18 felonies and up to 20 years in prison! Former Microsoft employee convicted of digital currency scam

Source: CointelegraphChina

Editor's note: The original title was "Ex-Microsoft Employee Convicted of 18 Felonies for Digital Currency Fraud"

A former Microsoft employee has been convicted of 18 federal felonies related to a complex plan to misappropriate $ 10 million using cryptocurrency.

The man was a 25-year-old Ukrainian named Volodymyr Kvashuk. He has been a full-time software engineer at the company since August 2016 and was fired in June 2018.

On February 25, the U.S. Department of Justice revealed that Kvashuk was found guilty by the U.S. District Court for Seattle.

"House of Lies"

Multiple charges have revealed the complexity of Kvashuk's conspiracy, hiding plans behind a colleague-linked account and using an extensive mix of fraud and cryptocurrency services to cover his tracks.

As such, the 18 felonies include five telecommunications frauds, six money launderings, two serious identity thefts, two false tax returns, one email fraud, access to equipment fraud, and access to a protected computer to fuel fraud.

During his time at Microsoft, Kvashuk participated in testing the company's online retail platform. He used his test permissions to steal "currency stored value", such as cryptocurrency gift cards, and then resell it online to profit from it.

At first, Kvashuk received a small amount of $ 12,000 through his account, and as the theft rose to millions of dollars, he started using a test email account tied to other employees.

To further conceal his connection to the program, Kvashuk used a Bitcoin hybrid service to obfuscate the digital source of funds, which were eventually transferred to its bank account.

In seven months, approximately $ 2.8 million of Bitcoin was transferred to Kvashuk's account. He also bought some luxury items with illegal proceeds, including a $ 160,000 Tesla car and a $ 1.7 million lakeside mansion.

Kvashuk forged a tax return and lied that he received bitcoin from his family as a gift. U.S. assistant prosecutor Siddharth Velamoor said in court that its "greed crime" was "full of fraud and deception at every step."

During the five-day trial, Kvashuk claimed that he had been working on a special project for Microsoft's benefit, not to deceive the company. But his colleague and assistant lawyer, Michael Dion, called the testimony "another lie on the house of lies."

Kvashuk will face up to 20 years in prison for his crimes.

The crime was reportedly stopped by the cybercrime unit of the Internal Revenue Service's Investigations Division (IRS-CI). In response to Kvashuk's theft of information from Microsoft and the federal government, IRS-CI Special Agent Ryan L. Korner said:

"Criminals who think they can evade investigation by using cryptocurrencies and laundering money through a mixer have noticed […] you will be arrested and held accountable."

Strengthening investigations

Earlier this month, U.S. President Donald Trump's draft budget took a tough stance on crypto-related financial crimes.

This includes a proposal to merge the Secret Service with the Ministry of Finance to increase the efficiency of cyber and financial crime investigations.

The U.S. government also revealed that it will continue to invest in tools that can help the government deal with new threats, such as the use of cryptocurrencies in money laundering and terrorist financing.