Key Takeaways
- • A federal jury in New York convicted U.S. crypto trader Jonathan Spalletta (aka Cthulhon and Jspalletta) of one count of computer fraud and one count of money laundering after a six-day trial.
- • Court filings allege that in April 2021 Spalletta carried out two exploits of the decentralized exchange Uranium Finance, the first withdrawing far more crypto rewards than he was entitled to and the second draining US$53.3 million from multiple liquidity pools.
- • The second exploit forced Uranium Finance to shut down because it no longer had sufficient funds.
- • U.S. authorities allege Spalletta laundered the proceeds through complex transactions, including the Tornado Cash crypto mixer, and spent part of the funds on rare Pokémon cards, antique coins and other collectibles.
Summary
A federal jury in New York found U.S. crypto trader Jonathan Spalletta guilty of computer fraud and money laundering following a six-day trial. The conviction stems from a series of deceptive trades that exploited weaknesses in the "smart" contracts of Uranium Finance, a decentralized cryptocurrency exchange. Spalletta is also known as Cthulhon and Jspalletta.
According to court filings, Spalletta carried out two hacks of the exchange in April 2021. In the first, he executed a series of deceptive trades that allowed him to withdraw far more in crypto rewards than he was entitled to, draining one of the exchange's liquidity pools of nearly all of its rewards. In the second, he exploited a flaw in a smart contract that spanned multiple liquidity pools and drained US$53.3 million in crypto. The loss left the exchange without sufficient funds, and it shut down as a result. Quartz, in a separate report, described the case as a $55 million crypto hack, a figure that differs slightly from the amount cited in court filings.
U.S. authorities further allege that Spalletta laundered the illicitly obtained crypto through a complex series of transactions, including the use of the Tornado Cash crypto mixer. Prosecutors contend that he used part of the proceeds to buy rare Pokémon cards, antique coins and other collectibles. The jury's verdict covers one count of computer fraud and one count of money laundering. The available reporting does not specify a sentencing date.
According to court filings, Spalletta carried out two hacks of the exchange in April 2021. In the first, he executed a series of deceptive trades that allowed him to withdraw far more in crypto rewards than he was entitled to, draining one of the exchange's liquidity pools of nearly all of its rewards. In the second, he exploited a flaw in a smart contract that spanned multiple liquidity pools and drained US$53.3 million in crypto. The loss left the exchange without sufficient funds, and it shut down as a result. Quartz, in a separate report, described the case as a $55 million crypto hack, a figure that differs slightly from the amount cited in court filings.
U.S. authorities further allege that Spalletta laundered the illicitly obtained crypto through a complex series of transactions, including the use of the Tornado Cash crypto mixer. Prosecutors contend that he used part of the proceeds to buy rare Pokémon cards, antique coins and other collectibles. The jury's verdict covers one count of computer fraud and one count of money laundering. The available reporting does not specify a sentencing date.
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