CRYPTOSTAKE
StakingMarketRegulationCryptostake ExplainsUncharted
Stolen a Fortune in Computing Power to Mine Coins: Cryptojacker Faces Charges

Details of the alleged cryptojacking scheme that cost over $3.5 million 

Federal prosecutors charge an individual with wire fraud and money laundering for illegally mining cryptocurrencies using stolen cloud resources.

Key takeaways:

  • Charles O. Parks III, accused of a $3.5 million cryptojacking scheme, could face up to 50 years in prison.
  • Parks allegedly mined $970,000 worth of cryptocurrencies, including Ether, Litecoin, and Monero, through fraudulent activities.

United States prosecutors have charged Charles O. Parks III, also known as “CP3O,” with wire fraud and money laundering, alleging he defrauded two major cloud computing providers out of $3.5 million. According to the Brooklyn U.S. Attorney’s Office, Parks used this unlawfully obtained computing power to mine cryptocurrencies valued at approximately $970,000. The cryptocurrencies mined included Ether, Litecoin, and Monero.

Cryptojacking involves unauthorized use of someone else’s computing resources to mine cryptocurrency. Parks was arrested in Nebraska on April 13 and is facing a combined maximum sentence of 50 years if convicted on all charges. He is expected to appear before a federal court in Omaha on April 16.

The broader impact and response

The indictment details how Parks allegedly created multiple fraudulent accounts with subsidiaries of two major tech companies, one based in Seattle and the other in Redmond, Washington. Between January and August 2021, he is accused of using various fake identities and corporate affiliations to gain elevated cloud computing services and deferred billing, which he then exploited for mining operations.

As service providers began to question the unusual data usage and unpaid balances, Parks reportedly deflected these inquiries. 

Furthermore, he is accused of laundering the mined cryptocurrencies through various means, including a decentralized cryptocurrency exchange and an NFT marketplace based in New York City. He also structured financial transactions to dodge the $10,000 reporting threshold, often moving $9,999 or less into a bank account.

Prosecutors also allege that Parks used the proceeds from his cryptojacking activities for extravagant purchases, such as a luxury Mercedes Benz, high-end jewelry, and first-class travel accommodations. In a statement, Brooklyn U.S. Attorney Breon Peace emphasized the commitment to prosecuting individuals who leverage sophisticated technologies to commit traditional frauds and deceits.