Two Canadian Nationals Face Two Years in US Prison for Alleged Bitcoin Fraud
The US Department of Justice has sentenced two Canadian nationals to two years in the US federal prison for using a fake Twitter account to steal Bitcoins from an innocent US victim
According to the statement shared by the US Department of Justice, on March 17, 24-year-old Jagroop Singh Khatkar and 23-year-old Karanjit Singh Khatkar were sentenced to two years in federal prison and three years of supervised release after conspiring to commit fraud in a scheme to steal 23.2 Bitcoins from an Oregon resident.
Fraudsters impersonate HitBTC customer service representatives on Twitter
The two perpetrators are residents of Surrey, British Columbia, Canada, and they operated the illegal scheme designed to steal money from October 2017 until August 2018. Since then, there have been new regulation changes in Canada.
The British Columbia residents created a twitter account acting under the handle “@HitBTCAssist,” to pose as HitBTC staff. They, therefore, tricked potential victims into thinking that they were communicating with a customer service representative from the popular Hong Kong-based crypto exchange HitBTC.
Eventually, an Oregon resident sent an inquiry to the fake twitter account inquiring how she can go ahead and withdraw Bitcoins from her HitBTC account. The Khatkars convinced her to forward sensitive information associated with her email and HitBTC account. The two then managed to transfer 23.2 Bitcoins (valued $119,000 today) from the victim’s HitBTC account to Karanjit Khatkar’s wallet on the Kraken exchange.
The scammers, after committing the theft, divided the stolen Bitcoins equally and proceeded to spend the funds on a lavish lifestyle involving luxury vehicles and high-end casinos. Karanjit bought a Mercedes-Benz for almost $40,000. He also spent tens of thousands of dollars doing gambling in luxurious casinos in Las Vegas.
In July 2019, Karanjit was, however, arrested at the McCarran International Airport in Las Vegas. Jagroop later on voluntarily appeared for his arraignment. In December 2019, they both pleaded guilty to conspiring to commit money laundering and wire fraud. They were ordered to pay the victim a total of $184,511 restitution.
Crypto theft alarming rate
According to CipherTrace, a blockchain forensic firm, the crypto sector lost over $4.4 billion in thefts and scams in 2019, up by more than 150% from $1.7 billion in 2018. Crypto theft has increased because malpractices have been happening through cryptocurrency exchanges. However, regulatory authorities have increased their oversight of digital assets across the world as market participants are seeking to penetrate the crypto space. For example, know your customer regulation is helping to trace, capture, and persecute crypto scammers.
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