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FollowingUkraine Police and National Security Service Destroy Transnational Cryptocurrency Fraud Network
On Tuesday, Ukraine's National Police and Security Service announced that they had successfully shut down a network of fake investment platforms. The gang stole cryptocurrency assets from victims in more than 20 countries around the world.
Criminal organization structure and operating model
So far, investigators have identified 62 victims, including citizens of Germany, Poland, Lithuania, Latvia, Spain, France, the United Kingdom, Canada and Israel. According to investigations, the gang's organizers recruited more than 46 Ukraine members and set up multiple offices in Kiev and surrounding areas.
The technical team is responsible for building a fake trading platform and taking measures to counter blocking attempts to ensure that the platform remains online; other members are responsible for running the office, answering phone calls and providing security services. Ukraine's security services described the organizer as a 25-year-old IT expert. At the peak of its business, the gang's monthly turnover was as high as US$1 million.
According to investigation, the fraud began on the Telegram platform, where the group promoted so-called "high-yield" cryptocurrency investment projects. After users register, they are induced to connect to their digital wallets and send funds to them, claiming to be for investment. Staff then manually falsified transaction data to display the growing balance on each customer's dashboard to induce more investment.
Financial theft and data leakage
When the victim attempts to raise the present, the request is directly refused. To "verify" the platform's proper operation, victims were asked to connect to their main wallet and approve a small test transaction. However, this authorization operation triggered a malicious program (Drainer) embedded within the website, causing assets to be transferred to wallets controlled by criminal gangs. The victim's account was then locked and no longer able to access the funds.
Investigators traced it to a server device in the Netherlands that stored the gang's database. The data obtained after the hacker invasion showed that it recorded in detail victim information, wallet address, stolen amount, internal communication records and platform operation logs. In addition, through the registration and verification process, criminal gangs also illegally collected sensitive information such as the victim's passport details, phone numbers, email addresses, login names, passwords and personal photos.
Large-scale raids and legal consequences
Uzbek law enforcement officers conducted 34 search operations in Kiev and surrounding areas, seizing more than 100 computers, more than 100 mobile phones, 79 SIM cards, a GSM gateway, a large amount of cash and 15 cars. Some vehicles and properties were registered in the names of the suspect's wife or relatives. According to reports, the organizers were protected by armed guards when they were out.
Currently, the case is being tried in accordance with Article 190, paragraph 5, of the Criminal Code of Ukraine. Police said they are still further identifying all those involved, remaining victims and the total amount of stolen funds.
Background and Significance
In June this year, Ukraine transferred more than US$8.3 million in seized USDT into state-owned wallets. This is the first time that the country has incorporated confiscated cryptocurrency into unified national management. The Royal United Services Institute (RUSI) estimates that implementing stricter regulatory rules could recover at least $10 billion in stolen funds and lost tax revenue.
