Cryptocurrency and NFT Fraud

Jon May is available to represent individuals who are who under investigation or being prosecuted for various frauds involving cryptocurrency and non-fungible tokens (NFTs).

Examples of such frauds include:

  • Promises to individuals that payments in cryptocurrency will give them the right to recruit others into a program. Individuals are told that they will get recruitment rewards paid in cryptocurrency. The more cryptocurrency paid, the more money the individual will supposedly make. But these are all fake promises, and false guarantees.
  • Sending individuals unsolicited offers from supposed “investment managers.” These investment managers represent that they can help grow the individual’s money if the individual gives them the cryptocurrency they previously purchased. However, once the individual logs in to the “investment account” they opened, they are not permitted to withdraw their money unless additional fees are paid.
  • Individuals receive unsolicited job offers to help recruit cryptocurrency investors, sell cryptocurrency, mine cryptocurrency, or help with converting cash to bitcoin.
  • Job websites will promise a job (for a fee), but end up taking an individual’s money or personal information.
  • The Department of Justice has thus far prosecuted two kinds of crimes involving NFTs: the theft of NFTs from hot wallets and the sale of NFT’s to persons where the NFTs were not delivered after the fraudster has received the money and disappeared.

The National Cryptocurrency Enforcement Team (“NCET”) at the Department of Justice pursues investigations and enforcement actions relating to cryptocurrency and virtual assets. The Team’s mission is “to deter, disrupt, investigate, and prosecute criminal misuse of cryptocurrency, as well as to recover the illicit proceeds of those crimes whenever possible.”

Examples of prosecutions brought by the United States:

Press Release – Tuesday, February 8, 2022

Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency

Government Seized $3.6 Billion in Stolen Cryptocurrency Directly Linked to 2016 Hack of Virtual Currency Exchange

Two individuals are facing charges in the district court for the Southern District of New York (Manhattan) for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange, presently valued at approximately $4.5 billion. Thus far, law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack.

According to court documents, Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Those unauthorized transactions sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan. The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack. After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.

Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen CryptocurrencyU.S. Department of Justice

Press Release – Thursday, March 24, 2022

Two Defendants Charged In Non-Fungible Token (“NFT”) Fraud And Money Laundering Scheme

Defendants Executed a $1 Million NFT Fraud Scheme in January 2022, and Were Preparing to Execute a Second Prior to Their Arrests

ETHAN NGUYEN, a/k/a “Frostie,” a/k/a “Jakefiftyeight,” a/k/a “Jobo,” a/k/a “Joboethan,” a/k/a “Meltfrost,” and ANDRE LLACUNA, a/k/a “heyandre,” were charged in a criminal complaint with conspiracy to commit wire fraud and conspiracy to commit money laundering, in connection with a million-dollar scheme to defraud purchasers of NFTs advertised as “Frosties.” Rather than providing the benefits advertised to Frosties NFT purchasers, NGUYEN and LLACUNA transferred the cryptocurrency proceeds of the scheme to various cryptocurrency wallets under their control. Prior to their arrests in Los Angeles, California, NGUYEN and LLACUNA were preparing to launch the sale of a second set of NFTs advertised as “Embers,” which was anticipated to generate approximately $1.5 million in cryptocurrency proceeds.

Two Defendants Charged In Non-Fungible Token (“NFT”) Fraud And Money Laundering SchemeU.S. Department of Justice