Oxford PhD student convicted for defrauding $2.6 million in cryptocurrency investors

Cryptocurrency crimes are growing more frequent, and law enforcement organizations are working hard to catch criminal actors and bring them to justice.

On January 27, the British Royal Court convicted a Ph.D. student at Oxford to four and a half years in jail for a 2-million-euro crypto fraud.

Wybo Wiersma, a 36-year-old student from Goredijk in the Netherlands, established a website while attending St Cross College.

Wiersma allegedly used a bogus name to set up the website iotaseed.io, which allegedly produced private keys (seeds) according to the report. Users can exchange IOTA using passwords (seeds) that he convinced were random 81-character strings. IOTA is a cryptocurrency that may only be accessed with passwords known as seeds. Users with the "seeds" can receive and send IOTA. However, Wiersma's website and promises were all a ruse designed to dupe naive consumers.

The Crypto Scam

According to sources, Wybo Wiersma convinced customers that the seeds on his website were generated at random, but the keys were planned. He made it feasible by putting malicious code on the website. Wiersma could utilize the malicious software to access each user's "seeds" when they carried out transactions and steal monies into his own account.

On January 19, 2018, Wiersma transferred the stolen cash to Bitcoin and Monero, an altcoin, on the cryptocurrency market Bitfinex. The assets were initially valued around $11 million, however the IOTA foundation and impacted crypto exchanges recovered a portion of the cash after banning Wiersma's accounts.

While this activity was taking place on Bitfinex, the cryptocurrency exchange got suspicious of the scammer's accounts and froze them. Bitfinex required Wiersma to authenticate himself before unfreezing his accounts, which he did by showing images of two fraudulent passports. One of the Belgian passports did not accurately indicate the nation listed on the paper. The other was a photograph of a man named Jason, who was carrying an Australian passport.

Because Bitfinex was unable to identify the account owners, the funds remained frozen, prompting Wiersma to switch to another exchange. Wiersma proceeded to Binance and registered five accounts, all of which were frozen, prompting him to present yet another forged British ID.

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Justice Served

In 2018, multiple victims reported stolen money to German and UK police using the website iotaseed.io. The police traced the crime to the United Kingdom and turned over the investigation to the South East Regional Organised Crime Team's cybercrime unit.

After connecting all of the blocked funds to a VPN that he used to access his Bitfinex account, this agency was able to trace the schemes back to Wiersma. Authorities then found four other exchange accounts used by the fraudster to collect stolen cash.

Following the finding, British authorities raided his Oxford residence in January 2019 and followed the movements on his desktop computer. Wiersma had already dropped out of his Ph.D. program at St Cross by that point. Even though there was proof against Wiersma, he disputed the claims, claiming that his computer had been hacked.

When the authorities questioned Wiersma about his malicious website, he too refused to answer. Due to a lack of hard proof, the police withdrew all accusations against him, and he returned to the Netherlands.

However, the police maintained their investigation until they traced Wiersma's VPN to a Bitcoin payment, which he used to construct the seed-generating website. On December 24, 2020, detectives seized his laptop, six hard drives, a memory card, and two USB sticks before arresting him.

As of January 27 2023, Wiersma was sentenced to four and a half years in jail by the Oxford Crown Court after pleading guilty.

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Sources:/Bitcoinist/; /Reuters/