A Hamilton man has been imprisoned for one year in the U.S. after pleading guilty to a 2022 cryptocurrency theft spree that targeted as many as 200 people and netted more than $1 million Cdn.
His latest thefts occurred while he was on bail for a separate crime he committed as a teenager — when he stole $48 million from a single person in a single day — one of the largest thefts in Canadian history.
U.S. prosecutors for the 2022 crimes described the man as a “serial online fraudster” who chose to “immerse himself in the world of cybercrime,” according to court documents.
His U.S. defence team characterized him as “largely raised by the internet” — an escape during his turbulent upbringing in Ontario, and where he gained attention and admiration through virtual relationships.
He was “a psychologically vulnerable teenager desperate to be seen, accepted and valued” when he committed the crimes, his lawyers said in a document filed in a Virginia court.
CBC Hamilton cannot name the man as he was charged and convicted as a minor in Canada for the 2020 theft and his identity is protected under the Youth Criminal Justice Act.
He was 17 when he stole the $48 million in cryptocurrencies from American dot-com entrepreneur Josh Jones.
Crown details how theft was pulled off
In a Hamilton court in 2022, Crown attorney Fraser McCracken told Ontario Court Justice Joe Fiorucci that the teen had pulled off the theft by using what’s referred to as a SIM swap.
He had called Jones’s cellphone provider and convinced a customer service agent to change the SIM card associated with Jones’s phone number, McCracken said, referring to a statement of facts agreed to by the defence.
The SIM swap redirected texts — including for two-step authentication — to the teen, allowing him to change passwords and gain access to accounts, including Jones’s online wallet. In it, he found the tens of millions of dollars worth of cryptocurrency, which he transferred to his own accounts and later laundered, said the Crown. Where most of the crypto went remains unknown.
“It goes without saying this is an astonishing theft,” said McCracken. “It is likely one of the largest cryptocurrency thefts in Canadian history.”
After the theft was discovered, the U.S. Federal Bureau of Investigation (FBI) and Hamilton police launched a joint investigation.
One clue that linked the teen to the crime was the purchase of the PlayStation Network moniker “God,” said McCracken.
Days after Jones’s cryptocurrency was stolen, the highly sought-after username was purchased from another user for about $30,700 worth of bitcoin. That bitcoin was traced back to what had been stolen from Jones.
When police executed a search warrant on the teen’s home a few months later, they seized a PlayStation with the God username linked to it.
Teen apologized to court, but kept stealing
The teen was arrested in May 2020, charged with theft over $5,000, and spent a year in pretrial custody — “a significant sentence for a young person,” McCracken said. He was released on bail in May 2022.
His Canadian defence lawyer, Luka Rados, described him as a “thoughtful, intelligent, mild-mannered kid” who was raised by a single parent who struggled to provide for him. He suffered from anxiety and low self-esteem, and didn’t have a lot of friends, except online.
“If there’s a silver lining to any of this, the arrest has been a massive wake-up call,” Rados said in court. “There’s a burning desire on [his] part to make things right … This is him growing up.”
Ottawa police say once money is invested in fraudulent cryptocurrency sites, it’s likely gone.
The teen apologized to the court for his actions. He was sentenced to a year of probation and ordered to pay back what authorities could track down — about $2.5 million.
“I’ve truly taken this time to reflect on my actions and learn from my mistakes,” he said. “I intend to move forward only in a positive direction and I thank the court for allowing me to do so.”
Behind the scenes, though, he continued to steal crypto.
While he was released on bail and being sentenced in Hamilton, he orchestrated another scheme, working with others to bilk X users, said the U.S. lawyers. They’d persuade X representatives to change email addresses on popular accounts with hundreds of thousands of followers.
CBC attempted to reach X for comment, but no response was received by publication.
The group the teen was involved with would then be able to change the account passwords, gain access and pose as the account holders. They’d post from those accounts about raffles or contests with links to fraudulent websites that were designed to gain access to victims’ crypto wallets.
He took part in these crimes until July 2022, while living alone in his father’s basement and using “dangerous narcotics” he was introduced to in juvenile detention, said his American defence lawyer, Stuart Sears, in a document filed with the court this summer.
He was also living with mental health conditions, with no order for him to continue treatment after jail, Sears said.
Man ‘painfully aware’ of his error, lawyer says
As part of his U.S. sentence, he was ordered to pay about $320,000 Cdn in restitution — a “conservative estimate” of the losses from two of the hundreds of victims,” said the U.S. lawyers. He was also ordered to pay a fine of nearly $83,000.
After he is released from jail next year, he will likely be deported back to Canada.
This time will be different, said Sears.
“He is now a young man who is painfully aware of the errors in his prior judgment and thinking,” Sears wrote. “And for the first time, he understands what it is that he stands to lose.”
