It seemed like a perfectly believable story: Two teenagers in Canada posed as members of Coinbase’s support team and scammed an American man out of $4.2 million in Bitcoin and Ethereum. The 30-year-old Sam Bankman-Fried, founder and CEO of the now-bankrupt exchange FTX, is accused of defrauding customers of billions of dollars. Why couldn’t teenagers pull off a smaller heist?
After seeing an email with a news release about the supposed arrest of the teenagers, a reporter from the Canadian Broadcast Company, one of Canada’s leading news outlets, ran the story, according to a member of the Hamilton police department who’s familiar with matter. (However, whether that email is the ultimate source of the story is yet to be determined.) The police in Hamilton, a small city near the border of New York, reportedly teamed up with the FBI and the U.S. Secret Service Electronic Crimes Task Force to pin down the two 17-year-olds, who went by the aliases “Felon” and “Gaze.”
News of the arrest of the teenagers, who, according to reports, used some of their $4.2 million in stolen crypto to buy coveted username @zombie on Instagram, then spread across crypto publications, even landing in Decrypt. However, the entire story—from the teenagers’ alleged heist to their arrest—is a sham, according to the same Hamilton Police Department source.
The department is still investigating the origins of the hoax and said it’s planning to issue a statement soon debunking the story, the source told Fortune. The FBI did not immediately respond to a request for comment.
“Coinbase has extensive security resources dedicated to educating customers about preventing phishing attacks and scams,” a spokesperson for the exchange said in a statement. “We work with international law enforcement to ensure that anyone scamming Coinbase customers is prosecuted to the fullest extent of the law.”
While Canadian and crypto publications were duped into running a lurid story of yet another crypto arrest, their gullibility isn’t without precedent.
In January 2018, in the village of Irvington, New York, the 15-year-old Ellis Pinsky, nicknamed “Baby Al Capone,” allegedly stole almost $24 million from crypto millionaire Michael Terpin. Pinsky agreed to pay back Terpin without admitting any guilt.
And the Hamilton police department itself has investigated and arrested a teenager for stealing almost $35 million in crypto through a SIM swap attack, or when scammers port a victim’s phone number over to their devices to bypass two-factor authentication.
The investigation and arrest, which happened in 2021, echoes the spoofed news release, including the Hamilton police department’s partnership with the FBI and the U.S. Secret Service Electronic Crimes Task Force as well as the stolen crypto being spent on a rare online username.
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