In January 2018, over 600 computers valued at $2 million were stolen from a bitcoin mining facility in Reykjavik, Iceland.
That night was only the beginning of the biggest heist in the country’s history. What followed were prison breaks, deception, and an attempt at a perfect crime.
The mastermind behind the crime was Sindri Stefansson, a man about 30 years old who had a history of burglary and drug possession. He’d found work as a web designer and other odd jobs to get by, but his appetite for wealth had always been difficult to suppress. He wanted big money and a big lifestyle.
"Sindri, the mastermind in the crime, is a guy who has always been kind of a thrill seeker,” Egill Bjarnason, a reporter based in Iceland who covered the case, told Yahoo Finance. “It seems like he had this gravity towards maybe making big money. When he got wind of there being built bitcoin mines all around the country, he thought he wanted to get a share of that.”
Cryptocurrency and Iceland are a perfect fit for each other. Because of the climate and cost of energy, Iceland has become a leader in the business of crypto, and offers a lot of incentive for the industry.
The country has built data centers with partial walls on a former World War Two British airstrip to catch the high winds, and those centers are cooled constantly by fans surrounding the equipment. Basically, it's a giant warehouse with computers stacked on computers all the way up to the high ceiling sitting right in the center of a vast Icelandic landscape.
Three months after the heist, Sindri was caught.
"He was in custody,” Bjarnason said. "He hadn't been charged yet, but he was still in custody. He was staying at a low security prison. We have what to the U.S. audiences sounds strange, which is called an open prison where the prisoner has pretty much the key to his own cell.”
Icelandic prisons can be low security for petty crimes — so much so that criminals can literally walk out of their cells.
“He ran away, and he booked the ticket in the middle of the night and left the country, and was on the run until arrested in Amsterdam where he was eventually captured” in late April 2018, Bjarnason said.
The twist of this story: Are those computers hidden somewhere, mining crypto while he’s serving his sentence?
“I'm almost sure that the computers are working on their behalf while they serve time,” Bjarnason said.
If these stolen computers are mining crypto all the time he’s serving in prison, it would be a near perfect crime: Steal something that passively generates money while sitting in prison for stealing it.
Alex Sugg: (00:01) In January of 2018, over 600 computers valued at $2 million were stolen from a Bitcoin mining facility in Reykjavik, Iceland. The mastermind behind the crime is named Sindri Stefansson, who was joined by six other accomplices. That night was only the beginning of this heist. What followed were prison breaks, deception, and what could be considered the perfect crime. This is the story of the Bitcoin Heist of Iceland. From Yahoo Finance, this is The Art of the Exit. I'm Alex Sugg.
It's no secret that Bitcoin and other cryptocurrency have been discussed a lot in the past few years. In December of 2017, a single Bitcoin was valued nearly at $20,000 at its all time high. Since that peak, the value has dropped significantly, and it's fluctuated a lot, leaving many to debate the legitimacy and longterm value of the currency as a whole.
AS: (01:16) We'll get to that in a bit, but first, let's get into the story. In Reykjavik, Iceland in December of 2017, we meet Sindri Stefansson, a man with a history of burglary and drug possession. He's been clean for a while. He found work as a web designer, and other odd jobs to get by. He has a family now. Even so, his appetite for wealth had always been difficult to suppress. He wanted big money and a big lifestyle. Cryptocurrency and Iceland are a perfect fit for each other. The country's climate and cheap energy costs are an ideal location for the industry, and we've seen a steady stream of crypto companies migrating to Iceland over the past few years. Sindri noticed the trend, saw what Bitcoin was going for in the market, and he knew he had to get in. Sindri began scoping the facilities these companies were moving in, and then he got to planning.
Alex Sugg: (02:29) Sindri put together a gang of accomplices, and they organized three heists that were planned out to the detail. The final heist is where most of the loot came from, so that is the crime we will focus on in this story. They were meticulous in their planning of the crime, but they weren’t as attentive while actually executing, leaving many traces behind which would eventually contribute to them getting busted. Even so, these were still pretty sophisticated thefts.
For the heist, they knew they needed to be extra careful because it was going to be much larger than the 2 previous heists had been. The facility was in a much more protected area than they were used to, along with their target being much bigger on this heist. But they had a plan - and it all rested on the shoulders of one security guard who they befriended. This guard knew all the codes, knew where the cameras were, and all the best ways in and out of the facility. After some heavy recruiting, they eventually convinced him to collaborate and help them break in. This was the key to their success. By the time they were ready to strike, they were all wearing jackets from the security company as to not appear out of place. They used the security codes to get inside, and worked extremely quickly. In a matter of a few hours and lots of heavy lifting, around 600 high powered crypto mining computers had been loaded into a truck by hand. They shut the door, and drove off - taking their gold mine to a safe location without getting caught.
Alex Sugg: (04:04) So you may be wondering like I did when I was first researching this story, why exactly does all of this matter? Why wouldn't Sindri in his crew simply steal something else with a little bit more of an immediate payoff? Cryptocurrency is a bit of a mystery to the average person. To most, it's a trendy financial term we've been hearing for a few years, but what exactly is it, and how exactly does it work?
Dan Roberts: (04:28) Well, the way I describe it in its most simplest terms is that it's a digital payment system, and even over the years as things have changed, and people have different conceptions about the industry, that's a pretty accurate description. It's a peer to peer electronic cash system.
AS: (04:59) This is Dan Roberts, my colleague at Yahoo Finance who's been covering cryptocurrency in detail since 2011. He's been watching the space closely from the very beginning.
DR: (05:08) ... cryptocurrency meaning you can't touch it, you can't physically hold Bitcoins. Side note, that's why it's funny when news articles about Bitcoin always use stock images of gold coins.
AS: (05:17) Oh yeah gold coins. Maybe talk to me a little bit about what was the conversation? What was happening at the peak? What was going on then?
DR: (05:26) Yeah. I think that the best little anecdote, and so many people had a shared experience where this occurred, I was talking to a venture capitalist about investing in certain tech companies, and he said to me, “Well, one good rule of thumb is I know that when my Uber driver is asking me about it not to invest in it.” He said, “So when Uber drivers are saying, 'Oh, do you do crypto and Bitcoin'”, he said, “I'm staying away.” Yeah, December, 2017 I think a lot of things came to a head at once. You started to see more stories about institutions and banks being interested in Blockchain. You also just saw general positive sentiment, more and more people being curious and educating themselves about it, but for a long time there when Bitcoin would go up, everything else would go up. They were all tethered to each other.
So a rising tide lifts all boats. So all at once toward the end of 2017, all of the biggest cryptocurrencies were soaring at once. Of course, price begets price actions. So the more that it Rose, the more newbies who really knew nothing and weren't caring about educating themselves about crypto, they didn't care about the technology, they wanted to rush in. Then you had people like Jamie Dimon, Warren Buffett coming out and saying, “Stay away. It's a bubble. It's a scam.” I actually think that that stoked the price even more, and that there were people saying, “Oh, now's the time to get in” because the people who've been in this industry involved in it, either working at companies, building things, or just investing it in, pumping it on social media, these people who are such big believers, originally the whole appeal was that it was outside government regulation, that it wasn't fiat currency, that it was libertarian.
DR: (06:56) A lot of the original big names in this space are libertarians. So I think that when they saw big names in mainstream finance and Wall Street trashing Bitcoin, they liked that, and they said, “This is good. We like it even more now.” So I think everything just kind of came to a head. You knew that it couldn't last forever, but it went up, up, up, and then everything kind of popped. Back in 2017, another funny thing that happened was a lot of people who didn't understand the space before, but they saw that the price was going up like crazy, a lot of young people unfortunately they rushed in, bought a lot of Bitcoin or other cryptocurrencies, and then in 2018 when the price started to fall back down to earth, they dumped in a rush, and that's never how you should invest anyway.
So there are a lot of people who bought high and sold low, pretty much the opposite of what you're supposed to do with investing. It's because they rushed in and of course, A, what they should've done is not sold and not panicked when the price started to drop and held on. But also pull back even further, they probably never should have bought in the first place. They certainly shouldn't have rushed in when they saw that the price was at 17,000, and it was soaring because the top could have been anywhere, and then sure enough it came pretty soon. So there are people who they only ended up owning Bitcoin, or Ether, or Ripple, or Bitcoin Cash for three months, and they lost money, and that's just not how you invest, and that's a shame. A lot of people I think lost their shirts among the hype.
Alex Sugg: ( 08:21) After the break, we'll hear how Sindri escapes prison, and how after all its ups and downs, this may have been the perfect crime. Because of the climate and cost of energy, Iceland has become a leader in the crypto industry's growth, and offers a lot of incentive for the business of crypto. Originally, they wanted to get the Facebooks and the Googles to move data centers there, but didn't have much luck. Crypto mining was a different story, and they've had a lot of success since embracing this new industry. They've built data centers with partial walls on a former of World War two British air strip to catch the high winds and are cooled constantly by fans surrounding the equipment. Basically, it's a giant warehouse with computers stacked on computers all the way up to the high ceiling sitting right in the center of a vast Icelandic landscape.
AS: (09:40) Iceland is a small country. There are only 340,000 residents in the entire nation. For perspective, that is less than the entire city of Honolulu, Hawaii that reside in this one country. The police don't carry guns, and there is no formal military. For reasons like this, Iceland is considered by many to be the safest country in the world. Crime is incredibly sparse, and people tend to trust each other. Things like hitchhiking are common there. The relaxed culture of Iceland turned into a really nice asset for Sindri to exploit.
AS: (9:58) I spoke to Egill Bjanason a reporter based in Iceland who covered the story,They got caught, or at least he did, and he went to prison, and then he escaped from prison. It's like-
Egill Bjarnason: (10:29) Yeah.
Alex Sugg: (10:29) ... oh, generally, they get caught, they're awaiting their sentence, they're in jail, and then kind of end of story. Not him, he went to jail and then escaped prison. So can you explain what happened there?
EB: (10:39) He was in custody. He was arrested few months after the last heist. The police had narrowed it all down to him. He hadn't been charged yet, but he was still in custody, and had been in custody for quite some time. He was staying at a low security prison. We have what to the US audiences sounds strange, which is called an open prison where the prisoner has pretty much the key to his own cell, but still everything is locked up during the night, and they can't leave the premise. But he ran away, and he booked the ticket in the middle of the night and left the country, and was on the run until arrested in Amsterdam.
AS: (11:25) Explain that, that a prisoner would have the key to his own cell in an Icelandic prison. Explain that to me.
EB: (11:34) Usually these are for prisoners that have behaved well, or are in jail for crimes that are not violent or petty. They live in a prison that is usually in a rural setting. The idea is too by giving them a little bit more freedom, they learn to become more responsible, and they're allowed to have a lot more comfort than you're used to in a prison. They have a TV in their cell, and the cell is more just like a room. They're allowed to see the children or their wives much more frequently. It's no luxury because it's prison, but it's still a lot different from being in a cell.
AS: (12:19) Is it proven in Iceland to that these types of settings encourage good behavior long term? You know, I think that's fascinating. If so, like you said, you almost earn trust, you earn responsibility, you earn more of what it means to be a responsible adult in the real world within the prison walls. It must be a proven system in Iceland to work, right?
EB: (12:43) Yeah. Prisoners are less likely to relapse if they have this sort of cushion to go back into the real life because these prisons prepare them more for the responsibilities of being in the real world as opposed to just throw them on the street when they've done their sentence and having them figure things out on their own. It's kind of something that kind of comes in between. What fascinated me about this story is where are the computers? The police has spent enormous resources, hours looking for the computers. They've looked through all the electric usage in the entire country just to see if there's any kind of unusual usage in a tiny home, or a remote farm, and they've raided a few places, but they never found the computers. The computers are somewhere probably plugged into power creating a crypted coin, creating a Bitcoin or other crypto currency, which is untraceable currency, so making money for the guys who have been sentenced, but in a way, they got away with the perfect crime because they stole things that create value without having to sell it again.
EB: (14:19) I'm almost sure that the computers are working on their behalf while they serve time because otherwise they would have given them up. They instead didn't give them up, and were sentenced to pay these companies quite a lot of money in damages, but probably they've made all that money already from just having those computers mine Bitcoin when Bitcoin was incredibly valuable.
AS: (14:50) What strikes me about this heist is that despite the countless searches and resources being poured into finding the stolen computers, nothing has been found. They've tracked energy use across the country, and chased a bunch of other leads that never got anywhere. Eagle believes that these 600 computers are set up somewhere mining crypto, and I don't think he's wrong. After Sindri is released, and these computers have been running for their entire sentence, they'll have a pile of cash waiting on the other side. It's pretty genius really, steal something that generates money while you're in jail for stealing it. When Sindri escaped prison and boarded a plane to Stockholm, he was greeted with a little surprise. There was a familiar face on the plane. As he began walking to his seat, he notices the Prime Minister of Iceland was flying business class only a few rows away from him.
AS: (15:46) That had to have been a little uncomfortable having just escaped prison, you're at large for millions of dollars, and now you have to sit by the most heavily guarded and high profile person in your country. Sometimes funny coincidence happens, but this one probably wasn't very funny to Sindri. He got through the flight unnoticed, but was caught shortly after landing in Stockholm. He is currently serving his sentence, and I imagine security is a little tighter on a cell this time. He might have the last laugh though because while he's behind bars, there's a very good chance he'll come out a much richer man on the other side of his sentence, talk about passive income.
AS: (16:41) The Art of the Exit is produced by Yahoo Finance at our studios in New York City. This episode was written, edited, and produced by me, Alex Sugg. Thank you to Eagle Barnasan for your time and contributing to this episode. Also, a big thank you to my colleague, Dan Roberts for your contribution, and for schooling us all on the basics of crypto. If you enjoyed this episode, please head over to Apple Podcast and leave us a five star rating and review there, and share the story with your friends. We'll be back soon with another new episode. So until then, thank you for listening to the Art of the Exit.
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