Over the past 10 days, the U.S. Department of Justice (DOJ) has published six separate press releases providing details on enforcement actions involving cryptocurrencies. One press release announced that several Arizona residents had pleaded guilty and received prison sentences for their involvement in a conspiracy to distribute controlled substances and launder the proceeds. According to the press release, the defendants sold narcotics on the dark web and attempted to launder the proceeds by selling cryptocurrency through peer-to-peer exchangers. Another press release provided details on the sentencing of a dark market vendor who forfeited "millions of dollars in digital or crypto currency including Bitcoins, Stratis, Ethereum [and] 2350 Monero." The press release noted that the forfeited assets included cryptocurrencies held in accounts at U.S.-based exchanges.
A third DOJ press release provided details on what is "believed to be the first federal criminal case charging an unlicensed money remitting business that used a Bitcoin kiosk." The defendant "agreed to plead guilty to federal criminal charges for owning and operating an unlicensed money transmitting business where he exchanged up to $25 million in cash and virtual currency for individuals, including Darknet drug dealers and other criminals, some of whom used his Bitcoin ATM kiosk." Another press release described charges against two Canadian nationals who allegedly "used a Twitter account with the name @HitBTCAssist to trick victims into thinking they were communicating with a customer service representative from HitBTC," a Hong Kong-based cryptocurrency exchange.
A fifth press release described the sentencing of an Australian national "for money laundering with Bitcoin." The investigation involved undercover agents who conducted money exchanges with the defendant, who agreed to exchange bitcoin for cash from narcotics proceeds. Finally, a sixth DOJ press release announced the indictment of a former software engineer at a major U.S. bank for unauthorized intrusion into stored data of the defendant's former employer and more than 30 other companies. According to the press release, the defendant gained unlawful access to data on cloud servers and "used this access not only to steal data, but also used stolen computer power to 'mine' cryptocurrency for her own benefit, a practice known as 'cryptojacking.'"
In addition to the DOJ actions, a Federal Trade Commission (FTC) press release published late last week described an FTC settlement with the "promoters of recruitment-based cryptocurrency schemes." The chain referral schemes (a type of pyramid scheme) involved the defendants using websites, YouTube videos, social media and conference calls to claim that they "could turn a payment of the equivalent of just over $100 into $80,000 in monthly income." The defendants forfeited more than $500,000 and will be permanently barred from operating any other multilevel marketing or pyramid scheme.
In a final notable development, this week a federal court ordered self-proclaimed Bitcoin inventor Craig Wright to transfer half of his bitcoin holdings, which are believed to be worth billions of dollars, to the estate of David Kleiman. According to the order, Wright's bitcoin holdings were produced in a 50-50 partnership with Kleiman to mine bitcoin and develop related Bitcoin technology.
For more information, please refer to the following links:
- Multiple Arizona Residents Sentenced to Prision for Using the Dark Web to Distribute Heroin, Methamphetamine, and Cocaine Throughout the United States
- Dark Web Vendor Sentenced to 70 months for Internet Distribution of Deadly Carfentanil, Fentanyl, and Other Drugs
- Westwood Man Agrees to Plead Guilty to Federal Narcotics, Money Laundering Charges for Running Unlicensed Bitcoin Exchange and ATM
- Two Canadian Nationals Indicted for Bitcoin Fraud
- Australian National Headed to Prison for Money Laundering through Bitcoin
- Former Seattle Tech Worker Indicted on Federal Charges for Wire Fraud and Computer Data Theft
- Alleged Crypto Pyramid Scheme Scammers Settle FTC Suit
- Promoters of Deceptive Chain Referral Schemes Involving Cryptocurrencies Agree to Settlement with FTC
- Bitcoin 'Inventor' Ordered To Give Up Half Of Bitcoin Holdings
- Federal court reportedly finds Craig Wright perjured himself; awards Kleiman Estate IP and bitcoins
- Craig Wright Order
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