Hacker Sentenced to 10 Years for $5 Million SIM Swap Fraud

In Santa Clara County, California, a landmark sentence has been handed down to a scammer involved in so-called SIM swap fraud. Joel Ortiz, a 20-year-old student, admitted to stealing cryptocurrency from 40 people, totaling around $5,000,000. He pleaded guilty and was sentenced to 10 years in prison.

What Is SIM Swap Fraud?

SIM swap fraud has become an increasingly common issue in recent years. In this scheme, a criminal contacts the victim’s mobile carrier and uses social engineering to impersonate the real account holder. Claiming the SIM card was lost or damaged, the scammer convinces the carrier to transfer the victim’s phone number to a new SIM card. This gives the attacker full control over the victim’s phone number, access to all linked services, and the ability to intercept one-time passwords and two-factor authentication codes.

Growing Threat to Cryptocurrency Investors

Last year, Vice Motherboard journalists published an investigation showing that SIM swap attacks are widely used by criminals to hijack accounts and steal identities by the dozens or even hundreds. Even more concerning, this type of fraud is increasingly being used to target cryptocurrency investors. For example, Bitcoin investor Michael Terpin previously sued telecom giant AT&T after more than $3,000,000 worth of various cryptocurrency tokens were stolen from him through a SIM swap attack.

Legal Precedent and Ongoing Cases

Joel Ortiz is now the first person to be convicted for this type of crime, and experts are calling it an important legal precedent. Other criminals are also awaiting trial on similar charges. For instance, Manhattan prosecutors have charged 20-year-old Dawson Bakies with 50 counts of fraud, identity theft, and stealing funds from more than 50 people.

Additionally, other arrests have been made: Xzavyer Narvaez, accused of stealing about $1 million in Bitcoin; Nicholas Truglia, also accused of stealing around $1 million; and well-known SIM swap scammer Joseph Harris, who is charged with stealing $14 million.

Consequences and Law Enforcement Response

Ortiz is scheduled to begin serving his sentence on March 14, 2019. Erin West, a representative of the Santa Clara County District Attorney’s Office, commented, “Every arrest we make sends a new wave of fear through this community. They [the scammers] realize they can no longer feel safe in their basements or their mom’s house—every one of them will be tracked down and arrested, one by one.”