Luxury cars, designer watches and wads of cash – it’s a murky word of crypto fraudsters who dupe rookie investors out of life savings.
And a north-east man fell victim to one criminal who convinced him he would make thousands of pounds – only to leave him broke.
A court this week brought that man to justice – and we can now reveal the inside story of how the landmark police investigation unfolded.
John, not his real name, is the dad of a young child from Aberdeenshire.
The 30-year-old has asked to remain anonymous as, according to police, he still feels embarrassed at being hoodwinked out of £10,000 savings – and some of his loved ones don’t know about what happened.
When he’s not hard at work, John plays video games online – and part of that involves being part of online communities.
Gamers chat on an app called Discord, where they can arrange when they will next play together online.
But criminals are exploiting the positive community spirit in those groups with evil motives.
And one of those was Benjamin Riley, from Elland, in northern England.
Riley boasted on social media how he had designed a computer system to look for signals that the cryptocurrency markets were going to go up or down and so he could make money from it.
But the unemployed 23-year-old never revealed details in a public forum – instead he invited anyone interested to join his group on Discord.
In September 2021, John signed up to Discord.
Detective Sergeant David Williamson, Divisional Cyber Enabled Crime Team, North East, said: “The system Riley mentioned is known as ‘bot technology’.
“It’s a computer program, which can exploit variations in the market and enhance your returns. That’s the sales pitch.
“Our victim has decided ‘yeah, I’ll buy that. I’ll like this.’ There are other members of the group who have done the same – sending money to Riley.”
Riley’s criminal plan was put into action on September 14 2021 when John invested £1,300.
John transferred money from his bank account to his account with cryptocurrency exchange Binance.
John then converted his sterling into cryptocurrency on Binance and transferred it to Riley.
Over the course of the autumn of 2021, Riley, who had the username CSBen, convinced John everything was good and John invested more.
So how did Riley convince Ben the fake system was working?
Riley teamed up with an accomplice from Belgium who designed an animation.
This animation appeared to the untrained eye as though it showed the live market – but it was all a mirage.
In reality, Riley and his accomplice could click a button and trigger the graph to show a surge in profit.
DS Williamson: “Our victim was able to watch his investment going up in real-time – or so he thought.
“As our investigation progressed, what we were able to see was a chat between Riley and a man who is clearly involved in this fraud.
“He’s developed what is essentially a picture to manipulate what the victims see on the screen.
“John has seen his money going up. But it was all make-believe.”
And then there was a further convincer.
John asked Riley to send him £1,500 so he could buy essential items for his child.
Riley sent the funds.
That meant John was more likely to speak favourably of the system in the group, duping new victims.
DS Williamson said: “This amount was billed as profit. John had been given a wee tickle with the transfer of that £1,500 to make it seem like everything was well.”
Riley’s devious plot was ticking over with no complaints – until things took an ominous turn at Christmas 2021.
Up to point, Riley was the life and soul of the party, posting dozens of times a day in his Discord group.
And then suddenly – he vanished.
There was no sign of Riley throughout December and, though his accomplice said it was because he was ill, nobody bought the tall tale.
It was radio silence into the new year 2022.
John was worried about the remaining £8,500 he had tied up in the scheme.
And then things got even worse.
On January 17, 2022, John was kicked out of Riley’s Discord group.
Feeling distressed, John alerted Police Scotland, who took a statement and started to build a profile on who was behind this online group.
DS Williamson said: “At this stage, you’ve got all these people in Riley’s Discord group who cannot contact Riley. They were worried and angry.
“It sparked a flurry of activity in the chat because you had people from all over the world who had invested money.
“We were being contacted by people in Peru, Moldova and Germany who alleged they had given money to Riley.
“We almost became the north-east division’s world police.
“It was a frenzy of activity because so many people wanted to get their hands on this chap.”
Detectives were determined to figure out who CSBen really was – and they had unprecedented help from Binance.
This is the first time in legal history that police in Scotland have secured a warrant to search a cryptocurrency exchange’s records to catch a criminal.
DS Williamson said: “Binance was helpful. We actually managed to go and execute a warrant at Binance.
“We were the first law enforcement team in Scotland to have done that.
“When you consider Binance is the world’s biggest cryptocurrency exchange, that kind of tool can be invaluable.”
Officers used the information supplied to establish a digital fingerprint for Riley.
They scoured the web for clues about his real identity and whereabouts and cross-referenced his IP address, an email address and his phone network to pinpoint him to an address in Halifax.
Then in October 2022, a team of police officers travelled from Aberdeen to Yorkshire and executed search warrants at two addresses – and snared a shocked Riley at his parents’ house in Halifax.
DS Williamson said: “Judging by his reaction, he was surprised at seeing us.
“There was continual spending on fancy, flash cars which was not in keeping with a guy who was unemployed.
“He had an Audi RS3 car with a private registration.
“We were able to recover a couple of high-value watches.”
This included a Breitling brand watch worth around £3,000.
It is hoped the authorities will eventually give the Crown permission to sell those items if they are proved to be the proceeds of crime.
Criminal’s explanation not considered ‘true or accurate’
Records also show Riley was spending his ill-gotten gains on showering his then girlfriend – now-ex – with gifts, including expensive jewellery and designer watches.
Riley was arrested and admitted to running an investment system on Discord but claimed his account had been hacked.
At Aberdeen Sheriff Court on Friday, Sheriff Mark Stewart KC told Riley he didn’t believe this explanation was “a true, accurate or a straightforward account” of what happened.
Riley pled guilty to one charge under the Proceeds of Crime Act at Peterhead Sheriff Court on February 9 this year and was sentenced on March 22.
Riley admitted receiving and converting £8,000 worth of cryptocurrency into pounds Sterling – money he was not entitled to.
His defence solicitor Ian Woodward-Nutt told the court that Riley had set up a cryptocurrency investment information group on Discord but that his client had been the victim of “a hack”.
‘This is his downfall’
“Unknown third parties were imitating him and charging others in this group for services claiming to be from him,” he said.
“It wasn’t long until he came to the unwanted attention of these unknown third parties.
“He tells me that effectively the Discord system was compromised and that these third parties could use a plug-in to allow them to access his own Discord account.
“In turn, that allowed others to take his own personal details.”
Mr Woodward-Nutt stated that his client was operating within the “somewhat murky world of cryptocurrency trading” which is an “unregulated environment”.
“He was threatened by [those third parties], and as a result of those threats he provided the personal details of his Binance wallet – in doing so, he assumed he was walking away from money he had invested himself,” Mr Woodward-Nutt said.
“But what seems to have been the case is that those third parties were able to access the accounts of other innocent parties.
“My client was then able to regain access to his Binance wallet where he discovered funds he knew did not belong to him.
“This is his downfall, what he did then, knowing that was criminal property, he transferred that cryptocurrency into his account – he took the money.”
Sentencing Riley, Sheriff Stewart said he had read the background report into his offending which he “wasn’t persuaded was true, accurate or a straightforward account of what happened”.
He added: “The point is that you took advantage of what money was paid in and transferred that money to your own benefit.”
Sheriff Stewart made Riley subject to a community payback order for 12 months and ordered him to carry out 200 hours of unpaid work.
Cryptocurrency is unregulated
DS Williamson said: “Riley used the hard-earned cash of John to fund a lavish lifestyle.
“Police got involved after Riley had pulled the rug on the con and nobody was able to get hold of him in the Discord group.
“That was when John realised his money was gone.
“By December 2022, Riley had decided he had had enough and wanted to close the operation down, but was unable to – and the chat logs that came from his group provided an insight into his offending.”
Detective Chief Inspector Jamie Sherlock, North East Division CID, said: “Unfortunately, financial crime is one that is becoming more and more prevalent and sophisticated.
“The harm and cost to our communities cannot be underestimated.
“In June 2021, North East Division, as part of our commitment to tackling the rise in financial crime enabled by technology, set up a full-time dedicated team of officers.”
First prosecution of this sort
DS Williamson said: “Cryptocurrency investment can have a high return, but the market can be unpredictable.
“Criminals use the potential for high returns on investment to draw people in and commit fraud.
“Investigating cryptocurrency fraud, as you can imagine, can be complicated and challenging.
“Unfortunately, cryptocurrency is almost entirely unregulated, so you don’t have the security of, for example, a financial ombudsman.
“Also, victims tend to be worldwide, so despite good partnerships working with other law enforcement agencies and financial institutions, we can only investigate crimes that happen to people in Scotland.”
He added: “This is our first successful prosecution with regard to crime underpinned by crypto locally, but it won’t be our last.
“We are gaining more and more experience in this type of crime.
“Our knowledge and close partnership working will only serve to help people who find themselves a victim of this type of crime.
“Criminals operate in the belief that using cryptocurrency provides them with anonymity. It does not.”
