AFP discovers 2,000 compromised Australian crypto wallets

The Australian Federal Police (AFP) has discovered that more than 2,000 cryptocurrency wallets owned by locals were compromised by offshore fraudsters, putting millions of dollars in digital assets at risk.

This discovery arose out of Operation Spincaster, a global anti-crypto fraud initiative led by Chainalysis and managed locally by the AFP-led Joint Policing Cybercrime Coordination Center (JPC3).

Operation Spincaster uncovers $162 million

Australia’s involvement in Operation Spincaster began in June 2024, with JPC3 hosting a workshop in collaboration with Chainalysis, digital currency exchanges, government bodies and law enforcement agencies.

Between April and June 2024, more than 100 participants from digital currency exchanges and public agencies from the US, UK, Canada, Spain, the Netherlands and Australia participated, highlighting the reach of these cyber fraud schemes. The investigation generated more than 7,000 leads, uncovering around $162 million in losses.

The main focus of Operation Spincaster was “endorsement phishing” scams. In these scams, cybercriminals trick victims into signing fraudulent blockchain transactions, giving them access to victims’ crypto wallets. This access allows criminals to deplete wallets of specific tokens.

In Australia, JPC3 was key to advancing the investigation of these crypto thefts. According to the Australian Federal Police, the operation has been vital in identifying strategies to counter the ongoing threat of cybercrime, identifying criminals and disrupting the activities of criminals in Australia.

Meanwhile, the report indicated that the compromised digital wallets were linked to several crypto exchanges, although specific names were not disclosed.

Phishing scams are on the rise

Experts warn that phishing scams remain a major threat in the crypto space. According to Scam Sniffer, more than 260,000 people lost $314 million to phishing scams in the first half of this year alone. Since May 2021, phishing attacks have resulted in losses of $2.7 billion.

In another development, Australian prosecutors are seeking jail time for a Crypto.com user involved in a major misappropriation of funds. In May 2021, a mishap by the crypto exchange resulted in an erroneous transfer of A$10.47 million (approximately $6.86 million) to Thevamanogari Manivel and Jatinder Singh instead of a refund of AUD$100. The error was traced to an incorrect account number.

The couple involved had spent some of the embezzled funds before Crypto.com identified the error. With approximately $4.9 million recovered, prosecutors are now seeking a prison sentence.

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