Kraken and UK Police Team Up: $2 Million Returned to Victims of Crypto Scam

In a landmark operation, crypto exchange Kraken has joined forces with the UK’s South East Regional Organised Crime Unit (SEROCU) to facilitate the return of nearly £2 million ($2.4 million) to victims ensnared in a crypto scam. 

The collaborative effort followed the arrest of a 40-year-old Dutch national, Wybo Wiersma, who had orchestrated a fraudulent scheme involving IOTA tokens through a deceitful website.

💸 Millions to be paid back to victims💸

Almost £2m worth of stolen cryptocurrency is to be paid back to victims of theft as a result of work by SEROCU.

It follows the sentencing of Wybo Wiersma earlier this year.

More here ➡️ https://t.co/GVrripF7fg pic.twitter.com/rsh69enmPn

— SEROCU (@SouthEastROCU) November 9, 2023

Following Wiersma’s arrest, SEROCU seized £2.37 million in crypto under the Proceeds of Crime Act. Notably, this marks the first instance in the UK where such legislation has been utilized to confiscate crypto from an exchange. 

Kraken’s expertise played a pivotal role in converting the seized cryptocurrency back into British pounds, ensuring the lawful return of funds to victims worldwide. 

Lana Sinelnikova, Kraken’s UK Head of Compliance, stressed the importance of industry collaboration, stating: 

“Scammers always find new ways to exploit their victims, and will continue to use these tactics until they prove unsuccessful.”

The operation, dubbed “Operation Hyphen,” revolved around Wiersma’s creation of the fraudulent website “iotaseed.io,” where unsuspecting victims were lured into generating IOTA crypto seeds. 

The predetermined seed phrases allowed Wiersma unauthorized access to victims’ tokens. Between 2017 and 2018, he illicitly transferred more than €10 million worth of IOTA tokens from multiple victims.

Wiersma was subsequently sentenced to four and a half years in prison for his role in the crypto heist. The court ordered him to pay £2.1 million, a process in which Kraken’s assistance was instrumental. 

Detective Inspector Rob Bryant of SEROCU’s Cyber Crime and Cryptocurrency Unit expressed gratitude, stating: 

“The victims, of which there are many across the world, have patiently waited for five years for this to happen, and it is thanks to my team’s innovation and collaboration, particularly with Kraken, without whom this may not have been possible.”

Kraken’s Head of Compliance Officer, Lana Sinelnikova, also emphasized the need for education within the crypto space, urging individuals to familiarize themselves with potential scams and red flags.

“we urge those who plan to participate in crypto to educate themselves about the ecosystem, including common red flags that scammers use, so they can avoid falling victim to similar crimes”

she said.

Collaborative Efforts for Victim Restitution

Returning the stolen funds posed a significant challenge, and SEROCU collaborated with Kraken, the Financial Conduct Authority (FCA), and the National Police Chief’s Council (NPCC) to navigate this intricate process. 

The collaboration ensured the conversion of recovered crypto assets into GBP, adhering to regulatory requirements and ensuring a transparent and lawful restitution process.

The SEROCU mentioned in a statement:

“Kraken provided significant expertise and support that enabled SEROCU to convert the stolen crypto-assets into GBP for their return to victims.”

Assistant Chief Constable Tim Metcalfe, the National Police Chiefs’ Council Lead for Cryptocurrency, emphasized the importance of partnerships with industry leaders, commending the collaborative effort that enabled victims to reclaim their stolen funds.