At a time when confidence in Bitcoin has grown exponentially, venture capital investors and regulators are showing widespread interest and security has increased tremendously since the dark days of last year’s wildly varying values and vast losses as the downfall of MtGox early this year consumed client funds, the less than salubrious side of Bitcoin has reared its head again.
Yesterday morning, at Ben Gurion International Airport on the outskirts of Tel Aviv, Israel, a 34 year old suspected fraudster from Mexico was arrested for the alleged crimes of extortion and ransom, amounting to several million dollars.
The State of Israel’s Police unit 433, which specifically tackles internet-related criminal activity, began an investigation against this particular individual several months ago, according to a report in Hebrew by Israeli news source ynet.
Israel is among one of a few technologically advanced nations with a highly organized financial markets economy which has embraced Bitcoin. Tel Aviv, one of the world’s most prominent technology development hubs, has a vibrant Bitcoin technology scene, with many meetups held at the Google Campus. The city is also home to the very first Bitcoin ATM in the Middle East, which was set in place earlier this year.
The investigation into the activites of the accused, who has not yet been named by Police, discovered that this particular suspected fraudster used darknet file sharing, which is an anonymous private network where connections are made only between trusted peers — sometimes called friends — using non-standard protocols and ports whereby IP addresses are not publicly shared, to break into computers from his residence in Mexico and steal insider information from companies.
The Police also allege that the accused also attempted to obtain ransoms from company owners, which amounts to an example of blackmail on the basis that if company owners did not oblige, he would disseminate the information, therefore causing them harm.
In return for not publishing the ransom, the alleged fraudster demanded payment in Bitcoin amounting to several million dollars. Police began an undercover investigation following a complaint filed, which also included Police impersonation on the same network to try to catch the frausdter. Eventually he was located, with the police then proceeding to pursue him until he was caught at Israel’s national airport yesterday morning and arrested.
A significant event that led to the capture of this transgressor was that Israeli Police recently found out that his wife is expected to come to Israel to give birth to a son. Then it became clear that he would come to the event and subsequently the very same morning that he landed in Israel, the Police were waiting for him. They took him immediately to into custody, subsequently resulting in his requirement to appear at a remand hearing at the Magistrates Court in Rishon Lezion, a suburb of Metropolitan Tel Aviv.
The investigation continues, however if found guilty, extortion and blackmail, even if demanding a virtual currency from victims, is a serious matter and may land the alleged in jail for a substantial amount of time.