Indian Sentenced to 5 Years for $20M Coinbase Scam

Chirag Tomar, a 31-year-old citizen of India, received a five-year federal prison sentence for running a cryptocurrency fraud scheme that victimized hundreds, causing losses exceeding $20 million.

The sentencing was carried out by U.S. District Judge Kenneth D. Bell, who also imposed two years of supervised release following prison time.

Scammers Clone Coinbase to Embezzle Millions

As revealed in court records, Tomar and his accomplices perpetrated the fraud by creating a deceptive website to mimic the established cryptocurrency exchange Coinbase.

Beginning in June 2021, the group launched a phony version of the exchange’s professional trading platform, Pro.Coinbase.com, using a fabricated URL, CoinbasePro.com. Victims trying to access their Coinbase accounts were misled into divulging their login information.

One tactic involved posing as Coinbase customer service representatives to persuade victims to provide their two-factor authentication (2FA) codes. In other cases, the fraudsters instructed victims to install remote desktop software, granting them complete access to the individuals’ computers.

With the stolen credentials, Tomar accessed various victim accounts, directing funds to wallets he controlled. He subsequently exchanged the stolen cryptocurrency for different digital assets, moving them between wallets to obscure the transactions. Ultimately, the money was converted into cash and distributed among the criminal enterprise.

The 31-year-old lavishly spent the embezzled funds, acquiring luxury items such as Audemars Piguet watches, high-end cars including Lamborghinis and Porsches, and traveling to lavish locales like Dubai and Thailand.

$240,000 Theft and Apprehension

The fraudulent scheme affected individuals worldwide, including residents of North Carolina’s Western District. In February 2022, a local attempted to access their Coinbase account via the counterfeit site. The fraudulent website immediately informed them that their account was locked and prompted them to call a number to reach a fake Coinbase agent.

The fraudulent agent then manipulated them into revealing their 2FA details, which enabled the scammers to infiltrate the victim’s genuine Coinbase account. Using this information, the criminals absconded with over $240,000 in cryptocurrency from the associated wallet.

Such incidents are not unprecedented. In 2021, authorities charged Soufiance Oulahya for pilfering $450,000 in cryptocurrencies and NFTs from a victim in Manhattan by mimicking the OpenSea marketplace.

Moreover, Convex Finance was compelled to implement two new URLs after its DNS was compromised in a spoofing attack, which led users to unwittingly approve harmful contracts. Following verification of the hijack, Convex disclosed that five wallets were impacted, while confirmed contracts maintained their security.

This threat extends beyond cryptocurrency. In 2020, JP Morgan faced a nearly $1 billion fine from U.S. authorities for spoofing practices related to metals futures and Treasury securities, being implicated in the FinCEN files for allegedly laundering up to $2 trillion in “dirty money.”