Georgia Criminal Defense Lawyers Blog
Cryptocurrency fraud has become increasingly prevalent in recent years. The lack of a centralized authority governing crypto along with the relative anonymity of transactions has contributed to this rise in digital financial crime. Specifically, cryptocurrency money laundering has grown significantly in recent years with billions of dollars stolen through hacks, Ponzi schemes, mixers. A recent report from Chainalysis estimates illicit cryptocurrency addresses received more than 50 billion dollars in 2024.
Crypto money laundering follows the same pattern used for fiat (government-issued) currencies by “cleaning” funds gained through illicit means, before exchanging or withdrawing them for cash. Traditionally, money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them. In the context of crypto, tokens are moved through various digital addresses to obscure their illegal origin and make them more difficult to trace.
The privacy-preserving nature of crypto has opened the door for criminals to conceal the origin of illicitly gained funds through a variety of methods. Cybercriminals ultimately funnel assets through several businesses and online addresses to hide the money trail before transferring the funds to a seemingly legitimate source.
There are several methods that criminals will use when engaging in cryptocurrency money laundering, including:
- Smurfing: Splitting up large sums of money into smaller amounts so they can be sent via multiple transactions.
- Exchange Hopping: Using multiple cryptocurrency exchanges to transfer funds across several platforms and obscure the money trail.
- Crypto Swaps: Using multiple cryptocurrency wallet addresses to directly convert funds without an intermediary or a centralized exchange.
- Offshore Transactions: Creating offshore accounts to hide the origin of funds.
- Mixing: Blending together the crypto assets of multiple users, making it difficult to determine who owns what.
- Gambling Platforms: Depositing tokens into online gambling websites to be either withdrawn as cash or used to place coordinated bets.
Cybercriminals require other actors (individuals and sometimes shell companies) to facilitate this crypto money laundering. Like traditional money laundering, criminals recruit “money mules” to move or launder the illicit funds, often unknowingly. In the context of crypto, this is often done under the guise of a cryptocurrency investment scheme.
Just as traditional money laundering can be federally prosecuted under 18 U.S.C. § 1956, crypto money laundering is a crime under that same law. In addition to money laundering charges, involvement in a cryptocurrency scam can lead to charges including conspiracy, wire fraud, mail fraud, and more. Further, individuals at all levels of these schemes can face prosecution, including those who may have unwittingly played the role of a money mule.
With decades of experience in defending traditional financial fraud paired with a deep understanding of the newer world of cryptocurrency, our firm possesses the skills and expertise to assist those accused of crypto fraud. Contact us for a free consultation.