Chinese arrest 20 in major Crypto Currency Mining scam

According to Chinese-language publication Legal Daily police in two districts of China have arrested 20 people for their roles in a major crypto currency mining operation that earned the criminals more than 15 million yuan (currently about $2M USD).

The hackers installed mining software developed by Dalian Yuping Network Technology Company ( 大连昇平网络科技有限 ) that was designed to steal three types of coins.  Digibyte Coins (DGB, currently valued at USD$0.03 each),  Siacoin (SC, currently valued at $0.01 each) and DeCred coins (DCR coins, currently valued at $59.59 each).

It is believed that these currencies were chosen for the dual reason that they are easier to mine, due to less competition, and that they are less likely to be the target of sophisticated blockchain analysis tools.

The Game Cheat Hacker

The investigation began when Tencent detected the presence of a hidden Trojan horse with silent mining capabilities built into a cheat for a popular first person shooter video game. The plug-in provided a variety of cheats for the game, including "automatic aiming", "bullet acceleration", "bullet tracking" and "item display."   Tencent referred the case to the Wei'an Municipal Public Security Bureau, who handled the case extremely well.  As they learned more about the trojans, they identified first the social media groups and forums where the trojan was being spread, and traced the identity of the person uploading the trojaned game cheat to a criminal named Yang Mobao. Mobao participated as a forum moderator on a site called the "Tianxia Internet Bar Forum" and members who received the cheat from him there widely shared it in other forums and social media sites, including many file shares on Baidu. Mobao was popularizing the cheat program by encouraging others to make suggestions for new functionality.  The users who were using the tool did not suspect that they were actually mining crypto-currency while using the cheat.  More than 30,000 victims were using his cheat software and secretly mining crypto-currency for him. Yang Mobao had a strong relationship with gamers from his business of selling gaming video cards to Internet cafes.  He installed at least 5,774 cards in at least 2,465 Internet cafes across the country, preloading the firmware on the cards to perform mining.  It turns out that these cards ALSO were trojaned!  As a major customer of Dalian Yuping, Moubao was offered a split of the mining proceeds from the cards he installed, earning him more than 268,000 yuan. Yang is described as a self-taught computer programmer who had previously worked management Internet cafes.  After experiencing some profit from the scheme above, he modified the malware embedded in some of the video cards and installed his own miner, mining the HSR coin and transferring the proceeds to a wallet he controlled.

The Video Card Maker

After Yang Mobao confessed to his crimes, the cybercrime task force sent 50 agents to Dalian, in Liaoning Province.  The Task Force learned that Dalian Yuping Network Technology had been approached by advertisers, who paid them embed advertising software on their video cards, which were then installed in 3.89 million computers, mostly high-end gaming systems installed in video cafes.  The company's owner, He Mou, and the company's Financial Controller, his wife Chen Mou, had instructed the company's head of R&D, Zhang Ning, to investigate mining software and to experiment with various mining trojans.  In addition to the illegal advertising software embedded in those 3.89 million video cards, their crypto currency mining software was embedded into 1 million additional video cards which were sold and deployed in Internet cafes across the country. Each time one of those machines successfully mined a coin, the coin was transferred to a wallet owned by He Mou.  Chen Mou could then cash them out at any time in the future.  16 suspects at the company were interrogated and 12 criminally detained for the crime of illegally controlling computer information systems.  Zhao was sentenced to four years himself. (I learned of this story from CoinDesk's Wolfie Zhao, and followed up on it from the Legal Daily story he links to as well as a report in Xinhuanet, by Reporter Xy Peng and correspondent Liu Guizeng Wang Yen.) （记者 徐鹏 通讯员 刘贵增 王艳）