Ex-Microsoft Employee Sentenced To 9 Years in Prison for Stealing $10 Million in Digital Currency

Sometimes the biggest threat to an organization’s data and IT systems are the employees who work there.

A 26-year-old Ukranian citizen who was found guilty of stealing millions of dollars in digital currency and using the proceeds to fund a lavish lifestyle was sentenced Monday by a federal judge in Seattle to nine years in prison and ordered to pay more than $8.3 million in restitution.

Software engineer Volodymyr Kvashuk worked as a Microsoft contractor and was later hired in 2016 by the company, where he helped test its online retail sales platform. Kvashuk used that access to steal digital currency such as gift cards that could be redeemed for Microsoft products, which he would then sell online, according to court documents. He used the proceeds to buy a $1.6 million lakefront home and a $160,000 Tesla car.

The scheme started out small, according to prosecutors. Kvashuk initially stole about $12,000 using his own account access, but later used test email accounts belonging to other employees to siphon funds. He also used a bitcoin mixing service, also known as a tumbler, to launder the funds and mask where they came from. Over the course of about seven months, Kvashuk was able to transfer $2.8 million in bitcoin into his bank and investment accounts, and filed fake tax returns claiming that the digital currency was a gift from a relative, according to court documents. Kvashuk was fired in 2018.

“Kvashuk’s scheme involved lies and deception at every step,” prosecutors wrote in a sentencing memo. “He put his colleagues in the line of fire by using their test accounts to steal CSV [currency stored value]. Rather than taking responsibility, he testified and told a series of outrageous lies.”

Kvashuk was convicted by a jury in February of wire fraud, money laundering and aggravated identity theft, among other offenses. He faced more than 20 years in prison. In the sentencing hearing, U.S. District Judge James L. Robart said Kvashuk “didn’t have any respect for the law.”

Microsoft could not be immediately reached for comment.

The IRS’s criminal investigation unit and the U.S. Secret Service were involved in the investigation, according to a Justice Department press release.

Adam Janofsky

Adam Janofsky is the founding editor-in-chief of The Record by Recorded Future. He previously was the cybersecurity and privacy reporter for Protocol, and prior to that covered cybersecurity, AI, and other emerging technology for The Wall Street Journal.

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