Law enforcement officials from Germany, the UK and Europol representatives reported the arrest of a fraudster who stole IOTA tokens from users. Investigators believe that the attacker’s actions caused at least 85 users damage in the amount of 10 million euros (in cryptocurrency equivalent).
The name of the detainee has not yet been disclosed, but it is known that this is a 36-year-old British citizen, previously known in the network under the nickname Norbertvdberg. The Norbertvdberg fraud scheme was very simple: it provided support to IOTA enthusiasts and created a special website iotaseed.io, where users were offered to use a random seed generator.
In fact, the fraudster’s website helped to create unique passwords that many people don’t want to invent on their own, because IOTA wallets are protected with passwords that are 81 characters long. To prove that his site is safe, Norbertvdberg attached a link to the GitHub repository, where the source codes of the service were allegedly located. But, as it is not difficult to guess, these statements were false, and the scammer had the opportunity to predict the generation of passwords and saved seed users.
Interestingly, the fraudulent scheme Norbertvdberg a year ago, explained in detail the British student and IS-enthusiast Alex Studer (Alex Studer). He wrote that the math.seedrandom function used for iotaseed.io to create passphrases uses the fixed seed 4782588875512803642 and increases this value by one after each run of the seedrandom. As a result, the fraudster always got a predictable result.
The site Norbertvdberg worked for six months, from August 2017 to January 2018. Having collected a lot of passphrases of gullible users, the attacker began his attack only on January 19, 2018: he began to enter the wallets of the victims and steal their funds. At the same time, the first thefts went unnoticed due to DDoS attacks on IOTA servers that occurred during the same period of time, and the developers did not notice any suspicious activity in the blockchain.
According to Europol, some of the victims of Norbertvdberg did not sit back and appealed to the law enforcement authorities. And although the scammer tried to cover his tracks (deleted his profiles on GitHub, Reddit and Quora, and also closed the site with a malicious generator), this did not help much. German police figured him back in July 2018, and this week Norbertvdberg was finally arrested. He has been charged with fraud, money laundering and theft. He is currently awaiting extradition to Germany, where he will stand trial.