Extortion Scheme Unveiled

In a jaw-dropping twist straight out of a Hollywood thriller, authorities in the United States recently arrested Steven Nerayoff and Michael Hlady for attempting to shake down a cryptocurrency startup. These two masterminds allegedly thought they could whip up a 21st-century extortion plot involving a startup’s initial coin offering (ICO). Spoiler alert: they were wrong.

The Arrest and Charges

On September 18, the U.S. Attorney’s Office for the Eastern District of New York, in collaboration with the FBI, brought the hammer down on Nerayoff and Hlady. Already making headlines, the duo made their initial court appearance, where serious charges of extortion were laid out against them. If only they had stuck to more traditional methods of earning a buck!

How the Scheme Operated

According to authorities, Nerayoff, who ironically is a lawyer, was recruited to help a Seattle-based company’s ICO. He brought Hlady on board, allegedly as the “operations guy.” But rather than doing what any self-respecting operations professional would do—like actual operations—they swiftly shifted gears to demanding a hefty payoff, flipping the script from helping to threatening.

Threats and Demands

Imagine being at the helm of a promising startup, and all of a sudden, two guys are throwing around demands for millions in raised capital and company tokens without lifting a finger. Sounds like a bad action movie, right? Their threats ranged from sabotaging the company’s ICO to an outrageous claim of “total destruction” of the startup itself. U.S. Attorney Richard P. Donoghue had a colorful take, calling it an “old-fashioned shakedown” amidst a modern crypto backdrop.

Comments from Law Officials

William Sweeney, the FBI Assistant Director-in-Charge, framed it as a typical, outdated extortion scenario, now with a digital age flavor. He said, “Imposing forceful demands on a company for personal gain is risky business.” Who could’ve guessed that breaking the law would be so, well, risky?

The Bigger Picture: Crypto Crimes

This incident is just a glimpse into the murky waters of cryptocurrency crime. As highlighted in a report by Symantec, cybercriminals raked in a staggering $1.2 million in Bitcoin through sextortion and bomb threat scams in a single year. It’s as if you can’t turn a corner in the crypto world without bumping into some sort of scam. Who needs to be a mastermind when you can just be a scam artist?