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Theft involving over $10M in Bitcoin Mixing Lands ex-Microsoft Dev in Jail

An ex Microsoft software engineer was sentenced to nine years in jail on Monday for a large multi-million dollar illegal scheme related to Bitcoin and digital gift vouchers. Volodymyr Kvashuk, 26 a Ukrain based citizen, was convicted for eighteen federal crimes in the District Court of Seattle for his plan to cheat Microsoft for more than $10 million. As per a press release from the Justice Department, this is the first case of its kind in the US.

From August 2016, Kvashuk was working for Microsoft in checking the online retail sales platform until he was terminated in June 2018. By using his employee ingress, he stole “currency stored value” (CSV) specifically digital cards. After that, he sold the CSV online and utilized the money to finance a luxurious way of life with a $1.6 million lakeside home and a $160,000 Tesla car. 

Bitcoin mixing service used to mask funds stolen from Microsoft 

At first, it started with a small amount of $12,000 in CSV by using his personal email access. But in due course transferred he amounts to email accounts associated with other staff to conceal the increasing fraud. Kvashuk further used a Bitcoin mixing service, in an effort to mask the origin of wealth in his bank account. 

U.S Attorney for the Western District of Washington, Brian Moran said: 

 “Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents.”

Kvashuk’s unlawful activity witnessed an overall of $2.8 million in Bitcoin being moved to his investment and bank accounts over a span of seven months. Further, as per the department’s statement and court records, he filed false tax return forms asserting that the Bitcoin had been gifted by relatives.

Stolen Microsoft gift cards worth over more than $8.3 million were bought and used by third parties, which Kvashuk is now supposed to pay as compensation. 

As per a court memorandum lodged in the Western District of Washington on November 2, Microsoft prevented a further fraud of $1.8 million in CSV equal to more than $10.1 million. 

Kvashuk was convicted for two counts of exacerbating identification fraud, five counts of wire fraud, and six counts of cash washing by a Jury. After 16 months of trial, his sentence was concluded. Additionally, according to a court judgment document, he was also found guilty of one count for every mail fraud, two counts of submitting fake tax returns, and access to a protected laptop and device fraud. 

“Kvashuk’s criminal acts of stealing from Microsoft, and subsequent filing false tax returns, is the nation’s first bitcoin case that has a tax component to it. Today’s sentencing proves you cannot steal money via the Internet and think that bitcoin is going to hide your criminal behaviors.”

IRS Special Agent, Ryan Korner
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