Cryptocurrency crimes are becoming prevalent and law enforcement agencies are on their toes to crack down on bad players and bring them to book. 

The British Royal Court recently sentenced a Ph.D. student of Oxford to four and half years in prison for a 2 million euro crypto scam on January 27.

The 36-year-old student named Wybo Wiersma, a native of Goredijk in the Netherlands, created a website when he was studying at St Cross College.

According to reports, Wiersma used a false name to set up the website iotaseed.io, which supposedly generated private keys (seeds). The passwords (seed), which he convinced users were random 81 characters, allow users to trade IOTA. Iota is a cryptocurrency that users can only access using passwords they call seeds. Users who have the “seeds” can receive and transfer IOTA. But his website and claims were all a scam targeting unsuspecting users. 

Details of The Crypto Scam

According to Julian Christopher KC, Wybo Wiersma convinced users that his website generates the seeds randomly, but in reality, the keys were predetermined. He made it possible using malicious codes which he wrote on the website. With the malicious codes, Wiersma could access each user’s “seeds” when they carry out transactions and hijack funds into his private account. 

Subsequently, Wiersma converted the stolen funds to Bitcoin and Monero, an altcoin, on the crypto exchange Bitfinex on January 19, 2018. The funds were worth about $11 million initially, but the IOTA foundation and affected crypto exchanges recovered part of the funds after blocking Wiersma’s accounts.

While this activity went on Bitfinex, the crypto exchange became suspicious of the scammer’s accounts and froze them. Bitfinex demanded that Wiersma identify himself before they could unfreeze his accounts, to which he complied by presenting photographs of two fake passports. One of the passports from Belgium did not correctly outline the country stated in the document. The other was a photogram of a so-called Jason holding an Australian passport.

Since Bitfinex could not identify the account owners, they remained frozen, leading Wiersma to migrate to a different exchange. Wiersma went to Binance and opened five accounts, which also got frozen, leading him to provide another fake British ID. 

Justice Finally Prevails Against Crypto Scammer, Wybo Wiersma

In 2018, several victims reported the website name iotaseed.io to the German and UK police for stolen funds. The police tracked the crime to the UK and handed the case over to the South East Regional Organised Crime Unit’s cybercrime unit. 

This agency traced the scams to Wiersma after linking all the frozen funds to a VPN, which he used to access his Bitfinex account. The authorities later discovered four other exchange accounts that the scammer used to receive stolen funds.

After the discovery, in January 2019, the British police raided his apartment in Oxford and tracked the activities on his desktop computer. By then, Wiersma has already dropped out of his Ph.D. program at St Cross. Even with evidence against Wiersma, he denied the allegations, saying his computer was hacked. 

Wiersma also refused to comment when the authorities questioned his malicious website. Without concrete evidence, the police dropped all charges against him, after which he returned to the Netherlands.

However, investigations continued till the authorities linked Wiersma’s VPN to a Bitcoin payment, which he used to create the seed-generating website. The investigators also accessed his laptop, six hard drives, a memory card, and two USB sticks and arrested him on December 24, 2020.

After prolonged detention and trials, the Oxford Crown Court sentenced Wiersma to four and half years in prison after he pled guilty on January 27.