In yet another example of the United States government’s commitment to investigate and prosecute crimes involving cryptocurrency, two men from Massachusetts were sentenced on October 19, 2022 for their creation of a scheme with the intent to steal cryptocurrencies from high-profile executives in the crypto community as well as gain access to their social media accounts. Both of the men received sentences of slightly over two years in prison.

The two men employed a simple, albeit innovative, strategy involving “SIM swapping” which allowed them to steal at least USD 330,000 worth of crypto securities from at least 10 victims and take control of two social media accounts. As alleged, the scheme operated as follows. The men targeted high-profile executives in the crypto community who also had a significant social media presence.  Once the victims were targeted, the men would convince the victim’s cell phone carrier to switch the phone number from the SIM in the victim’s phone to the SIM in a phone controlled by one of the men.  After gaining control of the phone number, the criminals would pose as the victim and obtain access to the victim’s online social media and crypto accounts by requesting password and account reset information to be sent to the SIM card in the control of the criminals.

Although the amount stolen and sentences levied in this case were small when compared with other crimes, this case is noteworthy because it illustrates a number of critical points the crypto community should take note of.  First, gaining access to a financial account in order to siphon away wealth from an unsuspecting victim is not a novel idea. The fact that it happens with crypto-related accounts should not be a surprise and it shows that criminals remain committed to exploiting any weaknesses in security in order to steal any type of asset with value. Hence individuals and companies need to make sure they have up to date security measures in place to protect against this type of crime.

Second, the case demonstrates that collaboration across law enforcement agencies on cryptocurrency related crimes appears to be working well and should continue to be the norm going forward. In this case, the investigation was conducted by the FBI’s Boston field office with assistance from the IRS’s criminal investigations team. This shows that there has been success in the the mandate for cooperation expressed when the  National Cryptocurrency Enforcement Team was created and further expressed in the recently released report on the role of law enforcement in crypto related crimes.

Third, the case illustrates the commitment of the United States to prosecuting crimes involving cryptocurrency, no matter how small. The amount stolen in this case was only USD 330,000, which is small when compared with other more recent enforcement actions. Yet, the low amount is in and of itself noteworthy because it demonstrates the United States focuses on the illegal activity and not the amount actually stolen.

The full press release can be read here.

Author

Caleb Sainsbury is an associate in the Firm's Z├╝rich office where he is a member of the Global Wealth Management and the Compliance and Investigations practice groups. Prior to joining Baker McKenzie, Caleb was an associate at an international law firm in Boston, Massachusetts.