Police make Queenslands' first bitcoin arrest

Queensland Police have made what is believed to be the state’s first bitcoin-related arrest.

Police say about $110,000 worth of the digital currency was in the possession of Kingaroy man Shane Duffy, who is accused of hacking a US-based gaming network and selling player information to the highest bidder.

Bitcoin, a borderless digital currency, is often used instead of traditional cash methods online but is becoming more commonplace in mainstream business. Bitcoin values are known to fluctuate dramatically, with 1 coin currently worth about $616.

Police allege Mr Duffy hacked the League of Legends game network database between July 14 and July 26 last year, where he was able to acquire the IP addresses of players and sell them online.

Mr Duffy, 21, was arrested on Tuesday in Hervey Bay by Maryborough police and officers from the Fraud and Cyber Crime Group and charged with possessing tainted property.

He was already out on bail for alleged fraud and computer hacking charges relating to the League of Legends matter, and police claim some of the bitcoins he allegedly possessed were payment for selling the player information.

By purchasing the IP addresses, players could potentially launch denial-of-service attacks on rivals’ computers to slow connection speeds and hamper gaming ability.

Investigators also allege Mr Duffy hacked the gaming network’s Twitter account and posted confidential information and screenshots.

However in March, Mr Duffy’s mother said her son - a self-taught computer whiz with Asperger's Syndrome - was not responsible for the hacking.

“Shane’s capable, but then the information he had and accessed was freely available on the internet. Somebody else has thrown the database out there,” she told News Corp.

Police also charged Mr Duffy with breaching his bail conditions around internet usage and keeping them informed of his residential address.

Mr Duffy has been bailed again and is due to face Hervey Bay Magistrates Court on July 24.

Detective Superintendent Brian Hay from Queensland Police's Fraud and Cyber Crime Group said he expected bitcoin-related crimes to increase.

“This is the start of the future. We know that they’re heavily used in the dark markets by cyber criminals. It provides a cloak of anonymity, it sits outside the standard reporting regime and banking structure,” he said.

“This is a challenge every law enforcement agency in the world has to stand up and meet. It’s going to afford us significant challenges and it is not an easy matter to follow.”

Brisbane Times.com