For example, the SEC recently filed charges against purported crypto asset trading platforms Morocoin Tech Corp., Berge Blockchain Technology Co. Ltd., and Cirkor Inc. and investment clubs AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd., and Zenith Asset Tech Foundation alleging that they defrauded retail investors out of more than $14 million in an elaborate investment confidence scam.

“AI Wealth, Lane Wealth, AIIEF, and Zenith operated so-called investment clubs using WhatsApp and solicited investors to join the clubs with ads on social media. The clubs gained investors’ confidence with supposedly AI-generated investment tips before luring investors to open and fund accounts on purported crypto asset trading platforms Morocoin, Berge, and Cirkor, which falsely claimed to have government licenses, as alleged. The investment clubs and platforms then allegedly offered “Security Token Offerings” that were purportedly issued by legitimate businesses. In reality, no trading took place on the trading platforms, which were fake, and the Security Token Offerings and their purported issuing companies did not exist, according to the complaint. When investors tried to withdraw their funds, the complaint alleges that the defendants further defrauded victims by demanding that they pay advance fees. In all, the defendants misappropriated at least $14 million from U.S.-based retail investors and funneled those funds overseas through a web of bank accounts and crypto asset wallets, as alleged.”

In another recent case, a young man, Elmin Redzepagic was charged in a 21-count indictment offenses related to an alleged cryptocurrency fraud scheme. As alleged in the indictment, Redzepagic “held himself out to investors as a cryptocurrency investor who earned high rates of return. Once Redzepagic had victims’ initial investment, he told them they had earned a substantial profit but had to pay additional fees (“gas fees”) to withdraw it. Redzepagic claimed to work as part of a team that included someone known as “The Chef,” who supposedly led the operation and determined who, how, and when investors would receive their profits. In fact, Redzepagic did not invest victims’ funds in cryptocurrency but instead transferred the funds to Stake.com, an offshore gambling platform that Redzepagic used to receive and hold proceeds of the scheme, to generate cryptocurrency addresses for victims to use to transfer Bitcoin to him, and to make large “lulling” payments to victims throughout the course of the scheme.”

Finally, in another case, Goliath Ventures founder Christopher Alexander Delgado has been arrested on a criminal complaint charging him with wire fraud and money laundering. It is alleged that this “was a “Ponzi scheme,” which is a form of investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Delgado’s scheme involved soliciting victims to invest substantial sums of money under false and fraudulent promises of monthly returns generated through cryptocurrency “liquidity pools.” Victims were induced to give money to Goliath through personal referrals, professional marketing materials, luxury events, charitable sponsorships, and some monthly payments of purported returns, all of which were designed to establish Goliath’s bona fides with investors. Based on these false and fraudulent representations, Goliath obtained at least $328 million from victim investors.

Although Goliath represented that it would place the victim investors’ funds in cryptocurrency liquidity pools, in reality, the funds were primarily used to pay purported returns to earlier investors, to return principal to investors who requested it, and for Goliath’s extravagant business gatherings, holiday parties, and luxury travel accommodations. With victim investors’ funds, Delgado purchased four residential properties each worth between $1.15 million and $8.5 million.”

The FBI has recently stated that “cryptocurrency investment fraud, which the media commonly describes as “pig butchering,” is one of the most prevalent and damaging fraud schemes today.” As a result, more and more DOJ prosecutions are happening. Please contact us if you have received any sort of indication that you are under federal investigation.

I. What charges can the government use to allege money laundering?

18 U.S.C. § 1956: This is for laundering monetary instruments and carries a penalty of up to 20 years in prison and fines of up to $500,000 or twice the value of the funds involved, whichever is greater

18 U.S.C. § 1957: This applies to engaging in monetary transactions in property derived from specified unlawful activity and can result in up to 10 years in prison and fines up to twice the value of the property involved.

18 U.S.C. § 1956(h): criminalizes conspiracy to commit money laundering. It makes it illegal for two or more people to agree to conduct or attempt to conduct a financial transaction involving the proceeds of specified unlawful activity (money laundering). The crime is the agreement itself, regardless of whether the money laundering was ultimately successful.

Bulk cash smuggling (31 U.S.C. § 5332): knowingly concealing more than $10,000 in currency or other monetary instruments on the person of such individual or in any conveyance, article of luggage, merchandise, or other container, and transports or transfers or attempts to transport or transfer such currency or monetary instruments from a place within the United States to a place outside of the United States, or from a place outside the United States to a place within the United States

RICO Act- the Racketeer Influenced and Corrupt Organizations (RICO)

II. Drug traffickers are purported to utilize some of the following tactics to money launder

-Purchase and or title assets in fictitious names, aliases, or in the names of friends or relatives

-Create and maintain Bitcoin and other cryptocurrency accounts. These are utilized because of the anonymity associated with the use of Bitcoin and other cryptocurrency accounts and because cryptocurrency is decentralized.

III. Dark Net Explanation

The darknet is a part of the internet that requires special software, like the Tor browser, to access, and is not indexed by standard search engines. It uses layered encryption to make user activity anonymous

IV. Cryptocurrency

This is a type of virtual currency, that is a decentralized, peer to peer network based medium of value or exchange that may be used as a substitute for fiat to buy goods or services or exchanged for fiat currency or other cryptocurrencies. Examples of cryptocurrency are Bitcoin, Ethereum, Litecoin, Dogecoin, Monero, among others.

Most cryptocurrencies have a blockchain which is a distributed public ledger, run by the decentralized network, containing an immutable and historical record of every transaction. It is still difficult for a number of reasons for law enforcement to track.

Cryptocurrency is stored in a virtual account called a wallet. Crypto wallets are designed to store your private key, keeping your crypto accessible at all times. They also allow you to send, receive, and spend cryptocurrencies like Bitcoin and Ethereum. Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – protected and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum.

The Financial Crimes Enforcement Network (“FinCEN”) has issued many notices discussing the various issues with cryptocurrency including recent concerns over regulatory risks related to convertible virtual currency kiosks. This notice dates back to 2019! It’s worth a read as it describes dark net marketplaces and cryptocurrency really well.

V. Recent cases in the news

The recent “Fire bunny” case was a case that operated on the darknet from January 2019 to August 2022. It operated on multiple dark web marketplaces and described itself as an “old vendor with the best in QUALITY SPEED OF DELIVERY and STEALTH.” In total, the defendants allegedly received nearly $8 million in Bitcoin proceeds and investigators found nearly $900,00 worth of cryptocurrency on one of the defendant’s phone. Some of the money received was laundered by converting Monero – a form of anonymized cryptocurrency that is extremely difficult to trace or monitor – into Bitcoin. The Bitcoin would then enter cryptocurrency exchange accounts controlled by the defendants and others. At least $2.4 million in Bitcoin was sent to a foreign based cryptocurrency exchange and laundered in the form of Chinese Yuan.

Samourai CEO Keonne Rodriguez and Samourai CTO William Lonergan Hill were recently sentenced for knowingly transmitting over $237 million in alleged criminal proceeds, coming from, among other things, drug trafficking, darknet marketplaces, cyber-intrusions, frauds, sanctioned jurisdictions, murder-for-hire schemes, and a child pornography (“CSAM”) website.

It utilized a Bitcoin mixing service known as “Whirlpool,” and coordinated batches of Bitcoin exchanges between groups of Samourai users. Through this process, the original source of particular Bitcoin holdings became obscured within the blockchain’s transactional record, effectively preventing law enforcement agencies and cryptocurrency exchanges from tracing funds back to their origins.

The second service, called “Ricochet,” enabled users to introduce additional and unnecessary intermediate transactions—known as “hops”—between sending and receiving addresses. This feature served a similar obfuscation purpose, making it substantially more difficult for monitoring entities to establish connections between cryptocurrency transfers and potential illicit activities. The scale of these operations was considerable: from Ricochet’s launch in 2017 and Whirlpool’s inception in 2019, more than 80,000 Bitcoin—valued at over $2 billion at the time—passed through these services. Samourai collected fees for both services, estimated to have a total value of more than $6 million.

Finally, in Operation RapTor, participating law enforcement agencies in the U.S., Europe, South America, and Asia arrested 270 darknet vendors, buyers, and administrators. Recently, as part of that large takedown, in the Southern District of New York (which is a district we are licensed to practice in) Incognito Market owner Rui-Siang Lin pled guilty for operating an online narcotics bazaar that existed on the dark web. It is alleged that Incognito Market sold more than $100 million of narcotics to anyone using the Tor web browser on the “dark web” or “darknet.”

Conaway & Strickler, PC is licensed to practice in NY, GA and CA. We can “pro hac” into any federal district in the country and have represented clients in New Hampshire, Vermont, Georgia, New Jersey, New York, California, Iowa, Texas, Tennessee, Florida, Pennsylvania, among others. We have “first chaired” many jury trials and have represented clients charged with RICO, drug trafficking and cryptocurrency money laundering cases. Please contact us for additional information or if you have a case you want to discuss with us. Please see here for additional blogs on this subject.

Recently, the Department of Justice highlighted enforcement efforts that allegedly aimed at protecting  Americans from transnational fraud schemes.  Here are some of the cases discussed:

United States v. Troy Murray and United States v. Cutter Murray. On June 11, 2025, DOJ’s Consumer Protection Branch filed an Information in SDFL charging Troy Murray also known as “Steve Dixson” with conspiracy to commit wire fraud. According to court documents, Troy Murray sold to lottery fraud scammers, including Jamaicans, his lead list database containing the names, and personal information of over seven million elderly American consumers. These lists were allegedly then used to defraud elderly victims. Additionally, Cutter Murray, Troy Murray’s son, will plead guilty to one count of money laundering for receiving and then laundering $1.6 million of the fraudulent funds Troy Murray obtained.

United States v. Jimmy Smith. On April 1, 2025 the U.S. Attorney’s Office for the District of Connecticut announced charges against Jimmy Smith, 30, a citizen of Jamaica, who resided in Hinesville, Georgia. According to court documents, Smith and others defrauded at least four victims residing in Connecticut, New York, Texas, and California, by telling them they had won a Publishers Clearing House Sweepstakes and needed to pay taxes or money to claim the prize.

United States v. Charles Uchenna Nwadavid. On April 9, the U.S. Attorney’s Office (USAO) for the District of Massachusetts announced charges against Charles Uchenna Nwadavid, a citizen of Nigeria who was arrested after landing at the Dallas-Fort Worth Airport. In January 2024, a grand jury indicted Nawadavid on one count of mail fraud and two counts of money laundering. Between approximately 2016 to September 2019, Nwadavid allegedly participated in romance scams that tricked victims into sending money abroad.  He plead guilty to mail fraud, aiding and abetting money laundering and money laundering on June 26, 2025.  The DOJ states “romance schemes”  generally begin when the “bad actors” recruit victims through advertisements for online relationships on dating or social media websites. Individuals perpetuating romance scams often create fictitious profiles and then use them to gain victims’ trust through a purported romantic relationship. Perpetrators then direct their victims to send money or to conduct financial transactions involving other victims’ money under false pretenses, such as an urgent need for money to secure a multi-million dollar inheritance or to pay for an unexpected hospitalization.

Another romance scheme can involve investing in cryptocurrency. The United States Attorney’s Office for the Northern District of Ohio (USAO) has filed a civil complaint in forfeiture against 8,207,578 Tether (USDT) cryptocurrency, valued at more than $8.2 million in February, 2025.   In that case, investigators found that scammers initially contacted the victims through seemingly misdirected, or “wrong number,” text messages. The fraudster then gained the victim’s trust and affection using various manipulative tactics. Once trust was established with the victim, the fraudster would share how much success they, or someone they knew, had with investing in cryptocurrency. This personal testimonial lessened any uncertainties the victims may have had about virtual currencies and eventually had the intended effect to persuade the victim to proceed with the investment.

The fraudster would then guide the victim, step-by-step, on how to open a legitimate cryptocurrency account, most often with a U.S. based virtual currency exchange such as Crypto.com or Coinbase. The scammer would walk the victim through the entire process of transferring money from their bank to the newly created cryptocurrency account. Next, the victim received instructions on how to transfer the purchased cryptocurrency assets to an online “investment platform,” which would turn out to be a fake site created by the fraudsters to look like a legitimate company. Information on the platforms promised lucrative returns which encouraged victims to invest further. However, once the victim transferred their funds to the “investment platform” they unknowingly handed over complete control and ownership of their funds to the scammer.  These fake cryptocurrency trading platforms or fake versions of official crypto wallets to trick unsuspecting victims. These fake websites usually have similar but slightly different domain names from the sites they attempt to mimic.

The complaint also outlines that the perpetrators of such investment fraud schemes often allow victims to withdraw a portion of their “profits” early on in the scheme to build trust and reinforce their belief that the “investment platform” was legitimate. But as the scheme progressed, victims were unable to withdraw their funds and given excuses as to why they could not access their funds. For example, the fraudsters referred to a fake “tax” requirement, stating that taxes must be paid on the proceeds generated from the investment platform. Knowing that the scam would run its course soon, the fraudsters used last-ditch efforts to lie to victims that they had to pay a tax. Ultimately, victims were locked out of their account on the investment platform and lost their funds.

A woman in Lake County, Ohio became the target of such a scam when she responded to a text on her phone from an unknown number in November 2023. She began sharing information via text with the person and the two bonded over topics such as hobbies and religion. Over a period of time, the victim followed instructions from her new “friend” and opened an account at Crypto.com and then transferred funds into the account. When the victim wanted to withdraw funds, her “friend,” relented and said additional payments were needed and she complied. When the victim no longer had any funds left after making additional payments, her “friend” began to threaten her that he would send his friends to “take care of” her friends and family. Having lost her entire life savings of approximately $663,352, including funds from her Roth IRA, the victim filed a complaint with the FBI’s Internet Crime Complaint Center to report the losses in June 2024. The FBI Cleveland Division subsequently initiated an investigation.

United States v. 679,981.22 Tether, et al. On June 3, the U.S. Attorney’s Office for the Northern District of Ohio announced the filing of a civil forfeiture complaint against 679,981.22 in the Tether cryptocurrency suspected of being fraudulently obtained as part of a romance/investment scam. According to court documents, one victim was targeted via LinkedIn and another victim was targeted though the dating App “Coffee Meets Bagel.”

The experienced federal criminal defense attorneys at Conaway & Strickler, PC are here to protect your rights, reputation, and future should you be under investigation. With decades of experience in defending traditional financial fraud paired with a deep understanding of the newer world of cryptocurrency, our firm possesses the skills and expertise to assist those accused of any type of fraud.  Call or contact us online for a confidential consultation.

The “newer” question on page 1 of the Tax Form 1040 now has a question that states, “At any time during the past year did you receive any financial interest in virtual currency?” In 2019, this question was only on Schedule 1.  As of 2020, it is on page 1 of the Tax Form 1040.  This is specifically targeted to combat cryptocurrency tax evasion.

Under 26 U.S.C § 7206(1), it is a criminal offense to file a tax return the filer knows is materially false.  So, if you do not check that box on that first page, AND have substantial income in crypto, you might be targeted by the IRS.  Remember cryptocurrencies are essentially similar to common stocks.  This means a taxpayer must report their gains in cryptocurrencies on Form 8949.  These gains are passed through to Schedule D on personal returns.  The filer is responsible for paying capital gains tax on the net gain for the year.  The government is long since versed in understanding the intricacies of the market like the role of hardware wallets, the use of DEXs, on-chain information, and how to track crypto movement across distributed ledgers.   Please see here for a recent  example of a case where non-payment of federal income tax on cryptocurrency earnings led to a conviction.

Contact Conaway & Strickler, PC if you have any questions on these complex federal criminal tax issues.  Our experienced federal criminal defense attorneys are here to help.

Crypto money laundering follows the same pattern used for fiat (government-issued) currencies by “cleaning” funds gained through illicit means, before exchanging or withdrawing them for cash. Traditionally, money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them. In the context of crypto, tokens are moved through various digital addresses to obscure their illegal origin and make them more difficult to trace.  

The privacy-preserving nature of crypto has opened the door for criminals to conceal the origin of illicitly gained funds through a variety of methods. Cybercriminals ultimately funnel assets through several businesses and online addresses to hide the money trail before transferring the funds to a seemingly legitimate source. 

There are several methods that criminals will use when engaging in cryptocurrency money laundering, including: 

• Smurfing: Splitting up large sums of money into smaller amounts so they can be sent via multiple transactions.  
• Exchange Hopping: Using multiple cryptocurrency exchanges to transfer funds across several platforms and obscure the money trail.  
• Crypto Swaps: Using multiple cryptocurrency wallet addresses to directly convert funds without an intermediary or a centralized exchange. 
• Offshore Transactions: Creating offshore accounts to hide the origin of funds. 
• Mixing: Blending together the crypto assets of multiple users, making it difficult to determine who owns what.   
• Gambling Platforms: Depositing tokens into online gambling websites to be either withdrawn as cash or used to place coordinated bets.  

Cybercriminals require other actors (individuals and sometimes shell companies) to facilitate this crypto money laundering. Like traditional money laundering, criminals recruit “money mules” to move or launder the illicit funds, often unknowingly. In the context of crypto, this is often done under the guise of a cryptocurrency investment scheme.  

Just as traditional money laundering can be federally prosecuted under 18 U.S.C. § 1956, crypto money laundering is a crime under that same law. In addition to money laundering charges, involvement in a cryptocurrency scam can lead to charges including conspiracy, wire fraud, mail fraud, and more. Further, individuals at all levels of these schemes can face prosecution, including those who may have unwittingly played the role of a money mule. 

With decades of experience in defending traditional financial fraud paired with a deep understanding of the newer world of cryptocurrency, our firm possesses the skills and expertise to assist those accused of crypto fraud. Contact us for a free consultation.  

“Cyber extortion is unfortunately a rapidly growing threat and highlights the ever-growing need for corporations to remain vigilant in cybersecurity efforts,” said Sean Burke, Acting Special Agent in Charge of FBI Atlanta. “This sentencing is just one example of the FBI working together to hold criminals that hide behind their computers accountable, regardless of their location.”

According to information presented in court, in June 2017, Purbeck purchased access to the computer server of a Griffin medical clinic on a darknet marketplace. He then used the stolen credentials to illegally access the computers of the medical clinic and removed records that contained the sensitive personal information of more than 43,000 individuals, including names, addresses, birth dates, and social security numbers.

In February 2018, Purbeck purchased access to a City of Newnan Police Department server on a darknet marketplace. Purbeck used the stolen credentials to hack into the City of Newnan’s computer systems and stole police reports and other documents, including personal information of more than 14,000 individuals.

Purbeck also attempted to extort a Florida orthodontist in July 2018, demanding a ransom payment in Bitcoin in return for his stolen patient files, threatening to sell the patient and personal information unless the orthodontist paid the ransom. Additionally, Purbeck threatened to sell the personal information of the orthodontist’s minor child. Purbeck harassed the orthodontist and his patients for 10 days with numerous threatening emails and text messages.

Song Wu, Chinese national, was indicted in September 2024, on charges for wire fraud and aggravated identity theft arising from his efforts to fraudulently obtain computer software and source code created by the National Aeronautics and Space Administration (“NASA”), research universities, and private companies.

“Efforts to obtain our nation’s valuable research software pose a grave threat to our national security,” said U.S. Attorney Ryan K. Buchanan. “However, this indictment demonstrates that borders are not barriers to prosecuting bad actors who threaten our national security.” According to information presented in court, Song allegedly engaged in a multi-year “spear phishing” email campaign in which he created email accounts to impersonate U.S.-based researchers and engineers and then used those imposter accounts to obtain specialized restricted or proprietary software used for aerospace engineering and computational fluid dynamics. This specialized software could be used for industrial and military applications, such as development of advanced tactical missiles and aerodynamic design and assessment of weapons. In executing the scheme, Song allegedly sent spear phishing emails to individuals employed in positions with the United States government, including NASA, the U.S. Air Force, Navy, and Army, and the Federal Aviation Administration.  Song also sent spear phishing emails to individuals employed in positions with major research universities in Georgia, Michigan, Massachusetts, Pennsylvania, Indiana, and Ohio, and with private sector companies that work in the aerospace field. Song’s spear phishing emails appeared to the targeted victims as having been sent by a colleague, associate, friend, or other person in the research or engineering community. His emails requested that the targeted victim send or make available source code or software to which Song believed the targeted victim had access. According to the indictment, while conducting this spear phishing campaign, Song was employed as an engineer at Aviation Industry Corporation of China (“AVIC”), a Chinese state-owned aerospace and defense conglomerate headquartered in Beijing, China.  AVIC manufactures civilian and military aircrafts and is one of the largest defense contractors in the world.

Ilya Lichtenstein, 35, of New York City, was sentenced recently to 60 months in federal prison for his involvement in a money laundering conspiracy arising from the hack and theft of approximately 120,000 bitcoin from Bitfinex, a global cryptocurrency exchange. According to information presented in court, Lichtenstein hacked into Bitfinex’s network in 2016, using advanced hacking tools and techniques. Once inside the network, Lichtenstein fraudulently authorized more than 2,000 transactions transferring 119,754 bitcoin from Bitfinex to a cryptocurrency wallet in Lichtenstein’s control. Lichtenstein then took steps to cover his tracks by deleting from Bitfinex’s network access credentials and other log files that could have revealed his conduct to law enforcement. Following the hack, Lichtenstein enlisted the help of his wife, Heather Morgan, in laundering the stolen funds. Lichtenstein, at times with Morgan’s assistance, employed numerous sophisticated laundering techniques, including using fictitious identities to set up online accounts; utilizing computer programs to automate transactions; depositing the stolen funds into accounts at a variety of darknet markets and cryptocurrency exchanges and then withdrawing the funds; converting bitcoin to other forms of cryptocurrency in a practice known as “chain hopping;” depositing a portion of the criminal proceeds into cryptocurrency mixing services; using U.S.-based business accounts to legitimize Lichtenstein’s and Morgan’s banking activity; and exchanging a portion of the stolen funds into gold coins. Additional information on this case is available on the United States Department of Justice’s website for large cases here.  

These types of schemes originated in 2020 and have gained international momentum through the use of social media platforms and online dating applications. In a departure from conventional financial scams, these fraudsters focus on psychological manipulation of victims by crafting elaborate fake identities to establish romantic or emotional connections with their targets.

After the scammer creates a fake online persona, the scam begins by initiating contact with a target. Often, the scammer will pretend to have stumbled across a “wrong number” as they contacted the victim. The next step is starting a conversation with a potential victim to gain their trust. The scammers often initiate benign chats about life, family, and work, and they’ll fabricate details about their own life that make them seem similar to you. Once the scammer gains trust, they will eventually pivot the conversation to investing and making claims about their own purported success with investments.

Once the target agrees to accept “help” with the investment process, the scammer typically explains how to wire money from their bank account to a crypto wallet and eventually to a “brokerage.” The scammer may initially encourage a modest investment and allow the victim to withdraw “returns” on their investment as proof the investment is legit. From there, the scammer will only continue to manipulate their victim into investing more and more. Once the fraudster is unable to convince the victim to continue making deposits, they will disappear and sever all contact.

A key feature that distinguishes pig butchering scams is the human aspect that shows a pattern of coercion and exploitation. Often times the low-level operators of these scams are victims themselves who may have been coerced into participating in these crimes under the guise of employment opportunities. Many of the perpetrators are lured from abroad then forced to commit the fraud by organized crime syndicates. The effects of pig butchering scams extend beyond the significant financial losses to encompass human rights issues tied to trafficking and coercion.

Perpetrators of pig butchering scams have been charged across the country by federal prosecutors working alongside the Computer Crime and Intellectual Property Section’s (CCIPS) National Cryptocurrency Enforcement Team (NCET), which was established to combat the growing illicit use of cryptocurrencies and digital assets. In California, four defendants were charged with conspiracy to commit money laundering, concealment money laundering, and international money laundering for their involvement in a $20 million dollar pig butchering scheme.

Pig butchering scams were discussed in a recent episode of Last Week Tonight with John Oliver. As the episode highlights, these scams are increasingly common and the losses to victims can be devastating.

Money Laundering refers to the illegal process of concealing the origins of money obtained through criminal activities, making it appear as if it comes from a legitimate source. This is criminalized under 18 U.S.C. § 1956. Money laundering using NFTs involves the illicit use of these digital assets to disguise the origins of illegally obtained funds. In this context, individuals create a fake record of sales on the blockchain by selling NFTs to themselves using different accounts. Once finished, they sell the NFT to an unsuspecting buyer and repeat the process.

Fraud has grown increasingly common in the crypto landscape due to its anonymous and decentralized nature. Fraud involving NFTs can manifest in various ways due to the unique characteristics of these digital assets. This is mostly being prosecuted as wire fraud under 18 U.S.C. § 1343. Some common forms of fraud associated with NFTs include:

1. Fake or Stolen NFTs: Fraudsters might create counterfeit NFTs by copying digital content and attempting to sell them as original or rare pieces. Additionally, they might steal someone else’s artwork or content and mint NFTs to sell without the creator’s consent.
2. False Representation: Individuals might misrepresent the ownership or authenticity of an NFT by falsely claiming it is associated with a particular creator or source, leading buyers to believe they are purchasing something of higher value or legitimacy than it actually holds.
3. Pump-and-Dump Schemes: Similar to traditional financial markets, some individuals may engage in pump-and-dump schemes within the NFT market. This involves artificially inflating the value of certain NFTs through false hype or manipulation, only to sell them off at a high price, leaving unsuspecting buyers with devalued assets.
4. Phishing and Scams: Scammers may use phishing techniques to trick NFT owners into providing their private keys or access to their digital wallets, allowing the fraudster to steal the NFTs. Additionally, fraudulent schemes and fake NFT marketplaces can deceive buyers and sellers into making transactions for non-existent or misrepresented NFTs.
5. Rug-Pull Scheme: As the term suggests, a “rug pull” refers to a scenario where the creator of an NFT and/or gaming project solicits investments and then abruptly abandons a project and fraudulently retains the project investors’ funds.

Law enforcement is continuing to prosecute these types of NFT schemes across the nation, in cases that allege millions of dollars being defrauded. Two defendants were charged for executing a $1 million NFT money laundering and fraud scheme in January 2022. In another NFT rug-pull, Aurelien Michel was charged for diverting $2.9 million dollars in an international fraud scheme.

Bitcoin is definitely attractive to money launderers because it is a decentralized currency that is not subject to government regulation. This makes it difficult, but not impossible, to track and trace Bitcoin transactions. Additionally, Bitcoin is often used in online transactions, which makes it easy to conceal the identity of the sender and receiver.

There are a number of ways to launder money using Bitcoin. One common method is to use a mixer, which is a service that mixes Bitcoin from multiple sources together. This makes it difficult to trace the original source of the Bitcoin. Another method is to use a tumbler, which is a service that breaks up Bitcoin transactions into smaller pieces and then reassembles them. This makes it difficult to track the individual transactions.

Bitcoin can also be used to purchase goods or services that are difficult to trace, such as drugs or weapons. This can make it difficult to identify the source of the funds used to purchase the goods or services.

Money laundering is a serious crime that can have a significant impact on the economy. It can also be used to finance terrorism and other criminal activities. Conaway & Strickler can help if the government is questioning you about or charging you with money laundering /wire fraud /bank fraud charges.

A lot of the times a money mule is utilized in money laundering schemes. A money mule is a person who transfers money on behalf of someone else, often without knowing that they are involved in a criminal activity. Money mules are typically recruited through online job scams, romance scams, or other fraudulent schemes. They are then asked to receive money from criminals, often through wire transfers or cryptocurrency transactions. The money is then transferred to other accounts, or used to purchase goods or services.

Money mules are often unaware that they are involved in a criminal activity. They may be promised a share of the money, or they may be led to believe that they are helping someone in need. However, money mules are always at risk of being caught and prosecuted. They may also face financial losses, as they may be held responsible for any money that is stolen from the criminals. The government often goes after these low end cases and prosecutes them federally.

Again, contact us immediately if you are being questioned by a federal agent about any of these issues.

First we asked, WHAT IS CRYPTOCURRENCY?

Its response:

Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature. It is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

Cryptocurrencies are systems that allow for secure payments online which are denominated in terms of virtual “tokens.” These tokens are created using cryptographic techniques that allow them to be transferred between users without the need for a central authority. Bitcoin, the first and most well-known cryptocurrency, was created in 2009.

Cryptocurrencies have been gaining in popularity in recent years, as more and more people become aware of their potential benefits. These benefits include:

• Security: Cryptocurrencies are secured by cryptography, which makes them difficult to counterfeit or double-spend.
• Transparency: Cryptocurrencies are transparent and decentralized, which means that there is no central authority that controls them.
• Efficiency: Cryptocurrencies can be used to make secure, efficient, and low-cost payments.

However, there are also some risks associated with cryptocurrencies, such as:

• Volatility: The value of cryptocurrencies can be volatile, which means that they can lose value quickly.
• Hacking: Cryptocurrencies are vulnerable to hacking, as they are stored on digital platforms.
• Regulation: Cryptocurrencies are not currently regulated by governments, which means that there is no protection for consumers if they lose money investing in them.

Overall, cryptocurrencies are a new and innovative technology that has the potential to revolutionize the way we pay for goods and services. However, there are also some risks associated with them, so it is important to do your research before investing.

Second, we asked, WHAT IS CRYPTOCURRENCY CRIME?

Its response:Cryptocurrency crime is any crime that involves the use of cryptocurrency. This includes crimes such as money laundering, fraud, and theft.

Cryptocurrency crime is a growing problem, as the value of cryptocurrencies continues to rise. In 2021, cryptocurrency crime was estimated to be worth $14 billion. This is a significant increase from the $7.8 billion worth of cryptocurrency crime in 2020.

There are a number of factors that contribute to the growth of cryptocurrency crime. One factor is the anonymity of cryptocurrencies. Cryptocurrency transactions are typically recorded on a blockchain, but the identities of the participants are not always known. This makes it difficult for law enforcement to track down and prosecute criminals.

Another factor is the growing popularity of cryptocurrency exchanges. These exchanges allow users to buy and sell cryptocurrencies, and they often have poor security measures in place. This makes them easy targets for criminals.

Finally, the lack of regulation in the cryptocurrency industry makes it difficult for law enforcement to crack down on crime. There are currently no laws in many countries that specifically regulate cryptocurrencies. This means that criminals can often operate without fear of being caught.

Finally, we asked, WHAT IS CRYPTOCURRENCY FRAUD?

Its response:

Cryptocurrency fraud is a type of fraud that involves the use of cryptocurrencies to deceive or defraud people. Cryptocurrency fraud can take many forms, including:

• Pump-and-dump schemes: In a pump-and-dump scheme, fraudsters artificially inflate the price of a cryptocurrency by buying it in large quantities and then selling it to unsuspecting investors. Once the price has increased, the fraudsters sell their holdings and the price plummets, leaving investors with worthless tokens.
• Fake cryptocurrency exchanges: Fraudsters often set up fake cryptocurrency exchanges to trick people into investing in cryptocurrencies that do not exist. Once the fraudsters have collected money from victims, they disappear without a trace.
• Fake cryptocurrency wallets: Fraudsters often set up fake cryptocurrency wallets to steal people’s cryptocurrency. Once the fraudsters have stolen the cryptocurrency, they disappear without a trace.
• Cryptocurrency mining scams: Fraudsters often set up cryptocurrency mining scams to trick people into investing in fake cryptocurrency mining schemes. Once the fraudsters have collected money from victims, they disappear without a trace.
• Cryptocurrency investment scams: Fraudsters often set up cryptocurrency investment scams to trick people into investing in fake cryptocurrency investment schemes. Once the fraudsters have collected money from victims, they disappear without a trace.

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ChatGPT and now Bard are becoming more and more mainstream and law firms like Conaway & Strickler are finding ways to incorporate AI in to better representing our clients. In addition, it seems only natural to discuss new technologies at the same time as discussion cryptocurrency.

It’s a Federal crime to commit aggravated identity theft.

The Defendant can be found guilty of aggravated identity theft only if all the following facts are proved beyond a reasonable doubt:

(1) the Defendant knowingly transferred, possessed, or used another person’s [means of identification] [identification documents];

(2) without lawful authority; and

(3) during and in relation to [the eligible felony alleged in the indictment].

[A “means of identification” is any name or number used, alone or together with any other information, to identify a specific person, including a name, social security number, date of birth, officially issued driver’s license or identification number, alien registration number, passport number, employer or taxpayer identification number, or electronic identification number or routing code. It can also include a fingerprint, voice print or other biometric data.]

[An “identification document” is a document made or issued by or for the United States Government, a state or foreign government or political subdivision.]

The Government must prove that the Defendant knew that the [means of identification] [identification documents], in fact, belonged to another actual person, [living or dead,] and not a fictitious person.

The Government must prove that the Defendant knowingly transferred, possessed, or used another person’s identity “without lawful authority.” The Government does not have to prove that the Defendant stole the [means of identification] [identification documents]. The Government is required to prove the Defendant transferred, possessed, or used the other person’s [means of identification] [identification documents] for an unlawful or illegitimate purpose.

The Government also must prove that the [means of identification] [identification document] was possessed “during and in relation to” the crime alleged in the indictment. The phrase “during and in relation to” means that there must be a firm connection between the Defendant, the [means of identification] [identification documents], and the crime alleged in the indictment. The [means of identification] [identification documents] must have helped with some important function or purpose of the crime, and not simply have been there accidentally or coincidentally. The [means of identification] [identification documents] at least must facilitate, or have the potential of facilitating, the crime alleged in the indictment.

We at Conaway & Strickler, PC know how to combat these type of charges. Please feel free to access our blog for other entries here

Please contact us to learn more should you be facing criminal charges.