the US, using physical force and threats of heinous acts to scare victims into handing over control of their digital assets. ®