US and Israeli law enforcement officials have arrested four men for suspected involvement in cyber blackmail and stock manipulation scams believed to be tied to the 2014 JPMorgan data breach.
The US Federal Bureau of Investigation (FBI) reported the arrests of Anthony Murgio, Yuri Lebedev, Gery Shalon and Ziv Orenstein and late on Tuesday.
Murgio and Lebedev are believed to have run an illegal Bitcoin money laundering exchange. (Bitcoins are a cryptographic currency that facilitate semi-anonymous transactions online.)
The exchange was reportedly in violation of US federal anti-money laundering (AML) laws and made money by charging customers, many of which the FBI believe are engaged in criminal activity, to swap cash for Bitcoins.
The FBI claims Murgio specifically exchanged cash for Bitcoins for victims of “ransomware” — a form of malware that locks victims out of their computer and demands they pay an unlock fee, often in Bitcoins.
If true this would make him a co-conspirator in the illegal cyber blackmail operations.
The FBI estimates the exchange earned the two at least $US1.8m between October 2013 and January 2015.
The specific charges against the two are:
- Conspiracy to operate an unlicensed money transmitting business.
- Operating an unlicensed money transmitting business.
Murgio is also facing a money laundering charge.
Pump and dump
Shalon and Orenstein were arrested in Israel on suspicion of running a “pump and dump” stock scam. The scam reportedly saw Shalon and Orenstein send bogus emails urging people to invest in “hot stocks” they were selling at fraudulently inflated prices.
“As alleged, the defendants manipulated trading in U.S. securities from overseas, using fake identities to funnel millions of dollars in unlawful proceeds through a web of international shell companies,” explained Manhattan US Attorney Preet Bharara in the FBI release.
“Using false and misleading spam emails sent to millions of people, these defendants allegedly directed their pump-and-dump scheme from their computers halfway around the world.”
The FBI is also looking for a third man, named Joshua Samuel Aaron for suspected involvement in the scheme.
How they’re linked to JPMorgan
The FBI has not officially linked the two cases. However, Bloomberg reported an anonymous source “familiar with the investigation” revealed a number of factors linking the four men to the 2014 JPMorgan data breach.
The breach is one of the biggest in history and according to stats from the Open Security Foundation saw over 83 million JPMorgan customer records compromised.
Bloomberg’s source suggested the stock market scam allegedly run by Shalon and Orenstein attempted to leverage data leaked during the JPMorgan breach.
It also claims “a previously unreported FBI memo” connects Murgio and Lebedev to the JPMorgan data breach investigation, though it does not specify how.
Business Insider has reached out to JPMorgan and the FBI for comment on Bloomberg’s report.
The arrests are part of a wider push by the FBI to combat cyber crime. The FBI led an international operation against the Darkode hacker forum on July 16 that led to the arrest of over 70 suspected hackers.