US Department of Justice Indicts Cryptojacker for Alleged $3.5M Fraud Scheme
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The US Department of Justice (DOJ) had on April 15 charged Charles O. Parks III with money laundering and wire fraud after he allegedly masterminded a “large-scale illegal cryptojacking operation, which led to the loss of $3.5 million.
He was arrested on April 13 for defrauding two computing providers to mine cryptocurrencies.
US Department of Justice Prioritizes Prosecuting Bad Actors
The US DOJ indictment alleged that Charles O. Parks III, popularly known as “CP3O,” created and used multiple fake names, corporate affiliations, and email addresses, including the ones from corporate companies he operated.
Nebraska Man Indicted for Multi-Million Dollar "Cryptojacking" Scheme
Defendant Allegedly Stole More Than $3.5 Million in Cloud Computing Services In Order to Mine Cryptocurrency@NewYorkFBI @NYPDnews https://t.co/CExr2Z9FSU
— US Attorney EDNY (@EDNYnews) April 15, 2024
Parks used these fake registrations to open accounts with cloud providers and gained access to a large amount of computing processing power and storage.
The US DOJ asserts that Parks tricked providers into approving benefits and privileges, such as high levels of cloud computing services and deferred billings. It was also gathered that the defendant deflected questions regarding high data usage and unpaid subscription balances.
Investigations from the DOJ further revealed that Parks converted and laundered proceeds from his cryptojacking operations through cryptocurrency exchanges, traditional bank accounts, a non-fungible token (NFT) marketplace, and an undisclosed online payment provider.
Cryptojacking is a form of cyber attack where a bad actor covertly uses resources, such as electricity, hardware, or computing power, without permission to mine cryptocurrencies.
The DOJ accused Parks of using proceeds from the illicit crypto mining for “extravagant purchases” like an expensive Mercedes Benz, jewelry, travel expenses, and first-class hotel.
Making comments on Parks’ indictment, James Smith, the Federal Bureau of Investigation (FBI) assistant Director-in-Charge, expressed commitment to pursue bad actors.
He said,
“Criminals are becoming more adept at manipulating digital tools and hiding behind advanced technology, which often causes significant financial damage to their victims. The FBI is committed to the steadfast pursuit of those who attempt to develop innovative techniques to commit crimes.”
Meanwhile, Breon Peace, US Attorney for the Eastern District of New York, noted that the DOJ office will continue to prioritize prosecuting criminal actors that use new strategies to commit “fraud and deceit.”
If convicted, Parks could face a combined maximum sentence of 50 years as he appears in court on April 16.
The Concerning Rise of Bad Actors in the US
The US is home to many crypto firms and exchanges, including Uniswap and Coinbase.
While there has been a lack of clarity on policies guiding the sector and a spate of lawsuits against violators, crypto scams, including faux investments and money laundering, have been a major issue.
According to the 2023 FBI’s Internet Crime Report, losses from crypto investment scams in the US totalled $3.94B in 2023, a shocking increase of 53% to $2.57B in 2023.
The FBI disclosed that crypto scams accounted for the majority of online crime in 2023, which is over one-third of the $12.5 billion of total losses.
The report noted that fraudsters are now using custodial accounts opened at financial institutions for exchanges or third-party processors, or they are having targeted individuals send funds directly to these platforms, where the funds are quickly dispersed.
