A former Microsoft engineer was sentenced to nine years in prison for an elaborate, multimillion-dollar criminal scheme involving bitcoin and digital gift cards.
Theft using colleagues' accounts
A Ukrainian citizen named Volodymyr Kvashuk, 26, was convicted by the United States District Court in Seattle for 18 federal crimes related to his plan to defraud Microsoft (Nasdaq shares) for more than $ 10 million.
Kvashuk was a Microsoft employee from August 2016 until June 2018, when the company was busy running a test for an online retail platform. In this context, he used his colleagues' accounts to steal "currency stored value" (CSV), ie digital gift cards.
He then resold that value online and used the proceeds to maintain a luxurious lifestyle with a $ 1,6 million home and a $ 160.000 Tesla car. After a small sum of $ 12.000 in CSV initially obtained using his own email account, Kvashuk switched to email accounts belonging to colleagues to create confusion around the increasing thefts.
Kvashuk then used a bitcoin mixing service, attempting to hide the source of the incoming funds in his bank account. Kvashuk must now return more than $ 8,3 million, including the value of the CSV redeemed by third parties who had purchased stolen Microsoft gift cards.
The software giant was able to stop the theft of an additional $ 1,8 million in CSV for a total of more than $ 10,1 million, according to a court memorandum filed November 2 in Washington's Western District.
"Bitcoin will not cover your crimes"
Thanks to his criminal operations, Kvashuk saw a sum of $ 2,8 million in bitcoin transferred to his bank and investment packages within seven months. He then filed false tax returns, claiming that the bitcoin sum was a legacy of a family member, according to the department's statement and court records.
The defendant was then convicted of two counts for filing false tax returns and for postal fraud, fraud with access devices and access to a secure computer in support of the fraud.
In February, Kvashuk was also convicted by a jury on five counts of computer fraud, six for money laundering and two for aggravated identity theft. The sentence ends a trial that lasted 16 months.
"Kvashuk's criminal acts of stealing Microsoft, and subsequent filing of false tax returns, are the nation's first bitcoin legal case that has a tax component," said Ryan Korner, IRS special agent. "Today's ruling is proof that you cannot steal money on the Internet in the belief that bitcoin will hide your criminal behavior.", He added.
