Miami Trio defrauded banks, crypto exchange in $4 million scam

The three men, residents of Miami, bought more than $4 million in cryptocurrency by opening accounts with a leading cryptocurrency exchange using photos of fake U.S. passports and driver’s licenses, according to an unsealed indictment.

The accounts were linked to bank accounts controlled by the trio. After buying the cryptocurrency, the men quickly transferred it to off-exchange cryptocurrency wallets. They then called the banks and said the purchases were unauthorized, prompting the banks to refund them.

The banks involved ultimately processed more than $4 million in fraudulent chargebacks. The cryptocurrency exchange, which was not identified by prosecutors, lost more than $3.5 million worth of digital currency.

The defendants withdrew the money they earned from the scheme through bank transfers, cashier’s checks and ATM withdrawals. In doing so, they defrauded the cryptocurrency exchange of both the cryptocurrency purchased, since it was transferred to external wallets, and the funds used to purchase it, prosecutors said.

The scheme went on for several months in early 2020, according to the indictment. The men were arrested in part as a result of investigative work by the Department of Homeland Security’s El Dorado Task Force, a decade-long program focused on money laundering.

Messrs. Cabrera, Hernandez and Ramirez could not immediately be reached for comment. The men will appear in US District Court for the Southern District of Florida, the US attorney’s office said.

Write to Dylan Tokar at [email protected]