Phone SIM card swap results in theft of $14 worth of crypto

October 4, 2018
Kane Pepi


Phone SIM card swap results in theft of $14 worth of crypto

The reputation of the cryptocurrency markets has once again taken a hit, with the latest scandal centring on a simple, yet effective scam that resulted in the theft of millions of dollars’ worth of crypto. The scam – known as a “SIM Swap”, involves the criminal making contact with a telecommunications provider, claiming that that they have had their cell phone lost or stolen.

Upon receiving the required security-check data, the telecommunication company will then proceed to re-activate an alternative phone, along with all of the data held on the sim card in question. At this point, the criminal has full access to all of the underlying data held within it.

In the case of Joseph Harris and Fletcher Robert Childers, the two arrested men in question, the crooks targeted the cell phone of an employee linked to a cryptocurrency project called Crowd Machine.  

By obtaining the required two-factor authentication and password credentials, the fraudsters were subsequently able to access the project’s hot wallet. According to a blockchain analysis carried out by CoinDesk, they then proceeded to transfer out $14 million worth of the native CMCT token in to a variety of third party exchanges.

Crowd Machine are looking to revolutionize the application coding process by decentralizing the cloud computing space. Their subsequent ICO raised more than 52,000 ETH in April 2018, which at the time was worth approximately $30 million. At the time of writing, Crowd Machine now has a market capitalization of just over $1.3 million.

Once the victims became aware of the hack and went public, although a plethora of exchanges suspended trading on CMCT, the token very quickly plummeted, losing close to 87% in value. The subsequent law enforcement investigation involved officers from the Regional Enforcement Allied Computer Team (REACT), Oklahoma Police and the Santa Clara County DA’s Office.  

By utilizing a range of investigative tools such as surveillance footage and cell-phone triangulation, the team were able to track the criminals down to an Oklahoma-based hotel. Upon securing a “no-knock” warrant, the police proceeded to search the suspect’s room. A no-knock warrant is a relatively new investigative tool that allows police to enter a location without knocking, with the aim of accessing material held on a computer device before the suspect is able to lock or delete the data.

According to recent updates, while Childers is no longer being held in custody, Harris has been denied bail.