Seven members of a California-based cryptocurrency hacker network were indicted by a Queens grand jury on charges of grand larceny, money laundering, identity theft and other related crimes following a long-term investigation into the hack of a private Bitcoin wallet belonging to a 61-year-old Jamaica man, Queens District Attorney Melinda Katz announced Monday.
The victim is the owner of a southeast Queens auto body shop. He purchased the Bitcoins in 2017 and never made any transactions. He has been watching his investment grow as his retirement fund, according to a law enforcement source. Bitcoin was removed from the victim’s Blockchain.com wallet through two unauthorized transactions in November 2022.
At the time of the hack, the 5.75 bitcoins were valued at approximately $92,000. Today, the same cryptocurrency amount is valued at more than $300,000.
Alleged mastermind Aaron Peterson Jr., 20, his father, Aaron Peterson, 39, and his mother, Autumn Clark, 37, all of Sacramento County, California, were arrested, extradited to Queens and arraigned Friday in Queens Supreme Court. Co-defendants Dontay Brown, 39, of Sacramento County, Ca., and Ronald Lamar, Jr., 22, of Solano County, Ca., are expected to be arraigned at a later date. Two other defendants are still being sought.
The victim sought help from his Assemblymember Clyde Vanel, who serves as chair of the Subcommittee on Internet and New Technology. Vanel alerted the Queens District Attorney’s Office, which launched an investigation. Using specialized techniques, members of the DA’s Cyber Crime Unit and Detective Bureau uncovered more than 250 transactions over the course of eight months used as a means to launder the money. This practice is commonly referred to as a “peel chain,” a method of hiding cryptocurrency transactions by sending small amounts to individual Bitcoin wallets on various dates.
The trace of the funds further revealed the movement of the stolen funds to various deposit addresses belonging to Cash App and other financial services that were then identified and subpoenaed. Each of the seven defendants was identified as the account owner in receipt of the stolen funds, according to the charges.
After the money was laundered through the Cash App accounts, the co-conspirators each withdrew a certain amount of cash for their personal use. The remaining funds were sent to a centralized “pool account” belonging to Peterson Jr. He used the funds on personal luxury purchases, including a diamond pendant necklace and a new Mercedes-Benz.
On July 24, he was arrested along with his parents, Brown and Moland, by local authorities at their respective places of residence in California pursuant to the indictment warrant.
“The individuals allegedly responsible for this operation went through a meticulous series of steps to hide their criminal activity,” Katz said. “My dedicated Cyber Crime and Cryptocurrency Unit and Detectives Bureau worked this case for months to figure out who was behind these transactions and to bring those people to justice.”
Queens Supreme Court Justice Maria Hirsch ordered Aaron Peterson Jr. and his parents to return to court on Oct. 15. They each face a potential maximum sentence of 5-15 years in prison if convicted of the top count. They were also charged with computer trespass and conspiracy.
“We are encouraged by the efforts of Queens District Attorney Melinda Katz to protect Queens residents from technology-related fraud,” Vanel said. “We want to help ensure that Queens residents are able to invest, transact and transfer value in a safe manner.”
As chair of the Subcommittee on Internet and New Technology, Vanel works to make certain that the state is prepared to regulate and leverage emerging technologies like cryptocurrency, artificial intelligence, virtual reality and more.
“Today shows that we will bring justice to those who attempt to defraud Queens residents,” Vanel said.
Katz thanked the lawmaker for alerting her office to the cybercrime and encouraged any Queens resident who may have been a victim of cryptocurrency theft to contact her Cyber Crimes team at 718-286-6673 or [email protected].
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