The European law enforcement agency, Europol, had launched an investigation in early 2018 after numerous thefts involving IOTA wallets were reported in Germany.
The Joint Cybercrime Action Taskforce (J-CAT) hosted at Europol’s European Cybercrime Centre (EC3) took over the investigation and coordinated an international effort to track and identify the perpetrator.
The man was arrested by SEROCU on Wednesday morning in Oxford. He has been charged with fraud, theft and money laundering.
IOTA Wallets Don’t Store IOTA
IOTA wallets do not actually store IOTA, as the name may imply. Instead, wallets act as a gateway to IOTA network, referred to as the Tangle, on which IOTA is stored. IOTA owners access their tokens, via IOTA wallets, using an 81 character-long digital seed, similar to a private key.
IOTA seeds are created using seed-generators found online. The official IOTA website even provides users with a list of these generators.
The suspect, the investigation revealed, used a now-defunct website, Iotaseed.io, from the provided list to obtain access to users’ seeds.
Arrested IOTA Theft Suspect Used Seeds To Steal $11 Million
According to Europol, “Several victims created the seed on this website in good faith, however the seeds were stored in the background by the service provider. Later the criminal used these to gain access to the victims’ wallets and transferred their money to other wallets created with fake IDs.”
SEROCU seized several computers and electronic devices during the arrest.
Europol has previously said that cryptocurrencies and digital assets are at increasing risk for criminal activity, such as hacking, extortion and mining malware.
The agency arrested 11 individuals in April regarding an €8 million (or $9 million) laundering operation involving an unnamed cryptocurrency, credit cards and a Finnish cryptocurrency exchange.