Scammers were smart enough to intercept a 100 Bitcoin investment – but then seem to have made a dumb move which lost them almost all of it.
The CEO of Alphabit, Liam Robertson, fell victim to a phishing scam earlier this year that cost him more than $1.1 million worth of Bitcoin.
But due to a seemingly dumb move by the scammers and a new legal settlement, Robertson looks set to get most of it back, with the likely culprit/s identified.
If it happened to him it can probably happen to you.
Robertson is one of the largest individual and corporate traders in Europe and the Middle East and established one of the world’s first regulated cryptocurrency hedge funds in 2016.
How the Bitcoin scam unfolded
As part of his regular trading, Robertson had agreed to invest 100 Bitcoins in an algorithmic trading fund.
However, the scammers caught wind of the investment before it went through and used a simple email phishing attack to trick Robertson into sending the Bitcoin to their wallet address instead of the correct one.
Instead of sending the Bitcoin in dribs and drabs to a crypto mixer, or some other method of anonymizing transactions to hide their tracks they instead sent about 15 Bitcoin to peer-to-peer exchange Local Bitcoin and another five to an offline wallet.
For some reason, they sent 80 of the Bitcoins to Coinbase – which appears to have been their big mistake.
Analysis traces the funds
Every transaction is recorded for posterity on the blockchain, and analysts were able to trace the funds to the regulated exchange – which also requires account holders to be KYC-verified.
Robertson applied for and was granted an asset preservation order last month through the UK courts, essentially freezing the Bitcoins at Coinbase.
He also obtained a Bankers Trust Order, extracting the name of the account holder whose wallet contained the 80 Bitcoins.
Either the scammers made a very dumb move by sending it to their own account – or the account holder did, by purchasing what turned out to be stolen Bitcoin and having it transferred to a verified account.
Law 360 reported yesterday that Coinbase and Robertson had reached an “undisclosed settlement to exit litigation”.
Senior Fintech Reporter Philip Rosenstein tweeted that it may establish a precedent and the outcome may help fraud victims reclaim their stolen property by establishing Bitcoin as a specific asset or sum of money.
.@coinbase Settles Bitcoin Asset Freeze Dispute – settlement out of the UK .. the outcome "may help fraud victims reclaim their stolen property by establishing bitcoin as a specific asset or sum of money." – @Law360 #fintech #cryptocurrency https://t.co/LUWInZiXGH
— Philip Rosenstein (@parosenstein) September 10, 2019
Phishing attacks on the increase
Phishing attacks jumped by 21% in the past quarter, according to Kaspersky.
The security software vendor detected 129.9 million attacks in Q2 of 2019.