A Long Island man was accused on Wednesday of using his position as IT supervisor for Suffolk County to mine cryptocurrency from government offices, costing the county thousands of dollars in electricity.
Prosecutors said Christopher Naples, 42, of Mattituck, LI, had hidden 46 specialized devices used to mine Bitcoin and other cryptocurrencies in six rooms at the Suffolk County Center in Riverhead, including under the floor and at inside an unused electrical panel.
Mr. Naples has been charged with public corruption, robbery, computer intrusion and official misconduct. If found guilty on the main charge, he faces up to 15 years in prison. A lawyer for Mr Naples did not immediately respond to a request for comment.
“We are talking about a huge amount of energy,” Timothy D. Sini, the Suffolk County District Attorney, said at a press conference on Wednesday, calling it a highly technical matter involving an unusual level of expertise. from investigators.
Mr Sini said Mr Naples admitted the devices were his own and had been using them for at least several months before the prosecutor’s office was alerted to the scheme.
Cryptocurrency mining, better known as Bitcoin, is a shortcut for a complicated process that is at the heart of the difference between cryptocurrencies and traditional currencies.
While the value of traditional currencies, like the dollar, is guaranteed by governments, the value of cryptocurrencies is guaranteed by its network of users. This guarantee means that whenever someone pays anything with, for example, Bitcoin, businesses and individuals compete against each other to validate that transaction and enter it in the ledger that follows every transaction made with Bitcoin.
“It’s just math,” Sini said at the press conference. “This is math that human beings cannot do.”
The process of mining cryptocurrency requires a huge amount of electricity to power the necessary devices: The New York Times found that the electricity spent each year to create Bitcoin exceeds that used each year by the Finnish nation.
Prosecutors said at least 10 of Mr Naples’ machines had been in operation since February, costing Suffolk County more than $ 6,000. Mr Sini said that since 36 more machines had been discovered, it was likely that Mr Naples had cost the county thousands more. Mr. Naples is still under investigation.
Some have argued that, by their very nature, cryptocurrencies go hand in hand with criminal enterprise. Janet L. Yellen, the United States Secretary of the Treasury, said in an interview with CNBC in February that she was concerned that Bitcoin was often used for “illicit financing” purposes. The technology has become a concern for state and federal regulators, given how quickly it has developed and how poorly understood it is.
Ari Redbord, head of legal and government affairs at TRM Labs, a company that investigates cryptocurrency crimes, and a former federal prosecutor, said the association between cryptocurrency and criminal activity has grown. was developed because the qualities that made the technology useful had made it attractive to criminals, who “also want to move funds at the speed of the Internet”.
“What you often see in any new financial system is really early adoption by illicit actors who care less about the things that are of concern to traditional actors in the financial system,” he said.
But he pointed out that activity related to potential crimes only made up a small percentage of all cryptocurrency transactions, and said new technological tools would make it easier for investigators to track money flows than they did. they had not been able to do so with traditional currencies.
The lack of understanding of cryptocurrency and blockchain technology more generally has allowed the possibility of cryptocurrency-related patterns that do not involve ransomware, terrorism, or international money laundering. Rather, they are pedestrian crimes with a 21st century twist.
In another example on Wednesday, Ohio man Michael Ackerman pleaded guilty in Manhattan Federal District Court to an investment scheme in which prosecutors said he defrauded hundreds of investors. over $ 30 million, telling them he would use their money to invest. in crypto.
Instead, he used at least $ 9 million of his investors’ funds to buy numerous real estate and hundreds of thousands of dollars in Tiffany jewelry, prosecutors said.
Mr Naples, who has worked for Suffolk County since 2000 and whose title is deputy director of IT operations, was released on bail on Wednesday.
Mr Sini said that a room in which Mr Naples had placed the devices contained computer servers and other equipment of critical importance to the entire county, and that the temperature in that room in which the devices were placed had dropped 20 degrees shortly after they were turned off.
“Not only do we have thousands of dollars of taxpayer money to fund this operation, but it also puts the county’s infrastructure at risk,” Sini said.
Mr. Naples’ use of the internet was such that other county employees complained about the slowdown in service, Sini said. He also said the county had repeatedly called in workers to fix the air conditioning in the room Mr Naples had installed the machines in.