Kvashchuk Vladimir

Biography

2019: Arrest for stealing $10 million from Microsoft

On July 17, 2019, the Seattle prosecutor's office charged 25-year-old Ukrainian Vladimir Kvashchuk with stealing money from Microsoft. A former company programmer spent stolen digital currency on expensive purchases.

At Microsoft, Vladimir Kvashchuk, who lives in Renton, Washington (USA), was testing a platform for online sales of products as part of the Microsoft Universal Store Team (UST).

Ukrainian programmer Microsoft stole $10 million from the company to buy a Tesla house and electric car

UST is the main commercial mechanism of Microsoft, whose task was to create a single universal store for all trading activities in the company, "Sam Guckenheimer, responsible for product development Azure DevOps at Microsoft, explained to The Reguster in 2017. - UST covers everything that Microsoft sells and sells to others through the company - consumer, corporate, digital and physical goods, subscriptions, transactions - through any channels and displays.

Members of the UST team set up test accounts in the Microsoft online store using specially created email addresses and credit cards. These accounts are used for trial purchases in the store without actually debiting money. Developers then whitelist their test accounts to bypass Microsoft security and mitigate risks. But when developing its testing system, Microsoft overlooked a significant attack vector.

A test program was developed to block the delivery of physical goods. Microsoft did not expect testers to make test purchases of digital currency, so no precautions were introduced to prevent withdrawal of money, the company said in a complaint.

While working on the project, Vladimir Kvashchuk noticed a loophole that made it possible to make test purchases of digital gift cards with a balance in cryptocurrency, receiving valid keys to them.

The digital cards thus obtained, Kvaschuk then resold on the Internet at prices below face value, and also used to buy Microsoft goods.

Investigators found out that a former employee of the company tried to hide the traces of the crime using the so-called "mixing services." These are special services that receive bitcoins from different addresses and forward them to several others with one translation, which both recipients and senders are known to have, but which one of them and what exactly it transmitted knows only the mixer itself.

Vladimir Kvashchuk turned to such services that make it difficult to track transactions before transferring funds to bank accounts.

According to the investigation, such a scheme, which the fraudster used for seven months, allowed the young man to illegally earn $10 million. He transferred $2.8 million to his bank accounts, despite the fact that his salary was $110 thousand per year.

He spent part of this money on the purchase of a house near the lake ($1.6 million) electric vehicle Tesla and ($160 thousand). Kvashchuk initially worked at Microsoft under a contract, and in 2016 he became a full-time employee.

The house that Vladimir Kvashchuk bought with money stolen from Microsoft

Vladimir Kvashchuk was fired in June 2018 after the disclosure of the scheme. Ex-Microsoft programmer arrested on July 16, 2019. The Associated Press could not contact Kvaschuk's lawyer for comment.

For criminal acts for which Vladimir Kvashchuk was charged, he faces up to 20 years in prison and a fine of $250 thousand, if proven guilty in court. By July 18, 2019, the investigation in this case is being conducted by the US Secret Service and the cybercrime unit in. the AmericanUS Internal Revenue Service^[1]

2020

9 years in prison for embezzlement of funds from Microsoft

In November 2020, the Seattle District Court (state) Washington sentenced Vladimir Kvashchuk to nine years in prison for embezzling money Microsoft from while working for this company. In addition, the Ukrainian will have to pay Microsoft compensation in the amount of $8.3 million.

The jury found the 26-year-old citizen Ukraine of Kvaschuk guilty of 18 criminal offenses: five cases of fraud, six cases of money laundering, two cases of aggravated identity theft, two cases of illegal tax refunds, as well as several cases of computer hacking. After the end of the prison term, the Ukrainian will be deported to his homeland.

Ukrainian Kvashchuk Vladimir, who worked at Microsoft, was sentenced to 9 years in prison for stealing $10 million from the company

According to the US Department of Justice, in total, the program withdrew more than $10 million, and in order to hide digital traces of crimes, part of the amount was transferred to bitcoins. He declared these funds in the tax return a gift from a relative.

Kvaschuk's scheme consisted entirely of lies and deception. He put his colleagues at risk using their test accounts for embezzlement. Instead of taking responsibility [for the deed], he testified, consisting of outrageous lies. Kvashchuk shows no signs that he feels remorse or regrets his crimes, the prosecutor's office said.

Prosecutor Brian Moran noted that this case required complex technical skills in the investigation and prosecution process, but law enforcement agencies and prosecutors had the skills to bring such criminals to justice.

Stealing from your employer is bad, but stealing and creating the appearance that your colleagues are to blame increases the damage that goes beyond material funds, "he added.[2]

Guilty of stealing $10 million from Microsoft

At the end of February 2020, the court found Vladimir Kvashchuk guilty of stealing from Microsoft $10 million in digital currency while working for the company.

A Ukrainian citizen living in the city of Renton (state, Washington USA) was convicted of five counts of fraud using electronic tools, six counts of money laundering and seven other charges related to embezzlement of funds. He was also convicted of hacking email and two computers.

Vladimir Kvashchuk

In addition to Microsoft, Vladimir Kvashchuk also stole from the government by hiding his fraudulent income and filing false tax returns, "said Ryan  Korner, special commissioner of the IRS-CI (US Tax Service division).  - The grand scheme of Kvaschuk was disrupted by the stubborn work of the cyber division IRS-CI.  Criminals who believe that they can hide their actions using cryptocurrency and money laundering through mixers [services for "mixing" cryptocurrencies that greatly complicate transaction tracking - approx. TAdviser] should know you will be caught and you will be held accountable.

In his defense, Kvaschuk said that he "did not intend to deceive Microsoft" and that he "is working on a special project in the interests of the company."  Given that he used the funds to buy a house worth $1.6 million and a Tesla car worth $160 thousand, the jury found the 26-year-old Ukrainian guilty of all charges after five hours of discussion.

According to the US Department of Justice, at the time of the arrest of the accused, he owned $2.8 million in bitcoins, and he declared this money in tax as a gift from relatives.^[3]

Vladimir Kvashchuk will go to prison for up to 20 years. He will begin serving his sentence in June 2020.

2021: Details of the $10 million theft scheme from Microsoft

In early July 2021, details of the theft scheme by Ukrainian programmer Vladimir Kvashchuk $10 million from Microsoft became known. According to Bloomberg, when the company hired Kvaschuk for a permanent position as an engineer with an income of $116 thousand per year, the programmer discovered a loophole that allowed him to steal funds when working with gift cards.

Vladimir Kvashchuk created a computer program PurchaseFlow.CS, which accelerated this process. With a few clicks in the application, he could choose the face value of the gift card (30, 75, 100), the output currency (US dollars, euros, British pounds) and the desired number of purchases. Later, the prosecutor's office reported that the program was "created with one goal: to automate theft and allow fraud and theft on a large scale."

There were details of the theft scheme by Ukrainian programmer Volodymyr Kvashchuk $10 million from Microsoft

Xbox gift cards with a face value of $30, $50 and $75 Kvaschuk sold at a discount of about 55%. For foreign buyers, the seller offered five more currencies, including the Japanese yen and the Australian dollar. Kvaschuk worked under the nickname Grizzled Wolf on Paxful.com, a leading trading platform for exchanging gift cards for cryptocurrency, usually bitcoin.

Kvashchuk began selling cards from $10 to $100 and in two years stole 152 thousand Xbox gift cards worth $10.1 million. So that Microsoft does not expose it, the programmer stole the logins and passwords of his colleagues and "bought" cards using VPN.

When the feds got into the Ukrainian's house, they found draft entries on purchases of gift cards, data from the crypto wallet where Kvashchuk was withdrawing funds, as well as a note in which Kvashchuk painted where he would spend his $10 million.

Kvashchuk pleaded not guilty, his lawyer said:

He generated gift card codes to help the company. The more free Xbox games Kvaschuk handed out, the more popular the platform became, increasing overall costs.[4]

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