Cyber Crime

Cryptocurrency Money Laundering

Published on: March 24, 2025 | By Conaway & Strickler, P.C.

Cryptocurrency fraud has become increasingly prevalent in recent years. The lack of a centralized authority governing crypto along with the relative anonymity of transactions has contributed to this rise in digital financial crime. Specifically, cryptocurrency money laundering has grown significantly in recent years with billions of dollars stolen through hacks, Ponzi schemes, mixers. A recent report from Chainalysis estimates illicit cryptocurrency addresses received more than 50 billion dollars in 2024.

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.

Recent Computer Hacking Cases in the News

Published on: November 24, 2024 | By Conaway & Strickler, P.C.

Recently, Robert Purbeck of Idaho, also known as “Lifelock,” and “Studmaster,” was sentenced to ten years after pleading guilty to federal charges of computer fraud and abuse. He hacked into the computer servers of the City of Newnan, Georgia and a Griffin, Georgia medical clinic, and then targeted at least 17 other victims across the United States – in the process stealing personal information of more than 132,000 individuals. He also attempted to extort a Florida orthodontist for payment in Bitcoin, threatening to disclose stolen patient records and other personal information.

“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.

What is a “Pig Butchering” Scam?

Published on: March 11, 2024 | By Conaway & Strickler, P.C.

A new type of fraudulent online investment scheme has led to thousands of victims worldwide and significant financial losses. In a pig butchering scam, victims are gradually lured into making financial contributions to a seemingly sound investment only to have the person they are dealing with subsequently disappear with the funds.

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.

The Intersection of Crime and Non-Fungible Tokens (NFTs)

Published on: November 14, 2023 | By Conaway & Strickler, P.C.

An NFT, or Non-Fungible Token, is a digital asset representing ownership or proof of authenticity of a unique item or piece of content using blockchain technology. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged on a one-to-one basis, NFTs are non-interchangeable and one-of-a-kind. As long as you’re following copyright laws and selling legitimate assets, creating, selling, and reselling NFTs is legal. However, due to the decentralized and anonymous nature of the crypto world, NFTs come with a host of legal issues. Like with most digital innovations, regulatory legislation has been slow to catch up and establish clear guidelines; still, wrongful use of NFTs can implicate an array of criminal charges.

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:

Bitcoin/Cryptocurrency Money Laundering

Published on: April 12, 2023 | By Conaway & Strickler, P.C.

What is Bitcoin money laundering? Bitcoin money laundering is the process of using Bitcoin to conceal the origins of illegally obtained money. This can be done by transferring the Bitcoin to multiple accounts, mixing it with other Bitcoin, or using it to purchase goods or services. Some believe that Bitcoin transactions are anonymous. There are, however, transaction records that are stored in the blockchain and publicly visible. The FBI recently stated “Criminals always leave tracks, and …[this] is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead” .

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.

Cryptocurrency Fraud

Published on: March 30, 2023 | By Conaway & Strickler, P.C.

We posed some questions about cryptocurrency using Bard (Google’s version of Chat GPT),

First we asked, WHAT IS CRYPTOCURRENCY?

Its response:

Covid Related Fraud Enforcement Update

Published on: February 19, 2023 | By Conaway & Strickler, P.C.

On May 17, 2021, U.S. Attorney General Merrick Garland announced the establishment of the COVID-19 Fraud Enforcement Task Force.

On March 10, 2022, Garland announced Associate Deputy Attorney General Kevin Chambers as the Director For Covid-19 Fraud Enforcement.

In August, 2022, President Biden signed laws that give the Department of Justice and other federal agencies more time to investigate and prosecute Covid-19 fraud. It extended the statute of limitations for fraud charges involving PPP and EIDL fraud to ten years.

Experience a Data Breach? What to do

Published on: February 16, 2023 | By Conaway & Strickler, P.C.

The International Bar Association created a “President’s Task force on Cybersecurity”. Meg Strickler was appointed to serve on this prestigious task force and helped draft Cybersecurity Guidelines. Today, it is all the more important to be weary of a data breach if you own and operate a small business. Data breaches can interrupt operations, cause chaos and most importantly impact the bottom line severely. Just this month, Atlanta based law firm Hall Booth Smith experienced a data breach. Meg Strickler was quoted in the Fulton County Daily Report in discussing this breach, stating that the most important thing for law firms to do is educate their employees on how to stay safe online. One of the biggest issues she’s seen recently is data breaches resulting from Trojan emails, when employees click on links from unfamiliar senders. She also advised other precautionary measures, such as making sure bookkeepers don’t transfer money without protections in place and establishing safeguards to prevent disgruntled employees from internally dismantling a system. Please see here for the full article.

So what to do to prepare? Some obvious first steps are educating employees on cyber safety measures, making sure emails are encrypted, ensuring cyber insurance is up to date and becoming familiar with your company’s assets. You want to have a procedure and plan written ahead of time.

How can I be charged with 18 U.S. Code § 1028A Aggravated Identity Theft?

Published on: January 22, 2023 | By Conaway & Strickler, P.C.

Here is the definition from the statute, cut directly from the 11th circuit’s jury instructions:

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:

SEC Complaint, RICO, Securities Fraud – biggest case against financial crime in SDNY in a long time

Published on: April 28, 2022 | By Conaway & Strickler, P.C.

Manhattan federal agents arrested Archegos Capital Management founder Sung Kook “Bill” Hwang on April 27, 2022 on fraud charges, roughly one year after the investment firm’s huge losses back in March 2021. Department of Justice prosecutors are charging both Hwang and Patrick Halligan, the firm’s chief financial officer, with racketeering conspiracy, securities fraud and wire fraud offenses as part of schemes allegedly designed to “unlawfully manipulate” the price of publicly traded securities.

The 59-page indictment, filed in federal court in Manhattan, alleges the men and others at Archegos sometimes timed their trades to drum up the interest of other investors, while borrowing money to make bigger and bigger bets. The Department of Justice states, “Hwang and his co-conspirators invested in stocks mostly through special contracts with banks and brokers called “swaps.” As alleged, these swaps allowed Hwang to cause massive buying of certain stocks, including at carefully selected days and times, to artificially pump up stock prices. Hwang, Halligan, and their co-conspirators lied to banks and used a series of manipulative trading techniques to keep those prices high and prevent them from falling. The lies fed the inflation, and the inflation led to more lies. The scale of this alleged fraud was stunning. In one year, Hwang turned a $1.5 billion portfolio and fraudulently pumped it up into a $35 billion portfolio.” The effective size of the firm’s stock positions swelled to $160 billion — rivaling some of the biggest hedge funds in the world. The case marks the biggest financial-crime charges to come out of the Southern District of New York under the leadership of Mr. Damian Williams, who was sworn in October 10, 2021.

The SEC has also filed a civil complaint stating that Mr. Becker, the former chief risk officer at Archegos, and Mr. Tomita, the firm’s former top trader, had led discussions with the banks about the firm’s trading positions but that Mr. Hwang and Mr. Halligan had directed and set the tone for those discussions.