3 Men Accused of Stealing $4m in a Bank-Frauding Crypto Transfer Reversal Scam

B. Ali
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According to a press release from the Department of Justice, the three suspects, Esteban Cabrera Da Corte, Luis Hernandez Gonzalez, and Asdrubal Ramirez Meza, were arrested on August 23 amid a crypto scam. These three men steal millions of dollars in cryptocurrency and defraud US banks of the money used to buy it. The US Department of Justice has charged three members of a Miami group in connection with a cryptocurrency scheme that allegedly netted more than $4 million.

How Did They Get Their Hands on Cryptos?

According to the charge, the men allegedly obtained cryptocurrencies from an anonymous exchange using accounts with fictitious profiles. Their bank had ties to those phony identities. According to the report, the defendants frequently used ATMs to withdraw cash from the linked bank accounts, which they then used to purchase cryptocurrencies. After purchasing the cryptocurrency, they transferred it to wallets controlled by them on another exchange before informing the bank of the illegal nature of the initial purchases.

Moreover, they called the banks and falsely claimed that the cryptocurrency purchases were unauthorized. The bank had to cancel the transactions as a result. The cryptocurrency exchange lost more than $3.5 million due to the scam’s execution, and US banks processed more than $4 million in false reversals. US Attorney Damian Williams said the three men obtained cryptocurrency using stolen identities. They then doubled down by challenging the transactions, tricking US banks into believing they were victims of someone else’s fraud. He said that because the El Dorado Task Force of HSI found out they were lying, they are now facing serious federal charges.

Crypto Scam – Registering with Fake IDs

A customer must pass Know Your Customer (KYC) checks before making an online cryptocurrency purchase. In addition, exchanges are required by US law to conduct identification verification procedures on all consumers before providing any services, effectively violating their customers’ right to privacy in the name of safety.

The defendants created many false identities to open accounts at various trading accounts. As soon as they had “borrowed” from themselves, they would utilize the funds to purchase Bitcoin and then withdraw them to a cold wallet. The criminal would then transfer the Bitcoin back to their original account and call the bank to report the theft.

Crypto Scam Can Still Occur despite KYC and AML Requirements

To prevent money laundering and crime, KYC and AML checks have been proven repeatedly to be completely inefficient and ineffective. The OECD reports that anti-money-laundering procedures barely retrieve 1% of stolen funds worldwide. The price of conducting these checks is significant, as it requires businesses and individuals to keep extensive records of their dealings.

This additional bureaucracy is incredibly inefficient, degrades the quality of service provided to customers by treating them as potential criminals, and paves the way for establishing a totalitarian surveillance state.

Specifics Regarding Financial Fraud

The arrests come as legislators call for prosecuting fraudulent actors in the cryptocurrency market. In March, President Joe Biden issued an executive order. He urged the government to combat cryptocurrency fraud and illegal activity more. According to the DOJ, the Miami-based trio used images of fake passports and licenses to open accounts on a cryptocurrency trading website. They also used stolen personal information from other people.

As a result, in addition to bank fraud and violent identity theft, the DOJ charged all three people with conspiring to commit wire fraud. The Unit handles the case for Combating Money Laundering and Transnational Criminal Enterprises. Furthermore, Emily Deininger, an assistant US attorney, is looking into this case. However, the defendants are presumed innocent until proven guilty. The charges in the indictments are just that: charges.

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Live webinar speaker and derivatives (Forex, Crypto, and Indices) analyst with a broad range of skills for evaluating financial data, investment trends, technical analysis, fundamental analysis, and the best ways to strategies investment selection.  Expertise: Trading Psychology; Speculative Positioning & Market Sentiment; Technical & Fundamental Analysis.