Miami Crew Leader Sentenced to 63 Months in Prison for Crypto and Bank Fraud
The U.S. Department of Justice (DOJ) has announced a sixty-three-month prison sentence against a Miami crew leader for using stolen identities to steal $4 million from a crypto exchange.
Per a press release from the department late last month, Esteban Cabrera Da Corte (a.k.a. “Steban”) now must pay restitution of $3.57 million, on top of forfeiture of $1.2 million.
“This sentencing should send a clear message that we, together with our law enforcement partners, will continue to zealously prosecute cryptocurrency scammers and money launderers,” said U.S. Attorney Damian Williams in a statement.
Steban and his co-conspirators’ scheme involved purchasing crypto from a “leading cryptocurrency exchange” using fake accounts created from “photos of fake U.S. passports, fake drivers’ licenses, and stolen personal identifying information.”
After linking those exchange accounts to bank accounts that they controlled, the crew used ATMs to buy crypto from the exchange using a series of cash deposits.
Once bought, the thieves quickly withdrew the stolen crypto to privately controlled wallets. Then, they would call U.S. banks claiming that such payments were unauthorized, receiving fiat-based refunds from their bank while keeping their stolen digital assets.
“The operation of this scheme by the defendants resulted in U.S. banks processing more than $4 million in fraudulent reversals and the Cryptocurrency Exchange losing more than $3.5 million worth of cryptocurrency,” said the DOJ.
The 27-year-old’s scheme has been ongoing since roughly March 2020, when Bitcoin (BTC) fell below $4,000 before skyrocketing to $64,000 over the next 12 months.
The scheme took advantage of a key difference between bank-based and crypto-based transactions: the former are reversible, while the latter are not.
Trouble At Centralized Exchanges
Binance founder Changpeng Zhao was also charged by the DOJ last month, stepping down as CEO and agreeing for his company to pay $4 billion in fines for anti-money laundering violations.
Centralized exchanges have fallen victim to a variety of hacks and scams over the past year, with experts at Elliptic believing that hackers may have shifted tactics in 2023 to target centralized services over decentralized ones.
By the firm’s logic, centralized businesses often operate larger workforces, leaving them more susceptible to social engineering attacks.
Last month, the Justin Sun-owned crypto exchange HTX lost over $100 million in a variety of digital assets to hackers. Sun promised affected users that their funds would be repaid.