Uzbekistan National Extradited from Ukraine Facing $11.8 Million Cryptocurrency Theft Charges
U.S. Attorney Trini E. Ross has confirmed the extradition of Nikita Andreevich Sklyuev, also known as Valeriy Dorojkin, a 37-year-old from Uzbekistan. He has been charged with wire fraud and the unauthorized use of an access device related to a cryptocurrency theft totaling $11.8 million. If convicted, Sklyuev could face up to 20 years in prison along with a potential fine of $250,000.
Details of the Allegations Against Sklyuev
Assistant U.S. Attorney Douglas A. C. Penrose, assigned to the case, explained that in June 2018, Sklyuev submitted a malicious software application named “EOSIO Wallet Explorer” to Apple for distribution via the Apple App Store. Although marketed as a cryptocurrency wallet, the application was intended to deceive users into revealing their private keys, which would allow Sklyuev to access their cryptocurrency holdings.
Victim’s Loss and Unauthorized Access
In September 2018, a resident of the Western District of New York, referred to as the Victim, downloaded and installed the EOSIO Wallet Explorer on his iPhone. After entering his private key post-installation, Sklyuev unlawfully accessed the Victim’s cryptocurrency wallet, which contained over $2 million worth of EOS, equivalent to $11.8 million at that time.
Control Lost and Further Transfers
On September 25, 2018, Sklyuev altered the private key for the Victim’s wallet, which resulted in the Victim completely losing access to his funds. By February 2019, Sklyuev had moved the EOS cryptocurrency from the Victim’s wallet to multiple other online wallets that he controlled.
Legal Proceedings and Extradition Details
Sklyuev was arraigned before U.S. Magistrate Judge Jeremiah J. McCarthy this morning and is currently being detained awaiting a hearing set for July 3, 2024. His extradition from Ukraine, which occurred on June 20, 2024, was facilitated by collaboration between the Justice Department’s Office of International Affairs and law enforcement agencies in Romania and Ukraine. The indictment stems from an investigation conducted by the Federal Bureau of Investigation, led by Special Agent-in-Charge Matthew Miraglia, and the U.S. Marshals Service, under the leadership of Marshal Charles Salina. It is important to note that the allegations against Sklyuev are merely accusations, and he is presumed innocent until proven guilty.
The Cryptocurrency Landscape in Uzbekistan
Uzbekistan has enacted extensive regulations to oversee and license cryptocurrency operations within the country. These regulations aim to enhance the transparency and legitimacy of the cryptocurrency sector, issuing licenses to various entities, including exchanges and depositories. This regulatory environment is expected to increase investor trust and stimulate growth in Uzbekistan’s digital asset market.
Moreover, projections indicate that the cryptocurrency market in Uzbekistan will grow by 11.99% between 2024 and 2028, potentially reaching a volume of $36.3 million by 2028. While crypto assets are officially recognized and regulated, they do not hold the status of legal tender. As of January 1, 2023, all cryptocurrency transactions, including those conducted by non-residents, are exempt from taxes.
The National Agency for Prospective Projects (NAPP) acts as the chief regulatory body, focusing on establishing high standards for Crypto Asset Service Providers (CASPs) to maintain a competitive and stable market environment. Uzbekistan’s legal framework differentiates between mining operations and CASPs, requiring licenses for various categories such as exchanges, stores, depositories, and mining pools.
Key players in Uzbekistan’s cryptocurrency sector include UzNEX, Coinpay, Lockton Hub, and Paynet Crypto. Additionally, NAPP has partnered with Tether to encourage the development of crypto-assets and blockchain infrastructure within the country.
