July 27, 2022DOJ Link

A federal jury convicted a New York man today in connection with a scheme to defraud investors by marketing and selling fraudulent virtual currency. 

According to court documents and evidence presented at trial, Randall Crater, 51, of East Hampton, founded My Big Coin Pay Inc. (My Big Coin), a purported cryptocurrency and virtual payment services company headquartered in Las Vegas, Nevada, and offered virtual payment services through a fraudulent digital currency, “My Big Coins,” which he marketed to investors between 2014 and 2017 using misrepresentations about the nature and value of Coins. Crater and his associates falsely claimed that Coins was a fully functioning cryptocurrency backed by $300 million in gold, oil and other valuable assets. Crater also falsely told investors that My Big Coin had a partnership with MasterCard and that Coins could readily be exchanged for government-backed paper currency or other virtual currencies. Crater promulgated these misrepresentations through social media, the internet, email and text messages. 

August 3, 2022:

Bitcoin Fog Case Could Put Cryptocurrency Tracing on Trial. Defendant accused of laundering $336 million, is proclaiming his innocence—and challenging a key investigative tool. DOJ Link

DOJ alleges that Defendant "operated Bitcoin Fog since 2011. Bitcoin Fog was the longest-running cryptocurrency “mixer,” gaining notoriety as a go-to money laundering service for criminals seeking to hide their illicit proceeds from law enforcement." DOJ alleges "Over the course of its decade-long operation, Bitcoin Fog moved over 1.2 million bitcoin – valued at approximately $335 million at the time of the transactions." DOJ further alleges the "bulk of this cryptocurrency came from darknet marketplaces and was tied to illegal narcotics, computer fraud and abuse activities, and identity theft."

August 9, 2022:

“After more than five years of litigation, [Defendant] was extradited to the United States yesterday to be held accountable for operating BTC-e, a criminal cryptocurrency exchange, which laundered more than $4 billion of criminal proceeds,” DOJ alleges Defendant and his co-conspirators ran BTC-e, "a significant cybercrime and online money laundering entity that allowed its users to trade in bitcoin with high levels of anonymity and developed a customer base heavily reliant on criminal activity." DOJ Link

August 14, 2022:

I took a close look at OpenSea’s new flagged NFT policy from the perspective of a blockchain criminal defense lawyer and one change in policy stands out to me. Here is a thread discussing that new change and how I predict it will impact the space.  Twitter Link

OS commented that: “Based on your input, we’ve already made the call to adjust elements of how we implement our policy. 1st, we're expanding the ways we use police reports: we've always used them for escalated disputes, but they'll now be used to confirm all theft reports.” I read this to mean that OS will use police reports to confirm ALL theft reports going forward.

August 18, 2022:

Defendant "his co-conspirators laundered the proceeds of ransomware attacks on individuals and organizations throughout the United States and abroad." "First identified in August 2018, Ryuk is a type of ransomware software that, when executed on a computer or network, encrypts files and attempts to delete any system backups." DOJ Link

"Of note, Ryuk can target storage drives contained within or physically connected to a computer, including those accessible remotely via a network connection. Ryuk has been used to target thousands of victims worldwide across a variety of sectors."