Oregon’s Attorney General has reported that 2 Canadians – Karanjit Singh Khatkar, 23, and Jagroop Singh Khatkar, 24, residents of Surrey, British Columbia – were sentenced to 24 months in federal prison and three years’ supervised release for conspiring to commit wire fraud and money laundering in a scheme to steal bitcoin from a resident of that state.
According to the indictment, beginning in October 2017 and continuing until August 2018, the defendants used a Twitter account with the name @HitBTCAssist to trick victims into thinking they were communicating with a customer service representative from HitBTC, a Hong Kong-based online platform used to exchange virtual currency. HitBTC provides its customers with web-based “wallets” to store virtual currency and make transactions.
Using the fraudulent Twitter account, the defendants responded to the Oregon victim’s questions about withdrawing virtual currency from her HitBTC account and they convinced her to send information they could use to log on and take over her email, HitBTC and Kraken accounts. (Kraken is a U.S.-based online platform that offers services similar to HitBTC).
The defendants initiated transfers of 23.2 bitcoins from the victim’s HitBTC account to Karanjit Khatkar’s Kraken account. Karanjit in turn transferred approximately half to Jagroop’s Kraken account.
Two days after illegally accessing the victim’s account, Karanjit Khatkar bought a Mercedes-Benz with $56,598 in Canadian dollars. The Khatkars also traveled to casinos. Karanjit Khatkar gambled with tens of thousands of dollars while staying at high-end casinos in Las Vegas, Nevada.
On July 18, 2019, Karanjit Khatkar was arrested upon arrival at the McCarran International Airport in Las Vegas and later ordered detained pending trial. Jagroop Khatkar appeared voluntarily for his arraignment and change of plea on December 16, 2019.
On December 16, 2019, the Khatkars pleaded guilty to conspiring to commit wire fraud and money laundering. As mandated by their plea agreements, the Khatkars delivered a check of $142,349 as a prepayment of restitution to their victim at their change of plea hearing.
At sentencing, the Khatkars were ordered to pay an additional $42,162 to their victim for a total restitution order of $184,511.
The moral of this story is two-fold. Firstly, the government doesn’t take too kindly to people stealing crypto-currency, and secondly, before giving out sensitive information, make sure you know who you are talking to.
This case is akin to the CRA scam where Canadians are threatened with jail from the “CRA” but it can be “resolved” if bitcoins are transferred into a “CRA” wallet. That scam has entrapped way too many Canadians. The CRA doesn’t even consider crypto currency to be legal tender, rather, they treat it like a commodity meaning once it’s sold, taxes are due on the Capital gain.