Malone Lam, a defendant in a $230 million bitcoin heist, in a booking photo from the Broward County Sheriff’s Office in Florida.
Broward County Sheriff’s Office
Federal prosecutors in Washington, D.C., charged 13 men in what court records describe as a wide-ranging conspiracy to identify victims with substantial holdings of cryptocurrency, steal those assets, and then launder the proceeds.
More than $265 million in crypto was stolen from the victims, according to a superseding indictment obtained Thursday by CNBC.
The participants, Americans and foreign nationals who allegedly became friends on online gaming platforms, are accused of spending lavishly after the thefts, including $9 million on exotic cars and $4 million on nightclubs, as well as on multiple rental properties.
One of the defendants, 20-year-old Singapore native Malone Lam, was previously arrested and charged in connection with the largest of those thefts, which netted about $245 million in bitcoin from a man in D.C. in mid-August.
That theft is believed to have led to the brazen kidnapping in suburban Connecticut of the parents of one of Lam’s alleged co-conspirators by a crew of thugs from Florida who prosecutors say planned to hold the parents for ransom from their newly rich son.
It also allegedly enabled Lam to purchase more than 30 exotic automobiles, among them Ferraris, Lamborghinis, Mercedez G Wagons, a Rolls Royce, a McClaren, and a Pagani, the superseding indictment says. He also allegedly bought a watch for $2 million.
Neither Lam’s co-defendant in the original indictment related to the $245 million heist — Jeandiel Serrano — nor the son of the people kidnapped in Connecticut is named as a defendant in the new superseding indictment.
Instead, both men appear to be identified only as “co-conspirator” in that charging document.
But the new indictment accuses 12 other men and Lam of charges that include RICO Conspiracy, conspiracy to commit wire fraud, conspiracy to launder monetary instruments, and obstruction of justice.
Two of the men, Hamza Doost and Kunal Mehta, were arrested this week in California, according to court filings, which alleged they were involved in money laundering for the ring.
Most of the other defendants are believed to have been arrested around the United States in the past several days.
Mehta, a 45-year-old who lives in Irvine, California, is the oldest defendant identified by name. The other named defendants range in age from 18 to 22 years old. Two defendants are identified only by nicknames.
Squishmallow’s on sale at a Fred Meyer grocery store, a sub of Kroger.
Michael Siluk | Ucg | Universal Images Group | Getty Images
The second biggest theft attributed to the ring was of $14 million in cryptocurrency from a victim.
“Members and associates of the enterprise used the stolen virtual currency to purchase, among other things, nightclub services ranging up to $500,000 per evening, luxury handbags valued in the tens of thousands of dollars that were given away at nightclub parties, luxury watches valued between $100,000 and $500,000,” the U.S. Attorney’s Office in Washington said in a statement.
The participants also bought “luxury clothing valued in the tens of thousands of dollars, rental homes in Los Angeles, the Hamptons, and Miami, private jet rentals, a team of private security guards, and a fleet of at least 28 exotic cars ranging in value from $100,000 to $3.8 million,” prosecutors said.
The indictment says that one of the defendants, 21-year-old Joel Cortes of Laguna Niguel, California, last year helped members of the ring “in changing stolen virtual currency into fiat currency and shipping the currency across the United States, hidden in squishmallow stuffed animals, each containing approximately $25,000 apiece.”
“Members of the enterprise laundered stolen cryptocurrency proceeds by moving the funds through various mixers and exchanges using ‘peel chains,’ pass-through wallets, and virtual private networks to mask their true identities,” prosecutors said.
The new indictment alleges that an off-duty law enforcement officer informed one of Lam’s alleged money exchangers in September that the ring was being investigated by federal law enforcement, and that the money exchanger then advised that Serrano stay in the Maldives instead of returning to the United States. Serrano later flew to Los Angeles, where he was arrested in September.
The indictment says an off-duty law enforcement officer tipped Lam on Sept. 18 that authorities were on their way to arrest Lam at his Miami rental home.
Lam soon after “walked to the rear of his Miami rental home and dropped his mobile telephone off the boat dock and into Biscayne Bay to destroy incriminating evidence,” the indictment alleges.
Prosecutors said that after his arrest in September, and continuing while he was being held without bail, “Lam is alleged to have continued working with members of the enterprise to pass and receive directions, collect stolen cryptocurrency, and to have enterprise members buy luxury Hermes Birkin bags and hand deliver them to his girlfriend in Miami, Florida.”
Lam and another defendant, Conor Flasburg, 20, of Newport Beach, California, were identified as organizers of the alleged scheme,e
Lam’s defense attorney, Scott Armstrong, told CNBC, “Mr. Lam is 20 years old and has no criminal history.”
“He is unfortunately caught up in a very complicated case. We will vigorously defend him,” Armstrong said.
CNBC has requested comment from Serrano’s attorney.
