money laundering

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:

How is White Collar Crime Generally Prosecuted?

Published on: July 10, 2023 | By Conaway & Strickler, P.C.

The Department of Justice investigates and prosecutes cases where large amounts of money is alleged to have been taken. Examples of white collar crimes are money laundering, bank, wire and mail fraud, tax evasion, insider trading, insurance fraud, mortgage fraud, bribery and embezzlement. Of course Homeland Security, the FBI, the IRS, Customs and Border Patrol and SEC can also investigate and prosecute cases of fraud as well.

The government has a special United States Guideline Chapter dedicated to “basic” economic offenses. For purposes of this blog, this chapter will be discussed in more detail below. As with anything involving federal criminal litigation, nothing is crystal clear in the law. Therefore, there is also a chapter in the United States Guidelines dedicated to tax offenses, election fraud, gambling, and money laundering in the United States Sentencing Guidelines.

This USSG chapter DOES cover extortion, bribery, kickbacks, counterfeiting, embezzlement, health care fraud, computer fraud, insurance fraud, securities fraud, mortgage fraud, identity fraud, bankruptcy fraud, etc. What is most important in this chapter is the loss amount. All charges start off with a base offense level of 6 or 7 depending on the statutory max of the offense charged. Then, you look at what the “loss amount” is using the below table.

Loss (apply the greatest)	Increase in Level
(A) $6,500 or less	no increase
(B) More than $6,500	add 2
(C) More than $15,000	add 4
(D) More than $40,000	add 6
(E) More than $95,000	add 8
(F) More than $150,000	add 10
(G) More than $250,000	add 12
(H) More than $550,000	add 14
(I) More than $1,500,000	add 16
(J) More than $3,500,000	add 18
(K) More than $9,500,000	add 20
(L) More than $25,000,000	add 22
(M) More than $65,000,000	add 24
(N) More than $150,000,000	add 26
(O) More than $250,000,000	add 28
(P) More than $550,000,000	add 30.

The loss amount is a pandora box of confusion and the government is able to add all kinds of relevant conduct and intended loss conduct to inflate these numbers.

To further make things complicated, there are enhancements in this section that permit the government to add levels for things such as the use of sophisticated means, role in the offense, number of victims, a defrauding a charity, mass marketing, among others.

Navigating the federal criminal system is a task that should not be endured alone. Contact our team today for more information about we can protect your rights and your freedom.

United States Sentencing Commission proposed USSG amendments for fraud cases

Published on: May 18, 2023 | By Conaway & Strickler, P.C.

On April 5, 2023, the United States Sentencing Commission announced amendments to the United States Sentencing Guidelines that will come in to effect on November 1, 2023. Below is a summary of those changes as it relates to just fraud cases.

Under proposed USSG 4C1.1, a client will receive a 2-level decrease to their offense level if

a)no criminal history points,

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: