Two Russian nationals have been charged with defrauding three cryptocurrency exchanges and their customers in a series of crimes that involved over $16.8 million in crypto assets, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced Wednesday.
According to the press release, Danil Potekhin and Dmitrii Karasavidi were involved in a scheme that from 2017 to 2018 and targeted the customers of three crypto service providers–two U.S.-based and one international.
“The individuals who administered this scheme defrauded American citizens, businesses, and others by deceiving them and stealing virtual currency from their accounts,” said Secretary Steven Mnuchin.
According to the press statement, Potekhin created fraudulent web domains imitating those of legitimate currency exchanges. When customers visited Potekhin's "spoofed" websites and entered their login information, Potekhin was able to gain access to their accounts.
Potekhin and his team then allegedly used a variety of ways to exfiltrate the stolen funds, including transferring the money to exchange accounts created using stolen identities, circumventing exchanges' internal controls and creating a market manipulation scheme whereby virtual currency was purchased quickly to increase demand and price, and then sold for a much higher price to reap profits.