Californian Crypto Startup Falls Victim To $14M Hack, Two Men Arrested 10

Californian Crypto Startup Falls Victim To $14M Hack, Two Men Arrested

Two Men Arrested In Connection To Crypto Theft And Hack

According to a report from Oklahoma News 4, two men have just been arrested due to their connection to the recent hack of a crypto and blockchain startup, which saw a California firm lose millions of dollars worth of crypto assets. As per the aforementioned local media outlet, Missouri residents Fletcher Robert Childers, 23, and Joseph Harris, 21, were simultaneously arrested by municipal police on Monday under suspicions of having committed a criminal act against Crowd Machine, a lesser-known, but up and coming crypto project.

Along with reportedly hacking the California-based startup, Childers and Harris were also arrested due to cases of grand theft and identity theft that were tied to the duo. Since the two were arrested by local police, Childers has posted a bail bond and is no longer in custody of the authorities, while his partner in crime, Harris, is still sitting in his cell due to his inability to procure a bond.

So what sparked this arrest? You may ask.

Well, according to recently filed court documents, the now-infamous duo are two primary suspects in the aforementioned $14 million case of theft, that saw San Jose-based Crowd Machine lose access to its cryptocurrency wallets on September 22, which is presumably when the duo struck. According to legal papers, Crowd Machine believes that the Missouri crooks used a SIM card swap.

SIM swapping, as the act has been dubbed, has quickly become one of the primary modes of attacks on consumers (especially crypto investors), as it allows hackers to steal a person’s mobile number, identity, and access to certain accounts through social engineering. In this case, as pointed out by an official Crowd Machine post, it has become apparent that this hack was used to compromise the firm’s wallet and drain millions of Crowd Machine Compute Tokens (CMCT). In fact, considering that the company had one billion CMCT in reserves following its ICO, it is clear that this amassment of crypto was stolen and transferred to exchanges en-masse to be sold.

In the same announcement, the San Jose firm revealed that it had advised exchanges to stop trading CMCT due to the influx of essentially ‘non-released’ CMCT tokens, while also recommending blog readers to not purchase the tokens until the ongoing investigation was completed.

Speaking on the unfortunate occurrence, Craig Sproule, the CEO and Founder of Crowd Machine told News 4 about his firm’s stance:

The criminal investigation is ongoing so we’re not in a position to comment other than to confirm that two arrests have been made. We’ve been working closely with law enforcement agencies to help with the ongoing investigation.

According to a search warrant affidavit that alluded to how far the legal case has progressed, it was added:

The victim, who had $14 million stolen by the occupant of the hotel room has also been receiving taunting e-mails from the suspect. The suspect is also actively laundering the cryptocurrency through several different exchanges, some of which are not located in the United States.

It is unclear how this case will progress, but due to the fact that the primary suspects are in custody, it can be assumed that Crowd Machine and authorities are doing everything in their power to reclaim the lost funds and to bring the apparent criminals to justice.

Photo by Charl van Rooy on Unsplash