Two Israeli brothers have been arrested in connection with a cryptocurrency scam involving “tens of millions” of dollars. Jerusalem-based Eli and Assaf Gigi were involved in a scheme were they accessed traders’ wallets and took the coins for themselves, Finance Magnates reports.
The brothers are also reportedly suspected by investigators of links to the 2016 Bitfinex exchange hack. The incident led to the loss of around $65 million in bitcoin in 2016. A police spokesperson refused to further discuss the link with the publication.
According to Posta, the brothers gained access to wallets through a simple phishing scheme. They posted in groups on the secure messaging app Telegram with links to supposed cryptocurrency trading sites. The web links, which imitated legitimate wallets, tricked traders into handing over their private information. The brothers used the details to gain access and transfer the cryptocurrency to their own accounts.
Although it was originally reported that the brothers obtained around $100 million, the figure was later reported to be in the “tens of millions.” However, investigators warned that the investigation first started in 2017, and more details may come to light in due course.
While the phishing scam is one of the brothers’ suspected methods, the investigators have not ruled out other methods. Eli has been recognized for his highly technical skills, as a former recruit to an Israeli Defense Forces unit specializing in youth with high academic results.
The brothers have been tied to the issues surrounding the beleaguered Bitfinex exchange. A security breach in 2016 led to the loss of 119,756 bitcoins, the largest breach at that point since the Mt. Gox hacks. The United States government later returned just over 27 bitcoins recovered through investigations.
The exchange has found itself at the heart of several scandals beyond the 2016 hack. A New York Supreme Court judge ordered the shutdown of Bitfinex and linked stablecoin Tether, alleging that it covered up the loss of $850 million in client funds.
Tether, a cryptocurrency tied to the U.S. dollar that has operated since 2014, has been criticized for not issuing public audits. When Bitfinex sent $850 million to a firm called Crypto Capital Corp and did not get it back, it allegedly used Tether to mask the loss.
The investigation into the Gigi brothers is set to continue, with cyber police in multiple countries assisting due to the international nature of the crimes. Victims are reportedly located in the United States and European Union. The current goal of these investigations is to find the missing funds.
Last modified: June 23, 2020 7:37 PM UTC