Cryptocurrency / Bitcoin Related Crimes

Bitcoin exploded in popularity during the pandemic. Nearly 1 in 4 Americans over the age of 18 invest in cryptocurrency like bitcoin. In 2021 alone, over $3.2 billion dollars’ worth of crypto currency were stolen.

Many champion the technology as the new currency for the digital age as it eliminates some of the issues society faces with the conventional gold-backed dollar. Bitcoin derives its value from block-chain technology. Block-chain technology records a digital signature every time the token is transferred. This technology is already widely used to authenticate products as they move from the manufacturer to the consumer, so the theory is it can also authenticate the value of the bitcoin.

Federal authorities in Miami seized over $34 million in cryptocurrency in a civil forfeiture case last week. Prosecutors allege that this bitcoin was earned through selling victims’ protected online account information. The black market on personal data is shifting away from off-shore accounts into exchanging bitcoin because bitcoin is a decentralized currency. Rather than go through a bank, sellers can authenticate the transaction by using a digital “key”.

While Bitcoin is relatively new technology, most of the crimes committed are not. Like with accessing bank accounts or credit card numbers, if someone gets ahold of another’s digital key, they can drain their bitcoin wallet. Ponzi schemes and other fraudulent investment schemes have also shifted towards bitcoin because of its decentralized nature. Unlike money kept in banks, money kept in crytpo wallets is not insured by the FDIC, making the crime even more devastating for the victims. Bitcoin makes financial crimes more difficult to trace but not impossible to find.

The Federal Government is cracking down on Crytocurrency related crimes. With more Bitcoin ATM’s, trading platforms, and consumers joining the trade each day, the industry will only receive further scrutiny.  In 2019, the Department of Justice formed the Crypto Enforcement Unit in response to the rising level of fraud in the crypo space.

“The MIMF (Market Integrity and Major Fraud) Unit is a national leader in prosecuting fraud and market manipulation involving cryptocurrency. Since 2019, the Unit has charged cryptocurrency fraud cases involving over $2 billion in intended financial losses to investors from around the world. Prosecutors use blockchain data analytics and traditional law enforcement techniques to identify and prosecute complex cryptocurrency investment schemes; price and market manipulation involving cryptocurrencies; unregistered cryptocurrency exchanges involved in fraud schemes; and insider trading schemes affecting cryptocurrency markets. Prosecutors in the Unit frequently work in parallel with the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.”      

If you are subject to one of these investigations, it is important you contact a lawyer with experience in financial crimes.

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