Police hunt for four men in alleged $195,000 Bitcoin fraud

Canadian crypto firm HoneyBadger hit with 'double-spend' fraud

Wanted men in Bitcoin fraud
Images of four men sought by police in connection with a $195,000 Bitcoin fraud. Courtesy Calgary Police Service

Calgary police are looking for four men in connection with a large Bitcoin scam that has a Toronto connection.

According to police, the men targeted Bitcoin ATMs in seven Canadian cities with “double-spend attacks,” making off with $195,000.

A double-spend attack involves the withdrawal of funds from a Bitcoin ATM, followed by the immediate cancellation of the transaction. The culprit gets the money before the company can process the cancellation.

The machines belonged to HoneyBadger Inc., one of Canada’s largest Bitcoin ATM networks.

Calgary police began investigating the case in October 2018, when they first learned of the scam. They have since reached out to law enforcement agencies across the country.

Police said there were 112 fraudulent transactions made between Sept. 16 and Sept. 26, at machines in seven Canadian cities. The criminals hit HoneyBadger machines in Calgary, Toronto, Hamilton, Montreal, Ottawa, Winnipeg and Sherwood Park, Alta.

The Toronto ATMs are located in a building near Spadina Avenue and King Street West, and at Dufferin Mall.

Location of the two ATMs in Toronto hit with double-spend scam.

Const. Darrin Chaplin of the Calgary Police Service’s cybercrimes team said he suspects the individuals were organized and working together because the operation required technical know-how and the ability to target machines from the same company multiple times.

“A double-spend scam requires specific knowledge to perform,” said Chaplin. “It’s not like The Anarchist Cookbook; you can’t turn a page and learn how to build a Molotov cocktail.”

When asked why HoneyBadger machines were hit, Chaplin said he believes it had to do with accessibility.

“They have locations across the country.”

Andrew Johns, founder of HoneyBadger, recently tweeted about the investigation, suggesting that the fraud nearly bankrupted the company.

There’s been lots of bad news in recent weeks for fans of the cryptocurrency, including the recent Quadriga Fintech Solutions Corp. scandal, in which the sudden death of the Canadian company’s CEO reportedly left about $200 million of investor Bitcoins locked up in password-protected accounts. Quadriga was believed to be Canada’s largest cryptocurrency exchange.

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Posted: Mar 14 2019 3:14 pm
Filed under: Business News