A Rise in Bitcoin Laundering and Fraud

A Rise in Bitcoin Laundering and Fraud

Back in March, when most states began their shelter in place orders, the Federal Bureau of investigation released statements regarding their concern of rising scams and fraudulent activity. The overarching concern was that COVID-19, many people losing their jobs, and the quickly deteriorating economy would result in the rise of money-driven Schemes, scams, and fraud.

The result that we’ve seen over the past three months is certainly consistent with those suspicions. Not only has there been a drastic rise in telemarketing or robo-dialing scams, but also in traditional email scams, mail scams, door-to-door scams, and now the Bitcoin laundering and Bitcoin fraud. While some criminals seem to have taken too the tried and true, others are pushing into the modern-day. The unfortunate element here is that people who use a Bitcoin or cryptocurrency regularly are now coming under suspicion for laundering and fraud. If you feel you may have been a victim of fraud, contact our Connecticut criminal lawyers right away.

Bitcoin Twitter Hack

Coinbase, a well-known cryptocurrency wallet that handles Bitcoin regularly, reported that it stopped the transaction of over 280,000 in Bitcoin during the very recent Twitter hack in July. To give some context to that value, one Bitcoin in July of 2020 valued at about $9,300 in US value.

The extent of damage isn’t known at this point in time, but it’s worth noting that Coinbase is one of many well-established cryptocurrency platforms or wallets, others such as Binance have not reported their numbers yet. These companies are often familiar with the types of scams that were posted onto high profile Twitter users, and they were quick to move the link provided to the blacklist, but that didn’t stop around $3,000 worth of Bitcoin From successfully moving into that account. Coinbase claims that they were able to blacklist the link within a few minutes of the hack taking place.

Bitcoin and Cryptocurrency Laundering

On the surface, Bitcoin, and cryptocurrency, it seemed like the ultimate way to launder money. Except the actual laundering process is lost. When you purchase a Bitcoin or other forms of cryptocurrency, there is a permanent trail. It is not like the classic laundromat or bowling alley laundering schemes that take “dirty” cash and make it seem as if it is good clean, cash-based, business. Bitcoin doesn’t work that way. You’re simply buying cryptocurrency the same way you would buy stocks, bonds, or a soda at 7/11.

The idea of using the cryptocurrency for laundering, however, began when it was not expressly clear how Bitcoin could be tracked or monitored. Those new to cryptocurrency and those who are unfamiliar with how it works may believe that they are essentially an untraceable ghost or figure online that can’t be found out. Now it may be difficult to find out who purchased cryptocurrency and where it has traveled since then, but it is far from impossible.

Gaming and Cryptocurrency

One of the ways that people have found quite a bit of trouble when it comes to allegations of cryptocurrency laundering is through gaming. Most online games or MMORPGs Have their own form of cryptocurrency, which may carry a real dollar value. When people are found creating accounts, loading up in Game dollars or coinage equivalent to that platform, and then cycling it through or selling that account, it certainly raises suspicions.

Suppose you’re facing charges of gaming laundering, Bitcoin laundering, or fraud related to cryptocurrency than you may be in much more trouble than it initially seems. These charges amazing ridiculous in that you were doing everyday things, but it is possible that they could result in federal charges, and 20 years in jail in addition to many other serious consequences.

Taking on This Relatively New Element of Criminal Allegations

Bitcoin and cryptocurrency have been around for a while now, but many criminal defense attorneys are still new or unfamiliar in handling this type of allegation. Often Bitcoin and cryptocurrency charges come in the form of laundering or fraud, and while it’s troublesome for states to move forward with these allegations and go to court, it can be extremely difficult for a defense attorney to build a strong foundation for their client.

Aeton Partners understands that the federal government and many state governments, including the state of Connecticut, have taken action against users of Bitcoin. It seems as though the overall view of Bitcoin years is that it is unsavory and, therefore must be associated with illegal trading or money laundering practices. That’s simply not true, and many people believe that what seems like sketchy cryptocurrency activity now is the future of banking and asset protection.

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