Alleged Cryptojacking Scheme Consumed $3.5 Million of Stolen Computing To Make Just $1 Million

An anonymous reader quotes a report from Ars Technica: Federal prosecutors indicted a Nebraska man on charges he perpetrated a cryptojacking scheme that defrauded two cloud providers -- one based in Seattle and the other in Redmond, Washington -- out of $3.5 million. The indictment, filed in US District Court for the Eastern District of New York and unsealed on Monday, charges Charles O. Parks III -- 45 of Omaha, Nebraska -- with wire fraud, money laundering, and engaging in unlawful monetary transactions in connection with the scheme. Parks has yet to enter a plea and is scheduled to make an initial appearance in federal court in Omaha on Tuesday. Parks was arrested last Friday. Prosecutors allege that Parks defrauded "two well-known providers of cloud computing services" of more than $3.5 million in computing resources to mine cryptocurrency. The indictment says the activity was in furtherance of a cryptojacking scheme, a term for crimes that generate digital coin through the acquisition of computing resources and electricity of others through fraud, hacking, or other illegal means.

Details laid out in the indictment underscore the failed economics involved in the mining of most cryptocurrencies. The $3.5 million of computing resources yielded roughly $1 million worth of cryptocurrency. In the process, massive amounts of energy were consumed. [...] Prosecutors didn't say precisely how Parks was able to trick the providers into giving him elevated services, deferring unpaid payments, or failing to discover the allegedly fraudulent behavior. They also didn't identify either of the cloud providers by name. Based on the details, however, they are almost certainly Amazon Web Services and Microsoft Azure. If convicted on all charges, Parks faces as much as 30 years in prison.

If you don't get caught...

[jenningsthecat]

Spending $3.5 million of somebody else's money to 'acquire' a million of your own seems to me a perfectly acceptable ROI!

Re:

[HBI]

Also, if their systems allowed the use of their compute without charges, how exactly is it the external customer's fault? If he just didn't pay his bill, that isn't what this indictment would look like.

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[drnb]

Also, if their systems allowed the use of their compute without charges, how exactly is it the external customer's fault?

It depends on the terms of service. For example the terms may have said no crypto.

Also if exploiting some bug was involved then hacking related stuff comes into play.

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[AcidFnTonic]

Me and my wife always joke using the phrase "They don't like that". We say it somewhat mockingly in the voice of Mike Judge doing Hank Hill.

It's when whatever action isn't really illegal or forbidden by rules but society finds a way to stop it.

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[Ed Tice]

They didn't allow compute without charges. They allowed post-payment of the charges. When you go to a sit-down restaurant, you eat and then you pay. If you don't pay the bill, it's usually a crime. It's the same principle here. They signed up for a post-paid service, used it for crypto-mining (which is surely against ToS), and didn't pay the bill.

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[HBI]

There's gotta be more to it than that. Also, the bills are month-to-month for normal people. If you don't pay your bill, they shut your resources down at the very least. Something else is going on here.

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[Ed Tice]

Yes they seem to have convinced the cloud providers to give them elevated services and to defer payments. Possibly via some sort of identity theft or other cime.

Re:If you don't get caught...

[Baron_Yam]

Climate change has taught us all what external costs are.... Someone else's problem.

This same issue is why botnets of all varieties exist. If you're not paying for the hardware, power, or bandwidth, as far as you are concerned they are free.

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[drnb]

Climate change has taught us all what external costs are.... Someone else's problem.

Politicians have taught us that. For example the California battery farm mentioned on slashdot yesterday, made in China.

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[haruchai]

He did it wrong. He burnt rich people's money to get a normal person money. You're supposed to burn normal people's futures to get rich people money.

Exactly right

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[rsilvergun]

Yeah from the structure of the headline I know I'm supposed to be outraged but from a criminal standpoint that's a pretty good deal if you get away with it.

I guess it does show that cryptocurrency mining is less than worthless now. Maybe that was what the author was trying to show but didn't want to stated bluntly for some reason?

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[ceoyoyo]

TV leads me to believe that fencing stolen goods often yields much less than 30% of their value.

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[ls671]

Spending $3.5 million of somebody else's money to 'acquire' a million of your own seems to me a perfectly acceptable ROI!

I take the $3.5 million figure with a grain of salt. I suspect it's a little like the amounts they state on drug charges. It probably costed less than $1 million in electricity charges, maybe even less than $500,000. The rest is only what they could have potentially charged at the maximum possible rate to their customers for using their gears.

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[EvilSS]

How else would you calculate it? If I steal a car, they don't value it at the wholesale price of the raw materials used to manufacture the parts used to manufacture the car, they value it at what it would have sold for at retail. Theft of services works the same way.

Re: If you don't get caught...

[gnasher719]

Iâ(TM)ve seen it differently for shipping insurance. If it costs $100 to build an item that I sell to you for $200 then I only need $100 insurance to build a new item and send it to you. But if the item gets stolen and I lose $200 because someone buys the stolen item, then I need $200.

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[Ed Tice]

It's not what they could have potentially charged, it's likely what they were charging and getting paid.

Re: If you don't get caught...

[gnasher719]

He entered dozens of contracts and is obligated to pay the same amount as a normal customer. Just because you lied in the contract doesnâ(TM)t remove your obligations.

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[The123king]

If i steal $100 million worth of jewellery, i'm not going to get $100 million for it on the black market. I'd be lucky to get $30 million for it. Seems perfectly reasonable.

Free money

[TheNameOfNick]

Even if it's only a tenth after laundry, it's still free money.

Fermi Paradox explained

[Black Parrot]

Technology "advances" to the point where a civilization has to expend 3.5 whatzits to acquire 1.0 whatzits, and it isn't even approximately sustainable.

Re: Fermi Paradox explained

[gnasher719]

No, that just means AWS isnâ(TM)t cost efficient for crypto mining if you pay the bill. Like digging out copper wire to make money from scrap is g cost effective if you pay for the damage.

AWS isnâ(TM)t designed for efficient crypto mining. They donâ(TM)t have specialised hardware, and they are most useful for businesses because they can react quickly and efficiently to changing demand. If I need 5 servers usually, but sometimes I need 100, then AWS has a good deal for me.

"MultiMillionaire, LLC"

[blackt0wer]

The defendant, whether guilty or not, was certainly not shy about their wealth gleaned from these services.

Guess who...

[LordHighExecutioner]

> two cloud providers -- one based in Seattle and the other in Redmond, Washington

Re:

[EvilSS]

> two cloud providers -- one based in Seattle and the other in Redmond, Washington

Guess who.... Didn't read the entire summary?

, they are almost certainly Amazon Web Services and Microsoft Azure.

Just further proof

[fredrated]

that crypto is garbage.

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[The-Ixian]

Even garbage is worth something. Just ask the garbage haulers.

Better summary

[Bill, Shooter of Bul]

For those too lazy to read the article its a perfectly understandable tactic he used. Create a bunch of accounts with bogus information, try to get elevated instances on each one, run crypto mining on them launder the crypto. As each instance gets shut off for non payment, create a new one with different bogus info. makes 100% sense how he did it, and how the caught him. Kind of dumb to try, did he really think he wasn't going to be caught once the totals got into the millions? I'm sure it was pretty easy to figure out which accounts he created at the end. His flaw was not stopping before he got caught and staying somewhere where US agencies have jurisdiction.

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[orlanz]

I too was wondering why he was still in the US. What he is doing is CLEARLY illegal. He knows more or less how much he is costing that provider. He knows how much he is making. I would pretty much sell everything, leave the country, and do a jump box with utilities being autopay and disappear once I passed $500k. Keep it going as far as it can and then not be found once its caught.

Greed, I understand... but at some point, you got to know you are going to float up to someone smarter than you on the othe

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[Vintermann]

I'm sure it was pretty easy to figure out which accounts he created at the end.

Well, Microsoft still hasn't figured out a way to detect the people creating thousands of hotmail and outlook accounts and using them for porn site spamming.

Come on

[Tx]

Details laid out in the indictment underscore the failed economics involved in the mining of most cryptocurrencies

Not really, in fact that's a pretty dumb claim to make. The economics of mining Bitcoin (or other Proof-of-Work cryptos) as they would normally be commercially mined is very different from the economics of mining such cryptos on jacked general purpose AWS instances or whatever. The economics former clearly works, otherwise the companies that do it would go bankrupt and disappear. The latter work

criminal math

[atheos]

not any different from when criminals smash a $500 window to steal $5 of someone else's change. they don't really care what it costs YOU.

Re:

[ls671]

IMHO, on the contrary, I suspect it could be very different. See my other comment above:
https://slashdot.org/comments.... [slashdot.org]

Anyone with actual US experience

[gnasher719]

Since the guy racked up a 3.5 million dollar bill, what will happen about paying this? Will Amazon etc. be able to get most of his pay check for the rest of his life (thatâ(TM)s what would happen in Germany), or will he more or less get away with it after he is out of jail (the British method).