Crowd Machine, a California-based blockchain startup, was the victim of a hack that resulted in the theft of approximately $14 million. Oklahoma police have arrested two men who reportedly stole 1 billion Crowd Machine tokens worth an impressive amount.
Fletcher Robert Childers and Joseph Harris, both from Missouri, were detained by police on Monday. According to search warrants and court documents, hackers used SIM swapping to steal victims' passwords and personal data.
SIM swapping, also known as SIM splitting, is a type of account takeover scam that typically targets the vulnerability present in two-factor authentication and two-step verification, where the second factor is an SMS or call placed on the mobile phone. The scam relies on contacting a mobile phone operator to quickly place a phone number on a new SIM card. This feature is usually used when a customer has lost their phone.
The scam begins with a hacker collecting information about the victim using phishing emails. Once the attackers have this data, they contact the victim's mobile phone service provider. They then use social engineering techniques to convince the provider to transfer the victim's phone number to the scammer's SIM card. Most often they claim that they have lost their phone.
It was this hacking model that allowed law enforcement agencies to find scammers without delay. According to the documents, investigators discovered that the victim's cell phone account had been transferred to another device located in the area near the SpringHill Suites hotel. They also discovered that the cell phone had been purchased at a nearby WalMart, and surveillance video showed two white men visiting the store to purchase the phone.
The criminal investigation is ongoing, so the company's comments are restrained and only confirm that the suspects have been arrested and are working closely with law enforcement.
Coming on the hack, Crowd Machine founder and CEO Craig Sproule recommends against purchasing CMCT until criminal investigations are completed. will end.
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