Hacker behind €10 million IOTA cryptocurrency theft arrested in Oxford

A hacker suspected of being behind the theft of €10 million in IOTA cryptocurrency from 85 victims since January last year has been arrested in Oxford by the UK’s South East Regional Organised Crime Unit (SEROCU) with the cooperation of German authorities.

The hacker, whose identity has not been revealed, installed a malicious seed-generator in the official IOTA cryptocurrency website to defraud visitors to the website and used freshly-generated 81-digit seeds to gain access to the victims' wallets before transferring their money to other wallets created with fake IDs.

Malicious tool installed in IOTA cryptocurrency website

The IOTA website allows investors to generate unique 81-digit seeds to access their online wallets and carry out transactions. Taking advantage of this feature, the Oxford-based hacker installed a malicious programme on the IOTA website that generated seeds that appeared genuine to visitors but were stored in the background by the hacker.

Once visitors to the website generated fresh seeds, the hacker would later use them to gain access to the victims’ wallets and transferred their money to other wallets created with fake IDs. According to Europol, a total of 85 people were defrauded this way since January last year and lost up to €10 million in IOTA cryptocurrency in the period.

In order to nab the culprit behind the fraud, German authorities forwarded the case to the Joint Cybercrime Action Taskforce (J-CAT) hosted at Europol’s European Cybercrime Centre (EC3) which later coordinated an international effort to catch suspects behind the theft.

On Wednesday, the UK’s South East Regional Organised Crime Unit (SEROCU) arrested the 36-year old hacker from Oxford in a joint operation with the National Crime Agency (NCA), Europol, and the Hessen State Police in Germany.

The theft of cryptocurrency from exchanges has been quite rampant in the recent past, with cryptocurrency exchanges around the world reported losses of tens of millions to fraudsters. In September last year, hackers stole about $60 million in cryptocurrency from Japanese cryptocurrency firm Tech Bureau Corp by taking advantage of "lack of proper safeguards for client assets and basic anti-money laundering measures".

Copyright Lyonsdown Limited 2020