Teenage crypto kingpin Ellis Pinsky, who was 15 at the time, masterminded a hack worth $23.8 million. In the few years since then, he has conducted very few interviews on the subject and remains a very enigmatic character.
Nevertheless, he has come to gain notoriety for his hacks and gained the title “The Baby Al Capone”.
Pinsky grew up as part of a relatively wealthy middle-class family. His parents had emigrated to the US from the Soviet Union and when he was 11 their family moved from the cramped urban conurbation of New York’s Upper East Side to the leafy suburbia of Irvington.
Pinsky’s first interest in hacking came about when he was 12 or 13, and someone asked him “How is Irvington?” whilst he he was trash-talking in a Call of Duty lobby.
The revelation that IP addresses weren’t anonymous and could be tracked down fascinated him – he felt that he could use the Internet to wield real power, if he understood how it worked.
By this point he had built up a network of gamers that he knew online by their aliases and avatars. One of these people was an account that went by the name of Ferno, and had a Bitcoin logo as his avatar.
Ferno taught him about about DDOS attacks and ISP doxxing, a form of “social hacking” in which one calls an Internet service provider and asks them reveal information about themselves.
Although reluctant at first, Ferno introduced Pinsky to the shady world of cyber crime and online hacking communities.
Time to start learning, fast, for this autodidact
Pinsky soon recognised that there was far more to learn than he had learned thus far, or that Ferno could teach him – as with all programmers, coders and hackers, to excel he’d have to do autodidactically:
“I’ve always been an autodidact, always been very persistent”
Online hacking communities excited Pinsky. They were overwhelming full of young males, and most seemed to be quite wealthy for their ages. He steadily grew his skills and accumulated more and more notoriety until, by the age of 14, he was confident that he’d be able to hack almost anyone.
The increase in SIM-swapping gave Pinsky and his hacker friends a chance. Digital currencies like Bitcoin were becoming more popular. Two Factor Authentication (2FA) was becoming more common as exchanges tried to keep their users safe from hacks – but it wouldn’t stop Pinsky.
In 2018, someone named Harry reached out to Pinsky to ask if he’d be able to target a specific individual’s phone, with the goal of going after his crypto holdings. The victim in question was to be Michael Terpin, a multi millionaire who has heavily invested in the world of crypto.
Once Pinsky had managed to reset his Email and make a new password, he was able to find a lot of interesting things: there were various Emails to Terpin about cryptocurrencies, but at first he couldn’t find a way to take anything.
Teenage crypto kingpin Pinsky stumbles across Terpin’s private keys
That was until he found a file entitled “passwords”. When he opened the file, he discovered a whole list of private keys for wallets owned and controlled by Terpin.
At this point, Pinsky realised that he had to act quickly: there was no doubt that Terpin would soon realise that his Email had been compromised and that he’d have to change his security quickly.
Looking through the wallets, Pinsky claims that he saw that the wallets held over $900m in crypto, although not all of that could be accessed because they required more signatories on a multi-sig.
Terpin resolutely disputes the claims that ever had anywhere near $900m, and that his figure was fabricated by Pinsky to make the hack seem less devastating.
In the end, Pinsky found a token called Triggers (TRIG). He initially believed that the 3 million TRIG would be quite worthless, given that he had never heard of the token before. Nevertheless, he check CoinMarketCap and was soon pleasantly surprised by what he found: the tokens were valued at around $7 each.
Before reaching the age of 16, Pinsky was about to make off with $24m in digital currency. The perfect heist?
Not quite. Illiquid alt coins like TRIG that mainly trade on centralised exchanges (in 2018 there was no Uniswap, trading such large quantities required KYC) are not as easy to dispose of as Pinsky may have hoped.
He couldn’t dispose of all these tokens himself – he’d need help. He reached out to people on Twitter, asking if anyone had an account on Binance.
Once he’d found six or seven people, he sent the TRIG to them in batches and requested that they sell it for Bitcoin and then send the Bitcoin to him (minus $20k-$50k for their services).
Messy strategy leads to price destruction
This turned out to be a pretty messy strategy, since the 3m TRIG under his control represented about 10% of the total supply, so the price was completely destroyed once he was done selling.
Not only this, but many of the people to whom he sent the TRIG never sent the Bitcoin on to him, instead pocketing the profit for themselves. In one such case, a hacker known as @erupts was entrusted with $500k for a test transaction, which he completed, and then $1m after that. He walked away with the $1m.
Pinsky’s partner in crime, Harry, then appealed to Pinsky that they reach out to their online communities to try and put out a hit on @erupts, but Pinsky decided against it – it seemed too intense.
When all was said and done, Pinsky had made 562 Bitcoin, about $10 million at the time.
At first, little in his life changed. “History lessons became more dull”, but that the extent of it. At first he was concerned that the FBI might break his front door down, but it never happened, and over time he grew less anxious.
He spent $50k on a Patek Philippe for himself and began to treat his family to expensive trips, but the main difference was that he was no longer enamoured with the hacker lifestyle.
“After this Terpin event, obviously, the money was there, but also I had this feeling that I was sort of done with that life. It wasn’t attractive to me. That was it.”
@erupts, the hacker who stole $1m in the hack, messaged Pinsky again to get back in touch, explaining that he was from New York and would love to meet Pinsky in person for a night out. His name was Nick Truglia, and he turned out to be very persistent.
Pinsky goes on a wild night out
He took Pinsky on a wild night out in New York, spending lots of money on food, alcohol and girls. It made Pinsky nervous just how blatant Truglia was – and he was right about his suspicions. A few weeks later Truglia was arrested by the police who became aware of the role that he had had to play, and they eventually made the connection back to Pinsky.
In what turned out to be quite the nightmare for the 16 year old, his mother received an Email from Terpin’s lawyer explaining the situation, and Pinsky was to spend the next few years talking to lawyers to rectify the situation.
He explained that being a part of a culture of gaming had meant that he had become removed from the effects of his actions, and did not realise the damage that his actions had been causing. He returned the 562 Bitcoin, the Patek Philippe, and the $100,000 that he kept in a safe under his bed.
Unfortunately, given the crash, by the time that the Bitcoin were returned in 2020, they were only worth about $2m.
Terpin wanted much more, and believed that was entitled to damages on top of the amount that had been stolen, but this didn’t happen. Pinsky’s age at the time of the crime and his cooperation with the constabulary afterwards meant that he received quite a favourable hearing.
Burglary – how to convince criminals that you don’t have the bitcoin keys
However, he wasn’t completely safe.
Just a few weeks before his graduation his house was broken into by several men after Terpin began to publicise his involvement in the case when a settlement agreement failed. Several men entered the house and threatened his family (him, his parents and his brothers).
What most concerned Pinsky as he lay on the floor with his brothers huddled around him and his shotgun in his hands, was that there’d be no way of convincing these men that he genuinely didn’t have the Bitcoin any more.
Nowadays, Pinsky is studying computer science and wants to build a career as an entrepreneur. He is extremely repentant for the role that he played in the case, and wants to rebuild his career and reputation. What is most difficult for him to come to terms with isn’t the actions themselves – he acknowledges what he did and is sorry for it. The thing that bothers Pinsky the most is that he may forever be defined for something he did at age 15 – reputation isn’t an easy thing to salvage.
Safe custody of crypto assets
Hacks are not uncommon in crypto, and it is important to remember the importance of safely custodying one’s assets. Terpin’s mistake of poor security cost him tens of millions, and he was supposed to be a professional. Hacks in crypto and DeFi happen all the time, and new innovations such as decentralised exchanges and Tornado Cash make it easier than ever to hackers to walk away from their crimes without consequence.
It is more important than ever that people are aware of the risks that they are taking with third parties, and to take self responsibility for custody.
Relevant news:
Battle Infinity - New Metaverse Game
- Listed on PancakeSwap and LBank - battleinfinity.io
- Fantasy Sports Themed Games
- Play to Earn Utility - IBAT Rewards Token
- Powered By Unreal Engine
- Solid Proof Audited, CoinSniper Verified