Ex-Singapore naval captain jailed for stealing $1.7M in crypto

Zhang Rongxuan, 35, a former captain in Singapore’s Naval Diving Unit, was sentenced to 82 months in prison after pleading guilty to charges including illegal access and misuse of a computer system.

Court records say Zhang met the 30-year-old victim through a mutual friend in June 2022. The victim stored 1.7 million USDT on a Ledger Nano X hardware wallet and kept the wallet’s 24-word recovery phrase on a piece of paper hidden in a wardrobe. The funds were deposited into the device on December 14, 2022.

On December 18, 2022, the victim handed Zhang an apartment access card to let another friend into the building; Zhang did not return the card. On December 31, while the victim was out, Zhang used the access card to enter the flat, photographed the seed phrase inside a storage box and left the items where he found them. By January 1, 2023, the 1.7 million USDT had been transferred out of the victim’s wallet.

The theft was reported to police on March 23, 2023. The victim hired a blockchain security firm to trace the transactions, and investigators linked the stolen funds to Zhang. He admitted taking the money and told authorities he had suffered heavy losses in the collapse of the FTX exchange.

Court filings show Zhang spent much of the proceeds on luxury items, gambling and debt repayment. Purchases and payments included an Audi A5, several high-end watches, roughly S$115,449 toward a housing mortgage and about S$200,000 invested in shares of DiGi Selection Holdings, a company tied to an NFT platform he co-ran with the victim. Prosecutors say Zhang lost about S$1.57 million to licensed betting outlets and illegal online gambling.

Police later seized the Audi, several watches and about S$130,000 in bank deposits. Zhang returned his company shares to the victim but made no other restitution, according to court records. He faced 16 charges under Singapore’s Computer Misuse Act and the Corruption, Drug Trafficking and Serious Crimes (Confiscation of Benefits) Act; he pleaded guilty to six counts and the remaining charges were taken into consideration at sentencing. Singapore’s Ministry of Defence confirmed Zhang is no longer a member of the Singapore Armed Forces.

The case involves a form of theft that exploits physical access to a hardware wallet’s recovery phrase, sometimes referred to as a “wrench attack.” Cold storage keeps cryptocurrency safe from remote hacking but does not prevent theft if someone can view or seize the seed phrase or device.