Fake Coinbase website leads to $20M fraud, 5-year sentence

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As a researcher with a background in cybersecurity and financial crimes, this case of Chirag Tomar serves as a stark reminder of how new technology can provide fertile ground for age-old scams. I’ve seen my fair share of fraudsters exploiting the trust of unsuspecting victims, but the scale at which Tomar operated is truly astounding.

Chirag Tomar, a resident of India, was given a five-year prison sentence due to his actions of deceiving users of Coinbase by creating fake websites that mimicked the real cryptocurrency exchange. This information was announced by the U.S. Attorney’s Office for the Western District of North Carolina. Previously, in May, Tomar admitted guilt to conspiring in wire fraud.

Fake website, real losses

A group led by Tomar falsely duplicated the Coinbase Pro website for deceitful purposes, using it to swipe user log-in details and authentication info. On certain occasions, they directed users to bogus customer service agents who successfully persuaded victims to grant remote computer access under false pretenses.

The result in either case was the loss of the cryptocurrency in the victims’ Coinbase accounts. In one incident, the victim, located in western North Carolina, lost over $240,000.

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Tomar was active as early as June 2021 and was arrested in December 2023. His scheme raked in more than $20 million from hundreds of victims worldwide, according to a Department of Justice statement. Furthermore: 

“Tomar used the victims’ funds to pay for his lavish lifestyle, including to purchase Audemars Piguet and other expensive watches, to buy luxury vehicles like Lamborghinis and Porsches, and to make trips to Dubai, Thailand and elsewhere.”

Initially, the Justice Department calculated that losses from Tomar’s actions amounted to approximately $37 million. He was potentially looking at serving 20 years in prison and paying a fine up to $250,000. The names and outcomes of Tomar’s fellow conspirators remained undisclosed.

Eventually, the Coinbase Pro platform was shut down and its features were merged into the primary Coinbase website.

New technology, familiar techniques

The crypto space offers bad actors ample opportunities for crime. Although there are risks unique to crypto, many times old and familiar scams are equally fruitful.

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Last September, impostors pretending to be representatives from the Gemini cryptocurrency platform managed to swindle approximately 4,100 Bitcoins (valued at around $230 million) from a resident of Washington D.C.

In October, judgments were issued in New York and Nevada regarding two separate Ponzi schemes. A sentence was handed down in New York for a $3.6 million scheme, while an 86-year-old individual received probation for a $14 million scheme in Nevada.

 

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2024-10-18 20:25