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Crypto Fraud Defense: NCET Defense Attorneys

Blockchain attorney Dr. Nick Oberheiden

Attorney Nick Oberheiden
Crypto Fraud Defense Team Lead
Blockchain attorney Alina Veneziano

Attorney Alina Veneziano
Crypto Fraud Defense Team Lead

If you have (or your business has) been charged/investigated for crypto-related crime, talk to us. We have a free consultation for you.

We have a cryptocurrency fraud defense team made up of crypto fraud lawyers and consultants nationwide that can handle the DOJ’s NCET (National Cryptocurrency Enforcement Team) and other federal agency enforcement teams.

Federal Agencies Take on Crypto-Related Fraud

The SEC and DOJ are two federal agencies that are aggressively targeting individuals and entities suspected of cryptocurrency fraud, such as fraudulent ICOs (Initial Coin Offerings), crypto investment scams, crypto marketing scams, and other crypto fraud. Suspected unlawful activities regarding cryptocurrencies are attracting unmatched attention from federal agencies leading to many types of charges that attract hefty fines and long jail terms.

Virtual currencies (crypto), crypto exchanges, and banking platforms offering crypto have increased drastically. However, cryptos are still relatively new to many. In fact, the race to enact laws specifically for cryptos is on. Currently, cryptocurrency fraud in the US is being prosecuted using existing laws that are generally applicable.

The implications of crypto to the financial and securities industries have made persons and entities suspected of crypto fraud to face many charges ranging from tax evasion to terrorism financing and money laundering. These offenses fall under different laws from the Securities Exchange Act to the Bank Secrecy Act. The importance of experienced cryptocurrency fraud defense attorneys can’t, therefore, be overlooked if you face crypto-related federal investigations or charges.

Definition of Cryptocurrency

What’s Cryptocurrency?

Cryptos are types of digital assets used to verify transfer or regulate units of digital assets. The term crypto means hidden/secret. Cryptos use encryption to control circulation. While there are thousands of cryptocurrencies today, Bitcoin is the most popular.

One popular benefit of paying using cryptocurrency is that it is an anonymous cryptocurrency which is accessible to everyone. Cryptocurrencies stand out for being secure since they depend on complex algorithms and blockchains. Companies that choose cryptocurrencies for payment are bound to enjoy these benefits.

Cryptocurrency Regulation

Before Former President Donald Trump’s executive order that established a special task force mandated with investigating cryptocurrency fraud, cryptos were largely unregulated. This is no longer the case today. Federal government agencies have intensified cooperation to investigate and prosecute individuals and companies suspected of cryptocurrency fraud.

Cryptocurrency Crimes

Crypto crimes can be categorized in many ways, from how they occur to the virtual currency in question.

ICO Crimes

Any crime that involves cryptocurrencies or is related to cryptocurrencies can qualify as cryptocurrency crime. The most popular cryptocurrency crime today involves ICOs (Initial Coin Offerings).

Bitcoin Cryptocurrency Crimes

If it isn’t an ICO crime, the crypto crime is likely to involve Bitcoin since it’s the most popular virtual currency whose usage has increased exponentially over the past several years.

Money Laundering

Money laundering is a common virtual currency crime since it’s easier to launder large sums of virtual currency than FIAT currency (U.S. Dollars, Pounds, Euros, etc.).

Other Crypto Crimes

US federal agencies have prosecuted many companies for ICO-related crimes and stealing funds from electronic wallets. Other commonly prosecuted crypto fraud cases involve transacting via unverified cryptocurrency exchanges or questionable servers.

How Does Cryptocurrency Fraud Take Place?

Cryptocurrency fraud has certain traits. Most cryptocurrency laundering happens via ATMs, prepaid cards, gaming sites, or unregulated exchanges. Criminals engaging in the crimes start by buying cryptocurrencies from online crypto exchanges.

Initial transactions are legitimate. However, subsequent transactions involve the use of anonymous services to hide a blockchain and the fund’s sources. Once the connection between cryptocurrency transactions is severed, there seizes to be a trace of the crime. Untraceable transactions easily pass as legitimate transactions. Federal agencies face challenges trying to prove the existence of a criminal motive for such cases.

However, such crypto crimes are on the rise. In 2017, crypto crime losses increased by approximately 160% to $1.74 billion compared to the previous year. In 2019, losses increased a record five times.

What to Do if Investigated or Charged by Federal Agencies for Cryptocurrency Fraud

You need an experienced cryptocurrency fraud defense attorney if you are facing crypto fraud investigations or charges. A legal expert will reduce your risk of being indicted. Individuals who have been charged need to talk to an NCET defense attorney immediately.

At Blockchainlawyer.com, our team of experienced federal defense lawyers offers unmatched experience in federal prosecutions ranging from DOJ to SEC investigation. We’ve also appealed convictions successfully before.

Cryptocurrencies have some unique issues. However, the same principles used to investigate other federal crimes usually dictate how cryptocurrency fraud is handled. To protect yourself or your company, you must have a proactive defense team that understands regulations that apply in such cases.

That’s what we offer at Blockchainlawyer.com. Our attorneys have over 100 years combined experience in all manner of federal criminal cases. We have legal professionals and consultants who have firsthand experience prosecuting fraud on behalf of federal agencies like the DOJ. We are perfectly placed to defend companies and individuals from cryptocurrency fraud nationwide.

What Federal Statutes Apply in Cryptocurrency Fraud Cases?

Crypto fraud investigations or charges can trigger many federal statutes. Our team of seasoned cryptocurrency defense lawyers represents individuals, companies, company executives, coders, investment advisors, investment firms, and many other entities in just about any cryptocurrency fraud charges or investigations imaginable.

We handle charges under 18 USC (United States Codes) 1030 (on Computer Fraud & Abuse), 18 USC- 1341 on Mail Fraud, 18 USC-1343 on Wire Fraud, 18 USC-1344 on Bank Fraud, 18 USC-1349 on Conspiracy to commit wire or mail fraud, 18 USC-1956 on Money Laundering and 26 U.S.C.-7201 on tax evasion. We also handle charges under the Securities Exchange, Commodity Exchange, and Bank Secrecy Acts, among other statutes.

Our representation extends to clients implicated in cryptocurrency fraud investigations or charges involving Bitcoin, XRP, Ethereum, Monero, Litecoin, Cardano, Tether, and many other cryptos.

Most Common Federal Cryptocurrency Fraud Charges and Investigations

If you face crypto-related charges or investigation by a federal agency, the investigations are likely to involve any of the following:

Launching Unregistered or Fraudulent ICOs

As mentioned above, ICO-related crime is the most popular cryptocurrency fraud today. ICOs are launched to raise capital for crypto or related projects. ICOs resemble IPOs for stocks. As per the SEC, an ICO based on certain facts may qualify as a securities offering falling under the agency’s jurisdiction. In simple terms, the SEC has a mandate to enforce many federal securities laws.

If securities regulations apply and you launch an ICO without following the SEC’s guidelines, you risk facing federal investigations and charges. The SEC and other agencies like the DOJ are increasingly targeting companies and individuals launching unregistered and/or fraudulent ICOs.

Fraudulent Crypto Investment Scams

Besides ICOs, you are likely to be a victim of cryptocurrency fraud if you participate in a crypto investment scam usually disguised as a genuine investment. Federal agencies have been focused on crypto-related investments in the recent past. In 2019, for instance, the DOJ even publicized a case where a person pleaded guilty to committing securities fraud involving crypto.

The defendant in the case – a 30-year-old resident of Texas – fraudulently raised $4.25 million from innocent investors who believed they were making legitimate investments in a new crypto coin called AriseCoin. Investigators found evidence that the defendant was diverting funds for personal use. This resulted in securities fraud charges and a 20-year jail term in federal prison.

Money Laundering Using Cryptocurrencies

As mentioned above, it’s easier to launder money using cryptocurrencies than using FIAT currencies. Federal agencies like the DOJ understand this, which is why they have a special unit – (Money Laundering & Transnational Criminal Enterprises) that targets criminal entities and individuals who use crypto for money laundering.

High volumes of crypto transactions are likely to cause red flags and indicate money laundering attracting federal agency investigations and enforcement actions. The DOJ, IRS, U.S. Attorney’s Office, and other agencies can subpoena crypto exchanges or use other methods (like artificial intelligence) to collect transactions and personal information on suspected entities or individuals.

Poor Investment Advice on Cryptocurrencies

It’s also illegal to offer fraudulent investment advice, and doing so will most likely attract federal investigations or charges. Since cryptocurrencies are relatively new, investing in them is a challenge for many investors as well as investment advisors.

Like other investments, advisors on ICOs and other crypto-related investments must offer suitable investment recommendations with the client’s interest at heart. Advisors must understand all risks involved with the crypto investment in question before providing advice. Misleading clients, withholding important information, overcharging, over concentrating client portfolios on certain cryptocurrencies, churning investor portfolios to make more commissions and engaging in other wrongdoing will likely attract civil or criminal cryptocurrency fraud charges.

Types of Cryptocurrency Crimes

What Qualifies as a Cryptocurrency Crime?

As stated above, Bitcoin is a common crypto used for committing cryptocurrency fraud. Examples of crypto crimes that involve Bitcoin or other cryptos include: laundering “dirty" money, buying illicit goods, defrauding investors, procuring/threatening funds, demanding ransom payments in Bitcoin or other cryptocurrencies, scamming victims, and using ransomware to steal crypto.

If you are a victim or accused of any of these crypto crimes, we can help you. Contact Blockchainlawyer.com to get started.

What Are the Federal Penalties for Committing Cryptocurrency Fraud?

Since cryptocurrency fraud can result in charges falling under multiple statutes, establishing potential repercussions of crypto fraud demands that you first establish the specific statute/s in play.

Secondly, it also helps to know the federal agency leading the investigation and the nature of the investigation – i.e., criminal or civil? Having this information is critical since some statutes have provisions for criminal and civil penalties.

Will I Go to Jail for Cryptocurrency Fraud?

If the case is civil, there won’t be any prison time. However, restitution, fines and/or other financial penalties apply and can easily amount to millions. Criminal cases have a jail term and other penalties like substantial fines.

How Long Will I Stay in Jail for Cryptocurrency Fraud?

The number of years served in jail will depend on the law that has been violated. Mail fraud, wire fraud, money laundering, and securities fraud attract the longest jail term (up to 20 years in jail per count). Computer fraud attracts up to 10 years in jail per count, while violations involving Bank Secrecy Act will attract a 5-year sentence per count.

Since most cryptocurrency fraud cases will involve multiple counts, the prison sentence can easily amount to decades in prison. Charges can also be enhanced for repeat offenders – i.e., 20-years for one count that would normally attract a 10-year sentence.

The importance of talking to a seasoned cryptocurrency fraud defense lawyer immediately when you face crypto fraud charges can’t be overemphasized.

Cryptocurrency Crime Investigations

Crypto regulations are complex and ever-changing. What’s more, cryptocurrencies have remained scarcely regulated for years. Federal agencies tend to rely on existing laws touching on other securities to launch cryptocurrency fraud investigations.

If an individual or company faces crypto-related charges in the US, they are likely to be investigated by the DOJ, whose enforcement efforts involve other agencies and departments such as the FBI and Foreign Assets Control. The agencies share information on individuals and companies.

They also enforce actions such as imposing sanctions on individuals or companies guilty of crypto crimes. Some states can use their own regulations on crypto and blockchain, if any. Such regulation can result in additional penalties.

Defense for Cryptocurrency Fraud Investigations and Charges

There’s an obvious need for a strategic defense when dealing with federal cryptocurrency fraud charges, investigations, trials, and grand jury proceedings.

We have a federal defense team that takes a strategic and proactive approach to protect clients from hefty fines and penalties imposed for most cryptocurrency fraud cases.

We begin by understanding our client’s story, analyze case facts, and use our experienced cryptocurrency fraud defense team of attorneys and experts to engage federal prosecutors and craft favorable pre-trial resolutions.

Clients who Contact us immediately when investigations are underway can rest assured, we will work tirelessly to ensure the investigations don’t become charges. Our cryptocurrency fraud services include the following:

Our Services

Quick Intervention in Federal Agency Investigations

Individuals or entities subject to ongoing cryptocurrency fraud investigations can rely on us to contact federal agency agents and prosecutors on their behalf. We take action immediately to prevent the situation from escalating.

Since we have vast experience in SEC, DOJ, and investigations involving many other agencies, our clients can trust our proactive approach. Most importantly, we have former federal prosecutors in our team that offer an unmatched advantage in crypto fraud defense strategies.

Our quick intervention service involves establishing the nature and scope of allegations and working quickly to establish a strategic defense.

Pre-Charge Resolution

This service ensures charges don’t escalate to convictions at trials. Our lawyers and consultants have a track record of successfully pursuing pre-charge resolutions that ensure clients avoid being charged with criminal and federal crimes.

We simply need to establish the reasons for investigations before challenging the investigations and convincing the prosecutors to drop the charges.

Subpoena Defense

Federal grand jury cases require a unique defense. Clients who get federal grand jury subpoenas are guided by our team throughout the process to ensure they respond appropriately. We can challenge the grounds for subpoenas to protect our clients from indictment.

Pre-Trial Negotiations

If you are subject to an indictment, we can use the pre-trial stage to challenge the admissibility of evidence. We can also negotiate favorable pleas.

Cryptocurrency Fraud Trial Representation

When your case proceeds to trial, we can represent you in any criminal or civil trial case on cryptocurrencies. Our goal is ensuring your interests are presented in court to fight for your freedom.

What Should I Do When I’ve Been Arrested or Charged for Cryptocurrency Fraud or Related Crimes?

Crypto crimes are serious crimes. As seen above, you can spend decades in jail if convicted. The fines can also amount to millions. Unsuccessful ruling can also come with permanent injunctions, among other penalties like disgorgement or disbarment orders. The crimes also require unmatched resources (time and money).

Federal criminal processes are usually lengthy, spanning months to years. Your company can easily “go under" fighting cryptocurrency fraud charges. Your personal reputation is also at stake. To protect yourself/your company, don’t divulge anything without talking to a cryptocurrency fraud defense attorney first. Understanding your rights is the start to avoiding problems.

Crypto crime defense lawyers at Blockchain Lawyer have the expertise and experience to craft a solid cryptocurrency fraud defense against these accusations.

The Role of NCET

The DOJ has an enforcement team – NCET (National Cryptocurrency Enforcement Team), that was established in 2021 to tackle cryptocurrency fraud. As per the DOJ, the NCET is supposed to handle complex investigations on cryptocurrency-related crimes particularly those involving cryptocurrency exchanges, money laundering actors and mixing & tumbling services.

The DOJ announced Eun Young Choi appointment as the NCET’s first Director in February 2022. Following the appointment, Choi stated the NCET’s role as ensuring technology supporting digital assets grows. She also stated that the NCET would enhance efforts to tackle all cryptocurrency-related abuse by criminals. Under Choi, the NCET is focused on collaborating with other government offices and agencies such as the FBI (Virtual Asset Exploration) and DOJ (Computer Crime & Intellectual Property Section) to tackle all crypto-related fraud.

From the DOJ’s perspective, the NCET will target entities and individuals that abuse crypto platforms for profit. This includes but isn’t limited to entities behind fraudulent ICOs, fraudulent crypto investments, and entities/individuals who attempt to manipulate crypto markets. The NCET will also target individuals and entities that use ransomware, among other cyber-attacks, to steal crypto. The enforcement team’s actions will also extend tracing crypto lost through fraud, extortion, ransomware attacks, etc.

DOJ and IRS Combined Efforts on Cryptocurrency Fraud

The DOJ’s NCET and IRS’ CI (Criminal Investigation Division) have been working closely to tackle crypto fraud. In 2021, these efforts saw the recovery of $3.5 billion of crypto assets seized that year (representing 93% of the IRS’ digital asset seizure in 2021).

According to a 2021 IRS report, the agency’s CI division has plans to collaborate with the DOJ to join forces in prosecuting crypto-related crime. The two agencies are already training and deploying crypto, blockchain, and other intelligent technologies (OSINT) to uncover cyber-financial crimes.

There are plans underway for advanced collaboration and a data center dubbed ACDC to enhance the CI’s capabilities in an evolving online and digital currency landscape. The center will bring technology, data, and experts across government to offer solutions to enhance the integrity of the US’ financial systems from cryptocurrency fraud, among other crimes.

The new IRS and DOJ efforts are expected to drastically increase the number of federal investigations, charges, and prosecutions in the crypto space in 2022 and beyond. So, individuals and entities in the cryptocurrency industry or those with crypto dealings must find ways of defending themselves from NCET’s and IRS CI investigations.

Seek Cryptocurrency Fraud Defense and NCET Defense Lawyers at Blockchain Lawyer

When faced by federal investigations or charges related to cryptocurrency fraud, Contact us immediately and have a leading cryptocurrency fraud defense attorney look at your case. Claim a free confidential crypto fraud defense consultation now.