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Cryptocurrency Fraud and Money-Laundering

While the majority of cryptocurrency transactions are for legal activities, federal agencies have stepped up their investigation and prosecution of companies and individuals believed to be engaged in cryptocurrency crimes. The development of digital currencies, such as Bitcoin and Ethereum, has created numerous opportunities for legal and illegal activities.

Such crimes include prosecutions for a company’s initial coin offering (ICO), failure to register as a money service business (MSB) with FINCEN, intellectual property, stealing money from people’s electronic wallets, and engaging in money laundering by the use of digital currencies. Common devices used to launder cryptocurrency include ATMs, gaming sites, prepaid cards, and unregulated exchanges.

This type of fraud occurs when individuals first purchase crypto assets from online trading exchanges. The initial purchase may be a legitimate transaction. However, the subsequent blockchain can be hidden, as well as the source of the funds. The connection between the crypto transactions is hidden and difficult to trace to crimes.

Nonetheless, with such criminal activity on the rise, the federal government is dedicating considerable resources to investigating and prosecuting crimes involving digital currencies.

If you are being investigated for or charged with cryptocurrency fraud of any kind, it is critical that you seek the help of an attorney who has experience in this realm.

Background on Cryptocurrency and Blockchain

Bitcoin (BTC) and the blockchain technology was created in 2008 as the first decentralized digital currency. It allows the transfer of funds without a central bank or third-party administrator. This cuts down on transaction fees and is therefore, appealing to many. Cryptocurrencies can also be invested and traded. Unlike traditional banking, however, Bitcoin and other users can remain anonymous and they use a digital wallet that should be protected. While Bitcoin has been the most common cryptocurrency used to commit crimes, there are a number of different cryptocurrencies in the marketplace. These include:

While these are some of the most popular to date, there are many others, and more expected to enter the field.

Examples of Cryptocurrency Crimes

Traditional fraud and money laundering offenses apply to the world of cryptocurrency, though it is often more difficult to detect. The Department of Justice and the Securities and Exchange Commission (SEC) and CFTC investigate cryptocurrency violations. These can include:

  • Money laundering
  • Defrauding investors
  • Failure to register as a money service business (MSB) with FINCEN
  • MSB failure to engage in KYC (know your customer)
  • Scamming victims out of cryptocurrency
  • Fraudulent Initial Coin Offerings
  • Drug transactions using digital currencies
  • Purchasing illegal goods
  • Crypto ransoms
  • Dark web exchanges
  • Ponzi schemes
  • Defi-related hacks and scams
  • Tax violations
  • Theft of cryptocurrencies on blockchains

Such offenses get prosecuted as wire fraud, racketeering offenses, and money laundering, to name a few. Meanwhile, the SEC can bring civil enforcement actions. And of course, cryptocurrencies can be part of offenses involving drug trafficking, child pornography, or any type of conspiracy.

Defending Against Cryptocurrency Charges

The attorneys at Jayne Law Group understand this emerging  technology and have experience with cryptocurrency law and its application. We make it our practice to stay current with technology and legal trends in order to bring our clients the most effective defense.

Our experience defending against federal charges for the past two decades means that, like with other crimes, we have tremendous experience opposing the federal government. With cryptocurrency offenses, we defend our clients to the fullest extent, as we would in any case.

Contact our firm for more information.