Two Canadian citizens were sentenced to 24 months in federal prison in the U.S. after conspiring to commit wire fraud and money laundering in a scheme to steal bitcoins from an Oregon citizen. The perpetrators posed as employees from the popular cryptocurrency exchange HitBTC and used a fake Twitter account to deceive the victim.
Bitcoin Fraud Using A Fraudulent Exchange Account
According to the statement shared by the District of Oregon, the two perpetrators are Karanjit Singh Khatkar (23) and Jagroop Singh Khatkar (24). Both are residents of Surrey, British Columbia, Canada, and they operated the illegal scheme from October 2017 until August 2018.
They created a fake Twitter account with the name @HitBTCAssist. Thus, they tricked potential victims into assuming they were communicating with a customer service representative from the popular Hong Kong-based cryptocurrency exchange – HitBTC.
Ultimately, an Oregon resident sent a question to the fraudulent Twitter account asking how she can withdraw bitcoins from her HitBTC account. The two Canadians convinced her to send her private information she used to log on in her account.
Then, they transferred all of the victim’s 23.2 bitcoins (worth $119,000 today) from her HitBTC wallet to Karanjit Khatkar’s account on the U.S.-based cryptocurrency exchange – Kraken.
The Rise and The Fall
After completing the scheme, the Khatkars split the stolen bitcoins. Karanjit bought himself a luxury car for 56,598 CAD, and both of them went to spend the rest in high-end casinos in Las Vegas, Nevada.
Karanjit, however, was apprehended upon arrival at the McCarran International Airport in Las Vegas on July 18, 2019. Later on, Jagroop appeared voluntarily for his arraignment. On December 16 the same year, both of them pleaded guilty to conspiring to commit wire fraud and money laundering.
The total restitution that the Khatkars paid the victim was $184,511. It included a prepayment of $142,349, and an additional $42,162. Aside from the money they had to pay, the Khatkars received a sentence of 24 months in federal prison and three years’ supervised release.
In another recent case involving Bitcoin “mixers” to launder over $10 million, a former Microsoft employee broke 18 federal laws and faced up to 20 years in prison.