Collaboration Leads to Arrest of Cryptocurrency Scammers in Austria
Law enforcement agencies from Austria, Cyprus, and Czechia have joined forces to dismantle an online cryptocurrency scam, resulting in the apprehension of six Austrians believed to be behind the fraudulent scheme.
Investigation and Seizures
With the assistance of Europol and Eurojust, the investigation targeted the masterminds behind a new cryptocurrency that was launched in December 2017. Following six house searches, authorities managed to confiscate over EUR 500,000 in cryptocurrencies and EUR 250,000 in fiat currency. Additionally, multiple bank accounts were frozen, and assets worth EUR 1.4 million, including two cars and a luxury property, were seized.
Details of the Scam
According to a recent blog post by Europol, the scam unfolded between December 2017 and February 2018, during which the perpetrators posed as a legitimate online trading company offering a new cryptocurrency through an initial coin offering (ICO). Investors were lured into purchasing tokens using established cryptocurrencies like Bitcoin or Ethereum. The fraudsters claimed to have developed proprietary software and a unique algorithm for token sales to enhance credibility.
However, suspicions arose due to the lack of transparency surrounding the team members and the cryptocurrency’s algorithm. The blog post highlights, “Traditionally, an ICO will build upon transparency and communicate clearly about each team member responsible for it. In this instance, there was a lack of transparency regarding both the team members involved and the algorithm underpinning the cryptocurrency.”
Exit Scam and Fallout
In February 2018, the scammers abruptly shut down the project’s social media accounts and website, executing what is known as an exit scam. This sudden closure left investors realizing they had been deceived, although not all victims have been identified.
Europol’s Role
Europol played a crucial role in the investigation, organizing operational meetings and providing comprehensive analysis. Eurojust facilitated real-time communication among judicial authorities and assisted in the swift execution of warrants. Austrian authorities, including the Criminal Intelligence Service and Specialized Prosecution Office, were actively involved in the operations.
For more information on exit scams and cryptocurrency fraud, you can read our article on Crypto Heists Surge in 2023, with $16.93 million already stolen in 2024.