It has been a good week for the guardians of the payments industry. We are very often writing of the upward trends in fraud and the latest channels to be hit, but we rarely celebrate the success of crime fighters.
This week there have been two significant “busts”:
Estonian Police Win
Police in Estonia arrested two men suspected of running a $575 million (£485 million) cryptocurrency scam involving hundreds of thousands of victims.
The force investigated the case with the FBI, and US authorities want to extradite the pair – Estonians Sergei Potapenko and Ivan Turogin.
The two 37-year-olds allegedly got people to invest in a cryptocurrency mining service called HashFlare and a fake virtual bank called Polybius.A US indictment has been issued.
A statement from the US Department of Justice (DoJ) says the pair are accused of wire fraud and conspiracy to commit money laundering – crimes punishable by up to 20 years in prison.
Giving details of the alleged scheme, the DoJ says the two defrauded victims by offering them the chance to buy into HashFlare’s cryptocurrency mining operations.
Customers around the world are said to have purchased more than half a billion dollars’ worth of HashFlare contracts from 2015 to 2019. But the operation allegedly overstated its capabilities.
The DoJ alleges that victims were also promised dividends if they invested in Polybius, a virtual bank Mr Potapenko and Mr Turogin said they had set up.
They used shell companies to launder criminal proceeds, buying at least 75 properties and luxury cars, DoJ says.
UK’s biggest anti-fraud operation
This scam involved fraudsters calling people at random, pretending to be a bank and warning of suspicious activity on their account.
They would pose as employees of banks including Barclays, Santander, HSBC, Lloyds, Halifax, First Direct, NatWest, Nationwide and TSB.
The fraudsters would then encourage people to disclose security information and, through technology, they may have accessed features such as one-time passcodes to clear accounts of funds.
As many as 200,000 people in the UK may have been victims of the scam, police said, with victims losing thousands of pounds, and in one case £3 million.
The mammoth cyber fraud operation began when police in the Netherlands bugged a website that allowed fraudsters to make anonymous phone calls from spoof numbers, posing as bank employees.
The iSpoof website, which has since been taken down by the FBI, crucially allowed scammers to access one-time passcodes and passwords, detectives said.
Fraudsters paid between £150 and £5,000 a month in bitcoin to use the iSpoof service, contacting, at times, 20 people a minute, primarily in the USA, UK, Netherlands, Australia, France and Ireland.
So far, police believe £48 million may have been stolen by criminals using iSpoof. This figure is likely to rise. Those behind the service are allegedly earning £3.2 million and living “lavish” lifestyles.
There have been more than 100 arrests so far, and one man has been charged.
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