Hamilton teen accused of stealing more than $45M in cryptocurrency pleads guilty
Posted June 24, 2022 2:07 pm.
Last Updated January 26, 2023 11:33 am.
A teenager from Hamilton, who was arrested in one of the largest cryptocurrency thefts of all time, has taken a plea deal.
Friday’s development wraps up the case which has spanned more than two years and one CityNews has been following closely.
It was February of 2020 when billionaire Josh Jones, who lives in Los Angeles, noticed his cell phone had been targeted in a SIM swap attack. A SIM swap is when someone tricks cell phone providers in order to gain control of your cell phone and all of its contents.
“What a SIM swap would be is basically moving the subscriber account to a different device,” said Ryk Edelstein Founder, President and C.E.O. of 5-L Technologies in Montreal.
After noticing his cell phone wasn’t working properly, Jones also discovered that $45 million worth of Bitcoin he had stored in a wallet on that phone had been stolen.
He alerted Los Angeles Police who brought in the F.B.I. and the U.S. Secret Service to investigate. But the case was cracked by an outside agency, located more than 500 Kilometres from L.A.
“We were not the lead agency in this case but we started receiving tips about this crime,” said Detective Samy Tarazi with the Santa Clara District Attorneys office in San Jose, CA. At the time of the crime, Tarazi worked for the county’s R.E.A.C.T. unit.
R.E.A.C.T. stands for the Regional Enforcement Allied Computer Team. By February of 2020, it had already solved several sim swap and crypto thefts.
“Because we had this notoriety for solving these types of cases, people often come to us with information or tips on similar crimes outside our area,” Tarazi told CityNews.
Tarazi and his team were tipped off that someone bought the PlayStation username or PSN, “God.”
“The tipsters indicated that the person who pulled off this heist bought that username so we looked into it.” Tarazi said.
Because PlayStation connects to the internet, investigators were able to track IP addresses to get a physical location of the person who was using the username.
“And that lead us to the suspect living in Ontario, Canada.” Tarazi said. More specifically, Hamilton, Ontario.
At this point, the suspect and a friend, who he had asked for help, were staying at different hotels in hopes of throwing off investigators.
CityNews spoke exclusively with the suspect’s friend.
“He (the suspect) asked me to go along with him and put my name on hotel rooms after the sim swap due to the fact that he was only 17 and I was 20,” the friend said, whose name CityNews is protecting.
“He told me, after the SIM swap, that he thought he got only $1 million. But when he looked at the total amount and saw it was $45 million, he panicked.” the friend said.
The duo bounced around between three different hotels in Hamilton before settling in an apartment on Fieldgate Drive in Mississauga.
“There was no indication that we were going to get arrested,” the friend told CityNews.
The two were roaming free for about three months. The friend said the suspect was spending his newfound wealth on crypto gambling websites but nothing big or elaborate.
“We mainly spent our time playing video games and ordering food, there was nothing fancy about it,” the friend said.
Then, one early morning in May of 2020, three months after the SIM swap, the duo got a rude awakening.
“Hamilton police stormed into our apartment, they told me to get on the ground and asked who was in the apartment with me,” the friend explained. “I told them the suspect was with me and they said that’s who they were looking for.”
The suspect was arrested without incident and taken into custody. The friend was not arrested and is not facing any charges in connection to this crime.
“I told the police everything.” The friend said. “I was a bit relieved this was over.”
The friend said police recovered computers, cell phones and at least one hard drive that contained some of the stolen bitcoin but, as of November 2021, only $7 million of the $45 million stolen has been recovered.
So where is the rest of it?
“The detectives can figure out which wallet it’s in. They just don’t know who owns it. And that’s the whole thing about cryptocurrency. It’s largely anonymous so the identity of the wallet owner is not written on the wallet,” Edelstein said.
“Some of the stuff they spent money on is unrecoverable, like buying usernames on PlayStation or going to a club and buying bottle service,” Tarazi said. “That’s just money we may never recover and they’re spending hundreds of thousands of dollars that way. So it’s important how fast the cops realise something was stolen, how fast they catch it.”
It’s likely the investigation to find where the rest of that money is continues.
On Friday, more than two years and a month after the raid, the suspect, who is now 19, appeared in Hamilton court to plead guilty to theft of over $5,000. He will not be serving any more jail time but will be on probation for one year.
“We have a prosecution to prove that they stole this money and a judicial system that determines what’s fair for a punishment. How many years in prison is fair?” Tarazi said.
But in the end what’s more important, jail time or recovering the rest of the stolen funds?
“The victim just wants their money back more than anything.” Tarazi said. Only time will tell if that happens. Jones did not reply to numerous requests for comment.