A Uzbek man extradited from Ukraine was arraigned Wednesday in Buffalo on federal charges that he gained unauthorized control of an individual’s cryptocurrency account worth nearly $12 million.
Nikita Sklyuev, 37, of Uzbekistan, faces charges of wire fraud and fraudulent use of unauthorized access device, according to the U.S. Attorney’s Office.
U.S. Magistrate Judge Jeremiah J. McCarthy unsealed a May 2021 indictment that accused Sklyuev of tricking a Western New York resident into buying a computer software application purportedly to serve as a cryptocurrency wallet.
Instead, the “malicious” computer software application was designed to steal the person’s private key to the digital account, according to Assistant U.S. Attorney Douglas A. C. Penrose, the prosecutor handling the case for the government.
Once the person entered his private key – similar to a password – on his iPhone in 2018 for his cryptocurrency account, Sklyuev gained unauthorized access to the cryptocurrency wallet, according to Penrose. Sklyuev changed the private key to the wallet, which resulted in the Western New York man losing all control and access to his wallet.
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In February 2019, Sklyuev transferred the cryptocurrency from the wallet to numerous other online wallets that were under his control, according to the prosecutor.
At the time, the cryptocurrency was valued at about $11.8 million.
The charges against Sklyuev, also known as Valeriy Dorojkin, carry a maximum penalty of 20 years in prison and a $250,000 fine.
Sklyuev is being held pending a detention hearing next week.
The arraignment followed his extradition last week from Ukraine. The Justice Department Office of International Affairs worked with Romanian and Ukrainian authorities to secure his arrest and extradition, according to the U.S. Attorney’s Office.
Patrick Lakamp can be reached at plakamp@buffnews.com