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Nigerian fraudsters used Bitcoin and Gemini exchanges to suck up millions

July 12, 2020

The two Nigerians, who filled their Instagram accounts with pictures of their magnificent wealth, were delivered from Dubai to the USA.. According to the FBI, they were able to convert millions of dollars into Bitcoin (BTC) on the Gemini exchange.

Transaction summary for Bitcoin address 16AtGJbaxL2kmzx4mW5ocpT2ysTWxmacWn. Source: crystal block chain

Summary of transactions for the 16AtGJbaxL2kmzx4mW5ocpT2ysTWxmacWn Bitcoin address. Source: crystal block chain

Nigerian fraudsters used Bitcoin and Gemini exchanges to suck up millionsNigerian fraudsters used Bitcoin and Gemini exchanges to suck up millions

The two people are Olalekan Jacob Ponle, also known as “Mr. Woodbery” and “Mark Kain”, and Ramon Olorunwa Abbas, who used the aliases “Ray Hushpuppi” and “Hush”.. The FBI’s lawsuit focused on its activities and how it used Bitcoin to transfer the stolen funds.

Compromised corporate email: 1,500 BTC

According to the FBI, Ponle and his accomplices participated in a program called the Corporate Email Compromise (BEC). A criminal would have access to a legitimate business email account and then manipulate company employees to transfer corporate funds to the criminal’s bank account. The lawsuit alleges that Ponle and his accomplices cheated US companies for tens of millions of dollars and converted $ 6.5 million to 1,500 BTC:

“Preliminary blockchain analysis shows that PONLE has received at least 1,494.71506296 bitcoins related to these BEC schemes, which were worth approximately $ 6,599,499.98 at the time of sales.”

The lawsuit states that it is clear that Ponle was not particularly concerned about covering his tracks on the Bitcoin network since he has used the same address (16AtGJbaxL2kmzx4mW5ocpT2ysTWxmacWn) since 2014, although the lawsuit focuses only on his illegal activity in 2019 .

Exchange twins

Twins were the criminals’ favorite exchange. This may seem surprising when you consider that the exchange is one of the most formal in the industry. However, this choice can probably be explained by the fact that the defendant needed a US-based exchange for companies.

On February 15, 2019, the Ponle employee confirmed that $ 2,149,000 was successfully deposited with Gemini and converted to BTC.

A discussion between Ponle and his employee about the transaction on February 15, 2019

A discussion between Ponle and his employee from the transaction on February 15, 2019

These transactions, when tracked on the Bitcoin blockchain, totaled 340 and 261 BTC, for a total of 601 BTC. At that point, the price of Bitcoin was around $ 3,500.

Two Bitcoin transactions from Gemini are exchanged at Ponle's address. Source: crystal block chain

Two Bitcoin transactions from the Gemini exchange to the Ponle address. Source: crystal block chain

The FBI infiltrates Ponle’s inner circle

Another transaction took place on January 17, 2019, when Ponle’s accomplice converted USD 119,000 to 33.13 BTC. The FBI lawsuit incorrectly states 3.13. This transaction came from an unknown address, but is only a stone’s throw away from another American stock exchange: Kraken. The latter is not mentioned in the complaint.

In July, the FBI was able to infiltrate Ponle’s inner circle when an agent began communicating online with Ponle using the same identifier that was previously used by one of its employees. On September 9, 2019, Ponle and his colleague discussed about converting $ 5 million into Bitcoin.

A discussion between Ponle and his employee on Sept. 9, 2019 transaction

A discussion between Ponle and his employee about the September 9, 2019 transaction

Unknown to Ponle this time, it was an FBI agent on the other side of the conversation. Although not stated in the lawsuit, this transaction probably never took place, since no related transaction can be identified with the “16AtGJ BTC Wallet”.

Payment through LocalBitcoins and Huobi

While Gemini was the exchange of choice to convert the stolen Fiat to Bitcoin, LocalBitcoins and Huobi were the preferred options for charging. According to Crystal Blockchain, 577 BTC were settled by the former and 539 BTC by the latter. Both platforms have been criticized in the past for lax KYC processes.

Ponle and his colleague Abbas lived a life of sumptuous wealth and showed their newly acquired fortune on Instagram. In one of his last posts, Ponle warned his followers of the guilt associated with wealth:

“YOU WORTH THE PLEASURE OF YOUR WORK 💙 Stop being guilty of people for the wealth you have earned, especially if you paid with blood, sweat, and tears because you have things that are” buying ” be valid.” “”

Put your Instagram post. Source: Instagram

Ponle’s Instagram post. Source: Instagram

Now the court will determine your guilt.

Gemini declined to comment on the situation, although her spokesman, Cointelegraph, said the exchange uses chain analysis to monitor risks.

The FBI rejected Cointelegraph’s request for comment.