On Feb. 25 former Microsoft employee Volodymyr Kvashuk was charged with six counts of money laundering, five counts of wire fraud, two counts of aggravated identity theft, two counts of filing false tax returns, and one count of access device fraud, mail fraud, and access to a protected computer.
The 25 year-old Ukrainian national received his bachelor’s and master’s degrees in economics and cybernetics from the National University of Ostroh Academy.
Kvashuk worked as a contractor for Microsoft from August 2016 to October 2017. The Redmond tech giant hired Kvashuk as a full-time employee in December 2017, where he worked until he was fired in June 2018.
At the company, Kvashuk was a member of the Universal Store Team (UST). He wrote programming codes that operated Microsoft’s online store and tested those codes to make sure they worked as were intended.
All UST members had designated test accounts using digital credentials where they could simulate a Microsoft customer’s experience when it comes to online shopping. In addition to the test accounts, USTs were given test in production cards (TIPS), which acted as phony credit cards.
Microsoft used a program called Fiddler, which tracked the exact steps that caused any unwanted features on the website. Some Fiddler reports included UST user name and password information — something Kvashuk had access to.
Safeguards prevented products in the online shopping carts from actually being delivered and purchased, however no safeguards were in place to prevent the delivery of digital gift cards associated with UST accounts.
As a result, Kvashuk utilized his — and others’ — test accounts to purchase digital gift cards from the Microsoft online store. These gift cards were referred to as CSV, or “currency stored value.” During the time of purchase, Microsoft would generate a 25-digit alphanumeric code that was displayed on the buyer’s screen and sent to that individual’s email address. This code allowed the purchaser to redeem the gift card value.
From 2017-18 Kvashuk accumulated more than $10 million. He used a small portion of the digital gift cards to purchase physical products. He resold the grand portion of CSVs through an online marketplace on which individuals can exchange gift cards for cryptocurrency called “Paxful.”
Kvashuk used four UST test accounts during his scheme:
The first was the “vokas” account, which held the user name “v-vokas.” This account was assigned to Kvashuk. From about April 2017 to October 2017 this account purchased more than $10,000 in digital gift cards.
The “avestu” account was not controlled by any particular UST member because it ran automated tests on the Microsoft store. From November 2017 to March 2018 this account bought about $1.6 million in CSV.
During the same timeframe of the “avestu” account, an account assigned to a Microsoft employee called the “swfe2eauto” account bought about $6.04 million in CSV. The account owner never authorized Kvashuk to use this account.
The final account, “zabeerj2,” purchased about $643,000 in digital gift cards during March 2018. Kvashuk was never permitted to use this account associated with another UST member.
From December 2017 to March 2018 Kvashuk’s Paxful account traded about $7.8 million in Microsoft gift cards for the cryptocurrency Bitcoin. He resold CSV at a 55 percent discount — for every dollar sold, he would receive 55 cents.
About 78 percent of cryptocurrency in his Paxful account was transferred to a Coinbase (cryptocurrency exchange) account in his name. Kvashuk bought three GeForce GTX 1070 video cards, a waterfront home in Renton for more than $1.6 million, a brand new 2018 Tesla Model S P100DL and placed about $2.5 million in Fidelity Investments.
When ordering the graphic cards, Kvashuk sent them to his apartment under the alias “Greg Shikor.”
The digital gift cards sold on Paxful were traced back to Microsoft. The company interviewed Kvashuk twice in May 2018 and he admitted to using the “vokas” account, but neglected to mention the others.
By June 2018, Kvashuk was fired.
Kvashuk was arrested July 16, 2019. Law enforcement agents searched his waterfront home and found incriminating records to include notes, gift card denominations, log-in information for user names and passwords to UST accounts and screenshots of Microsoft order confirmation codes.
Google records relayed Kvashuk’s search engine history which consisted of “cash for gift cards” and “hide my a** web.” In addition, he visited sites that allowed him to “Sell Gift Cards for Cash Online.”
On Dec. 9, 2019, Kvashuk pled not guilty.
A five-day trial was held and Feb. 25. Kvashuk was convicted. He faces up to 20 years in prison.
The Internal Revenue Service Criminal Investigation’s Western Area Cyber Crime Unit and the U.S. Secret Service investigated this case.
