An ex-Microsoft employee stole $10 million in Xbox gift cards

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According to Bloomberg, Volodymyr Kvashuk was hired as a junior engineer at Microsoft’s headquarters in Redmond, Washington, in 2017 to test the company’s e-commerce infrastructure. This entailed simulating payments on Microsoft’s online store with a “faux credit card” that would be flagged in the system to prevent physical goods from being shipped.

Kvashuk, on the other hand, discovered a flaw: if he tested a purchase of Xbox gift cards, the system generated a valid 25-digit code. Instead of reporting the bug, he decided to take advantage of it for financial gain. He created fake profiles for his colleagues by guessing their passwords and routed his internet traffic through servers in Japan and Russia to hide his tracks.

By January 2018, Kvashuk had created a custom computer program that prosecutors described as “created for one purpose, and one purpose only: to automate embezzlement and allow massive fraud and theft.” Kvashuk then sold his illegally obtained codes in bulk for a discount exchange for Bitcoin before processing them through money laundering sites to cover his tracks.

The fraud had started on a small scale, with Xbox cards being generated in increments ranging from $10 to $100. However, by the time federal agents apprehended him two years later, the value of the Xbox gift cards he had stolen had risen to $10.1 million.

The magnitude of the fraud ultimately led to Kvashuk’s demise, as Microsoft had noticed an increase in online purchases using gift card codes. He was also not subtle about his ill-gotten wealth, spending it on a seven-figure lakefront home. When federal agents raided his home in July 2019, they discovered a list of his future investments, including a $4 million home in Maui, a yacht, and a seaplane.

Kvashuk was charged with money laundering, identity theft, wire and mail fraud, and filing false tax returns in February 2020. A judge sentenced him to nine years in prison in November. He will most likely be deported back to Ukraine after serving his sentence and must pay $8.3 million in restitution.

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