BIG PICTURE
A group of guys who met playing video games allegedly steal millions in cryptocurrency, launder it, and then brag about it. Aside from the allegation about the group playing video games together, it has absolutely nothing to do with video games. But it’s still a fun read.
THE PLAYERS
On May 7, 2020, Michael Terpin, an LA-based, high-profile cryptocurrency pioneer, filed a complaint in the Southern District of New York, alleging a sophisticated cybercrime spree masterminded by a then 15 year-old high school student named Ellis Pinsky, to steal nearly $24 million worth of Terpin’s crytpocurrency. The complaint alleges that Pinsky, who still lives with his mom, recently turned 18 and is about to graduate from a suburban high school in New York. Terpin claims that “a group of young video game players [including Pinsky]—with participants in the United States and Great Britain—formed a user group called ‘Original Gangsters’ or ‘OGUsers.’” The complaint doesn’t explain how this makes the gang “video game players” since OGUsers is a digital marketplace for connecting buyers and sellers of virtual products — but there you have it.
THE ALLEGED SIM-SWAP, CRYPTOCURRENCY HEIST
Terpin claims that in January of 2018, Pinsky was working with a non-party accomplice, Nicholas Truglia (who “is currently out on bail for charges in the California state court system and a federal indictment in the Southern District of New York involving the theft of Plaintiff's $24 million cryptocurrency”). Pinsky, Truglia, and a “dozen or more gangsters in the Pinsky Gang” supposedly had “assigned roles, including identifying the victims, obtaining their cell phone and passcode numbers, forging identity cards, conning or bribing the mobile phone carrier employee into giving the imposter a new SIM card, handing off the personal identity information to Pinsky who with the assistance of his cohorts executed the hack and laundered the cryptocurrency holdings into Bitcoins or fiat money.”
Terpin claims that the gang obtained Terpin’s SIM card and took over his cell phone with his AT&T wireless number, causing his phone to go dead and, for all intents and purposes, his identity to be hijacked. The gang then allegedly used two-factor authentication messages to gain control of Terpin’s accounts and stole nearly $24 million in Triggers, Skycoin and Steem. On the date of the Terpin SIM swap, the complaint alleges that Truglia boasted that “today my life changed forever,” and he offered to hire “porn star escorts” and take his friends to the Super Bowl.
MONEY LAUNDERING
Terpin claims that “[l]ike drug cartel money, stolen cryptocurrency holdings are dirty, give rise to suspicion, and may be very difficult to spend if they are not either washed or converted to other forms of readily-spendable currency.” To launder the money, the Pinsky gang allegedly moved the coins into their own accounts, converted them to more common coins like Bitcoins, then withdrew them with “stolen or forged passports” to get around banks’ Know-Your-Customer protocols.
THE ALLEGED ADMISSIONS
The complaint paints Pinsky as a spoiled rich kid who boasted to his friends that he has hundreds of thousands in cash stored in his bedroom in his mother’s home and that, in 2019, he used some of the cash to repay Terpin a portion of what had been stolen. Terpin claims that the “brash egoist” Pinsky texted:
“You think I'm fucking dumb … I'm not fucking stupid … I threw out all my shit [computers] … Fuck that attorney [Terpin's lawyer]. They don't have shit on me…You think I'm dumb enough to keep all my money in America … [Truglia] is a dumb ass … and got caught.”
The complaint goes on to claim that Truglia implicated Pinsky in several conversations recorded by a friend, in September 2018. According to the declaration of the “friend,” Truglia implicates Pinsky with numerous statements by saying:
How Pinsky and he hacked Terpin to steal his $24 million worth of Cryptocurrency holdings;
How Pinsky and he laundered cryptocurrency holdings out of the blockchain into cash;
Truglia has an account at the Gemini exchange and took out $ 1,200,000;
Truglia committed tax fraud;
Truglia saw records indicating that in December 2017, Pinsky had $70 million;
One of their victims, Plaintiff, is too “dumb” to be able to figure out what happened and trace the laundered cryptocurrency holdings.
He will never be caught hacking/stealing because he is so good at it— literally, “how are they going to prove that my story [his defense] wrong?”;
“Nobody can get me in trouble. Nobody can put me in jail. I would bet my life on it, actually”;
As of September 2018, Truglia had $60 million of Bitcoin.
He told the police that he had $60 million when they came to his apartment;
He had stolen all his money and had not legitimately accumulated his wealth;
He was a computer hacker and stole his victims' cryptocurrency holdings and that this was thrilling for him—“the thrill of the game”—which he would never stop doing—even if there were no money involved; it was all “a mind game”;
His partner was named Ellis Pinsky, and Pinsky had stolen between $70 and $80 million through hacking;
He, Truglia, is a “Robin Hood” who robs from the rich but does not give to the poor;
Pinsky and he do hacking and SIM swapping by Truglia locating the victims through social engineering and Pinsky intercepting 2FA messages to find out information about accounts;
Truglia's “biggest” SIM swap was Plaintiff Michael Terpin for $24 million, and Pinsky was his partner; and
Pinsky took proceeds from the $24 million.
It’s not clear, however, how any of this will be admissible evidence against Pinsky, since Truglia (who, like Terpin, is a California resident) is not a party to the case. But it sure makes for a spicy complaint.
TAKEAWAYS
Watch your SIM card. And be careful when investing in cryptocurrency.
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