UK Police Auction Off $294,000 in Stolen Crypto From EtherDelta Hack

UK police auctioned off more than $294,000 of cryptocurrency confiscated from the teenage hacker of EtherDelta and TalkTalk.

The Eastern Region Special Operations Unit (ERSOU) worked with Wilsons Auctions to sell the digital assets, including bitcoin, ripple and ethereum, in what is said to be the unit’s first such auction.

"Asset recovery in a digital world has evolved, so it's really important that, working alongside commercial partners, we have a clear process for the storage and sale of cryptocurrency,” detective chief inspector Martin Peters said in a statement.

The department hired an asset management and realization contractor to vet the bidders “to ensure that the assets are not able to make their way back into crime,” according to the statement.

Teen hacker

Police seized the funds from 19-year-old Elliott Gunton in 2018, following a routine check of his computer related to his sentence for hacking into the telecommunications giant TalkTalk, in 2015.

During the inspection, it was found that Gunton held stores of stolen personal information from EtherDelta customers, which he advertised for sale online for $3,000, paid in crypto. At the time, Gunton’s illicit holdings were valued at $337,000.

The auction comes days after Gutman was sentenced at Norwich Crown Court to 20 months in prison after pleading guilty to these crimes, which include conspiracy to commit computer and wire fraud and aggravated identity theft. He was also ordered to repay approximately $509,000.

In the indictment, it’s shown that Gutman worked with U.S. national Anthony Nashatka to breach the exchange and "withdraw cryptocurrency from hundreds" of EtherDelta accounts. Throughout the conspiracy, the two operated under the aliases Planet and Psycho.

Crypto caper

The scheme took place over seven days in December 2017 and comprised several steps.

On Dec. 13, 2017, Nashatka purchased identifying information regarding an unnamed person in the indictment, “Z.C.,” thought to be Zachary Coburn, EtherDelta’s CEO. The following day, the two then rerouted Z.C.’s cellphone and email addresses to accounts under their control.

Using this information, Nashatka and Gunton gained unauthorized access to EtherDelta’s Cloudflare account, disabled the website and spun up a proxy site. Whenever an EtherDelta client logged in, their accounts, wallets and private keys were visible to the two defendants.

While the total number of victims and the amount of stolen funds remains unknown, one victim reportedly lost approximately $800,000.

For his role in the scheme, Nashatka faces a maximum prison sentence of 20 years and maximum fines up to $250,000. His federal court appearance is scheduled for Oct. 10 in San Francisco.

Gunton’s parents previously pleaded guilty to transferring criminal property for attempting to transfer cryptocurrencies out of a seized bitcoin wallet. They are due to be sentenced next Wednesday at Norwich Crown Court.

Auction image via Shutterstock