A former Microsoft engineer has been sentenced to nine years in prison for a scheme to steal $10m in digital currency.
26-year-old Ukrainian citizen Volodymyr Kvashuk – a former employee at Microsoft – has been found guilty of 18 US federal felonies for defrauding the company. The US Attorney’s Office for the western district of Washington said that Kvashuk has been sentenced to nine years in prison for a scheme to defraud Microsoft of more than $10m.
He worked for the tech giant from 2016 until he was fired in 2018. Records filed in the case showed that Kvashuk was involved in the testing of Microsoft’s online retail sales platform and used that testing access to steal ‘currency stored value’ (CSV), such as digital gift cards.
By reselling these online, Kvashuk used the proceeds to purchase a $1.6m lakefront home and a Tesla car worth $160,000. In the beginning, the filings said, he stole smaller amounts of around $12,000 in value using his own account access.
When his scheme escalated to the point that he was selling millions of dollars of gift cards, he began using test email accounts linked to other employees. He also tried to hide evidence linking the scheme back to him by using a ‘bitcoin mixing service’, which lets someone mix their coins with other users to make their finances more difficult to track.
Over the space of seven months, Kvashuk transferred $2.8m in bitcoin to his bank and investment accounts. When he filed tax returns, the court heard, he claimed the bitcoin had been a gift from a relative.
The landmark sentencing is the country’s first bitcoin case that has a tax component to it, according to the US Internal Revenue Service (IRS).
‘A series of outrageous lies’
“Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents,” said US attorney Brian T Moran.
“This case required sophisticated, technological skills to investigate and prosecute, and I am pleased that our law enforcement partners and the US Attorney’s Office have the skill sets needed to bring such offenders to justice.”
Kvashuk testified at the trial that he didn’t intend to defraud Microsoft, but was working on a special project that would benefit the company. The court ordered that he pay $8.34m in restitution and he may be deported to Ukraine following his prison term. Prosecutors for the case were highly critical of Kvashuk’s actions.
“Kvashuk’s scheme involved lies and deception at every step,” they said. “He put his colleagues in the line of fire by using their test accounts to steal CSV. Rather than taking responsibility, he testified and told a series of outrageous lies. There is no sign that Kvashuk feels any remorse or regret for his crimes.”