Man Arrested in New York over $1.8m Crypto Mining Fraud

Man Arrested in New York over $1.8m Crypto Mining Fraud

Cryptocurrencies are associated with fraud, but law enforcement is getting increasingly better at cracking down on fraud on all levels of the blockchain. The case of Chester J. Stojanovich is another example of how efficient the US Department of Justice has become in cracking down on financial crime pertaining to the sector.

Man Promises Unlimited Hashing Power, Delivers None

According to the New York Division of the Federal Bureau of Investigation assistant director, Michael J. Driscoll, there is enough to charge Stojanovich in what appears to be a fraudulent scheme that fleeced investors out of $1.8 million.

The money, Stojanovich promised his victims, would go for the purchase of much-coveted hardware used in cryptocurrency mining. Stojanovich promised “unlimited hashing power” which is needed in mining proof-of-work cryptocurrencies, which are usually the ones that fetch a pretty penny.

However, Stojanovich failed to deliver on any of his promises, including but not limited to securing mining and hosting services for his victims who paid the money upfront it seems but received little to none of the actual services. US attorney Damian Williams explained that the case of Stojanovich was an example of how exciting the new world of cryptocurrency and mining could be.

Such financial frontiers, though, could also lead to opportunities for “old-fashioned” fraud, Williams continued. Driscoll said that “as alleged,” Stojanovich has cost his victims close to $2 million, but the latest moves into detecting the fraud were indicative of how well-prepared authorities have become in counteracting cryptocurrency fraud.

Some 13 Victims Have Fallen for the Scheme

While miners are still short of the promised services, the lawsuit against Stojanovich if proving successful may result in the return of those missing funds. Stojanovich began his alleged scheme in 2019 by introducing at least ten miners to his alleged services and accepting a total of $1.66 million at the time.

Another three customers were introduced to the scheme in 2021 and forwarded an additional $179,880 million. Stojanovich was apprehended by authorities after crossing into New York from Canada. He has been charged with one count of wire fraud and faces up to 20 years in prison if found guilty.

Author: Ian Douglas