Hamilton teen banned from crypto for a year after hacking $48-million from ‘bitcoin pioneer’

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A Hamil­ton teen who stole $48-mil­lion in cryp­tocur­ren­cy from a U.S. entre­pre­neur – what police say was the biggest such hack of a sin­gle vic­tim – will spend no fur­ther time in cus­tody but has been banned from han­dling dig­i­tal assets for a year.

The young man, who was 17 at the time of the offence in 2020 and can­not be named under Canada’s Youth Crim­i­nal Jus­tice Act, had reached a deal with pros­e­cu­tors and was hand­ed a one-year pro­ba­tion Fri­day with the con­di­tion of not trans­act­ing in cryp­tocur­ren­cy dur­ing that period.

The inter­na­tion­al case spanned mul­ti­ple agen­cies, includ­ing the U.S. Fed­er­al Bureau of Inves­ti­ga­tion and Secret Ser­vice, and high­lights the unique secu­ri­ty issues and increas­ing promi­nence of dig­i­tal assets in today’s online world.

The teen plead­ed guilty to one count of theft over $5,000. In a joint sub­mis­sion accept­ed by Jus­tice Joe Fioruc­ci in a Hamil­ton court, the defence and pros­e­cu­tion rec­om­mend­ed no jail time – part­ly due to the year the young man had already spent in custody.

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Defence lawyer Luka Rados told the court his client has strug­gled with anx­i­ety and oth­er men­tal-health issues and has had to drop out of tra­di­tion­al school. But he is now poised to com­plete high school and wants to even­tu­al­ly work in cybersecurity.

“Some­one hav­ing been involved in a mas­sive cryp­tocur­ren­cy hack now becom­ing a secu­ri­ty expert is a fit­ting way for this case to come full cir­cle,” Mr. Rados said.

The teen, who has been out on bail, appeared before the court remote­ly, with the com­put­er screen turned away from the pub­lic. He apol­o­gized direct­ly to the vic­tim – entre­pre­neur and investor Josh Jones of California.

“I intend to move for­ward only in a pos­i­tive direc­tion,” he said.

The court heard that it was pos­si­ble the young man had worked with anoth­er per­son, but it was unclear if author­i­ties were pur­su­ing the mat­ter further.

About 94 bit­coins, worth rough­ly $2.5‑million, would be returned to the vic­tim. It remains to be seen how much of the $48-mil­lion can be recovered.

Hamil­ton police announced in Novem­ber that they had arrest­ed the teen for a so-called “SIM swap” attack, in which per­pe­tra­tors trick telecom­mu­ni­ca­tions com­pa­nies into port­ing over vic­tims’ cell­phone num­bers to SIM cards they con­trol. Access to a cell­phone num­ber fre­quent­ly grants access to oth­er accounts, includ­ing e‑mail, whose log-ins are often depen­dent on two-fac­tor, text-mes­sage authentication.

Per­pe­tra­tors are often young men who spend a lot of time in insu­lar online cul­tures. They some­times steal short or one-word user­names, which sig­nal ear­ly adop­tion and can both com­mand clout and sell for thou­sands of dol­lars. They also some­times fish for pass­words to cryp­tocur­ren­cy, whose trans­ac­tions are con­sid­ered irreversible.

Often, though, SIM swap­ping tar­gets celebri­ties and is done pure­ly for fun.

The Hamil­ton teen has no pri­or crim­i­nal record. But he had been SIM swap­ping since at least 2016 and has con­nec­tions to many high-pro­file hack­ers, accord­ing to his chat logs, which The Globe and Mail obtained from a con­fi­den­tial source.

The Globe is not nam­ing the source because they were not autho­rized to dis­close that information.

Details of the young man’s back­ground were first report­ed by Toron­to Life.

Fam­i­ly court files show he was brought up large­ly by his moth­er after his par­ents sep­a­rat­ed amid finan­cial issues.

Mr. Rados said Fri­day that the case had a “sil­ver lin­ing”: the young man’s renewed rela­tion­ship with his father, who had moved away. “After [the teen] was charged and found him­self stuck in cus­tody, [his] dad took it upon him­self to move back to Ontario, bail out his son and be there as a father.”

The vic­tim in the case, Mr. Jones, was an ear­ly investor in Bit­coin and has had his hands in web host­ing, avi­a­tion and ani­ma­tion. A pod­cast describes him as the “rich­est, goofi­est, most con­fi­dent yet nor­mal-seem­ing per­son who was a Bit­coin pioneer.”

The court heard that the Hamil­ton teen took con­trol of Mr. Jones’s phone num­ber on the T‑Mobile net­work, broke into his e‑mail and was then able to access his cryp­tocur­ren­cy wal­let on Blockchain.com.

Hamil­ton police, which ini­tial­ly pegged the stolen amount at $46-mil­lion, said the young man was iden­ti­fied as the hack­er after the stolen cryp­tocur­ren­cy was used to buy a user­name con­sid­ered rare in the gam­ing com­mu­ni­ty and linked to an address. The Globe’s source iden­ti­fied the PlaySta­tion Net­work user­name as “God.”

Mr. Rados told the court the ensu­ing arrest was “high­ly dynam­ic” and “aggres­sive,” with police kick­ing in the teen’s door. “The mem­o­ry of that night is burned into the teen’s mind and has been the cause of some post-event stress.”

Hamil­ton police have declined to elab­o­rate on the heavy-hand­ed response for a non-vio­lent offence.

Records obtained from anoth­er police force via a Free­dom-of-Infor­ma­tion request show the young man had been the tar­get of at least one “swat­ting” attempt, in which a prankster calls in a false threat at some­one else’s address to elic­it a response from a tac­ti­cal team. Peo­ple are some­times swat­ted as a result of dis­putes in online circles.

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