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Ex-Microsoft engineer gets 9 years in prison after using digital currency scheme

The Microsoft campus in Redmond, Wash. (GeekWire File Photo)

An ex-Microsoft engineer was sentenced to nine years in prison for 18 federal felonies after he stole more than $10 million worth of digital currency from his ex-employer and used the funds to finance purchases including a $1.6 million lakefront home and $160,000 Tesla vehicle.

Volodymyr Kvashuk, a 26-year-old software developer and Ukrainian citizen who worked for Microsoft from 2016 to 2018, took advantage of a testing program for Microsoft’s online retail sales platform. He stole “currency stored value” such as Microsoft gift cards and then resold them online.

Kvashuk used a “bitcoin mixing service” to try and mask the source of the funds he was moving into his bank account. He also used test email accounts associated with other employees.

After seven months of illegal activity, Kvashuk transferred about $2.8 million in bitcoin to his bank and investment accounts. He filed fake tax forms and said the bitcoin was a gift from a relative.

Microsoft investigators were able to crack the case and confronted Kvashuk in May 2018. He was fired a month later.

During the five-day trial, Kvashuk said he did not intend to defraud Microsoft and claimed to be working on a “special project to benefit the company,” according to the U.S. Attorney’s Office.

“Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents,” U.S. Attorney Brian Moran said in a statement. “This case required sophisticated, technological skills to investigate and prosecute, and I am pleased that our law enforcement partners and the U.S. Attorney’s Office have the skill sets needed to bring such offenders to justice.”

Kvashuk was convicted in February. He was ordered to pay $8.3 million in restitution and may be deported following his prison term. It’s the nation’s first Bitcoin case with a tax component.

“Simply put, today’s sentencing proves you cannot steal money via the Internet and think that Bitcoin is going to hide your criminal behaviors,” IRS-CI Special Agent in Charge Ryan Korner said in a statement. “Our complex team of cybercrimes experts with the assistance of IRS-CI’s Cyber Crimes Unit will hunt you down and hold you accountable for your wrongdoings.”

Kvashuk, who lives in Renton, Wash., was convicted of five counts of wire fraud; six counts of money laundering; two counts of aggravated identity theft; two counts of filing false tax returns; one count of mail fraud; one count of access device fraud; and one count of access to a protected computer in furtherance of fraud.

Read More: Ex-Microsoft engineer gets 9 years in prison after using digital currency scheme

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