In brief
- A former Microsoft employee was convicted of 18 federal felonies related to the theft of $10 million in digital currency which he used to fund a lavish lifestyle.
- US and international authorities are growing wary of the use of cryptocurrency mixers.
A former software engineer for Microsoft has been convicted of 18 federal felonies “for stealing more than $10 million in digital value,” the US Department of Justice announced on Tuesday.
Volodymyr Kvashuk, a Ukranian citizen residing in Renton, Washington, was a former contractor and employee for the computing giant Microsoft from 2016 until 2018.
According to records and testimony in the trial, Kvashuk was involved in testing an online retail sales platform for the firm and used his “testing access” to steal millions of dollars in digital gift cards. He resold the gift cards online for Bitcoin, lakefront property, and Tesla cars, among other things.
Authorities said that when Kvashuk bought Bitcoin he used a “mixing service” to wash the cryptocurrency and cover his tracks. He purportedly held $2.8 million in Bitcoin which he disguised in his tax return as a gift from a relative. Kvashuk also used email accounts belonging to coworkers as part of the scam. Microsoft fired Kvashuk when the company discovered the heist and the criminal complaint led to the subsequent trial.
At trial, the ex-Microsoft engineer argued that he did not intend to defraud the firm and claimed he was working on a project to benefit his employers. Prosecutors argued that Kvasuk “hid behind his colleagues’ names…. dripping fraud and deceit every step of the way.”
In closing arguments, Assistant US Attorney Siddarth Velamoor said: “This is a simple case… anyway you look at it this is a crime of greed.”
Kvasuk was found guilty by a jury and faces up to 20 years in prison.
Bitcoin mixing services are currently a hot topic among regulators around the world. Earlier this month, US federal agents indicted Larry Harmon for operating a Bitcoin mixer service Helix, which they allege was used to obfuscate $300 million in illicitly used BTC.
And last December, Binance caused a stir in the Bitcoin privacy community when they blocked withdrawals to Wasabi wallet, which comes with a mixing service called Coinjoins, presumably to avoid regulatory scrutiny.