A man operating under an assumed name has been accused of stealing bitcoin and bitcoin mining equipment from a Florida-based industrial mining facility and defrauding investors on a popular bitcoin lending platform.
The alleged perpetrator worked under the name Jon Simms, acting as both an independent bitcoin buyer and seller and a professional mining specialist for Digital Mining Investments. The scam targeted bitcoin lending site BTCJam and Digital Mining Investments' Tampa-based mine.
The stolen items allegedly include 55 BTC (roughly $35,000 at press time) taken from BTCJam users, roughly $160,000 in mining equipment stolen from Digital Mining Investments and a currently unknown amount fraudulently redirected through the industrial mine.
CoinDesk spoke with Pat Kenrick, an operations manager for Digital Mining Investments, who said that the alleged perpetrator was discovered to have been rerouting bitcoin mined in Tampa to a secret wallet. While he didn't know the exact amount of bitcoins redirected from the mining operation, the mine's large capacity - 500 TH/s - suggests that the theft was of a considerable amount.
Kenrick explained that the man disappeared without notice before any alleged wrongdoing could be prevented, saying:
"We have not heard from or seen Jon for two weeks now. He deleted us from his Facebook page [and] turned off his phone as well."
Digital Mining Investments has since reached out to local law enforcement agencies, and an investigation is now underway, according to Tampa police authorities.
Multiple aliases used
According to Kenrick, the man who presented himself under the name Jon Simms had at least one other identity. During his time in Tampa, the man built relationships with both prominent members on BTCJam, as well as members of the local bitcoin community.
The man alleged to be behind the scheme also acted as a local bitcoin advocate and activist in Tampa, ostensibly working to both promote Digital Mining Investments and the digital currency as a whole. Local users of BTCJam told CoinDesk that the man even appeared on local television to discuss bitcoin.
The man's BTCJam profile shows one active loan of 55 BTC - this was the final amount he received from lenders, according to users on the bitcoin loan platform who suffered losses as a result of the incident. The loan, which carried at 0.75% interest rate, had a seven-day repayment period, but users who gave money to the alleged scammer said that he promised payment within three days.
The owner of CashInBitcoinOut.com, a bitcoin investing service, says that he worked closely with the alleged scammer and believes that "he needs to be found and brought to justice".
"CashInBitcoinOut was one of the largest lenders on BTCJam to Jon. I personally bought my first bitcoin from him in December, met him again, shook his hand, saw where he worked and vouched for him on BTCJam. It's not just about the money, it's about my own reputation for vouching for him."
CashInBitcoinOut is also offering a 1 BTC reward for information that leads to the arrest of the accused perpetrator and the repayment of the 55 BTC stolen from BTCJam users.
Digital Mining Investments is moving quickly to recover from the incident and loss of both bitcoin and mining hardware, which included KnCminer ASICs and other equipment that has been seen for sale online, according to Kenrick.
He added that due to the incident, the company is undergoing restructuring, and that it has already acted to make key investments that will ensure its long-term viability.
This includes relocating to a data center in Salt Lake City, Utah, he said:
"It'll work out a lot better for us power-wise, just the facility itself. Once we have everything taken care of in with attorneys, get out of Tampa, get everything out in Salt Lake City, we'll be somewhere around 500 TH/s of mining power."
Kenrick acknowledged that the full ramifications of the bitcoin and hardware theft - as well as the incident at BTCJam - may take time to resolve. However, he said that the company is actively working with law enforcement and legal experts to find a solution.
Despite the uncertain situation regarding the whereabouts of the alleged thief - unsubstantiated reports indicate that he may have planned to flee the US, it appears that both Digital Mining Investments and the BTCJam community are working to move past the incident.
Mounir Shita, a user who loaned money to the man, told CoinDesk that he will continue to invest on the platform despite the incident, saying:
"He was my first investment and my first loss. Promised 72 hours return, loan is now past due. No word from borrower. Still believe in BTCJam community, so one loser won't stop me from trusting others."
CoinDesk will continue monitoring this situation as the investigation in Tampa unfolds.
Hacker image via Shutterstock
Additional reporting by Emily Spaven.