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Yes, the DOJ Pursues Cases Involving Alleged Crypto Fraud


Like fraud involving fiat money, cryptocurrency fraud occurs when someone employs a scheme to unlawfully obtain another person’s assets. As crypto continues to burgeon, scams with the currency have been increasing. This is likely because of the way digital money is processed and regulated (or not regulated).

Cryptocurrency fraud can be committed in various ways, the most common being investment and romance schemes. Regardless of how offenses are executed, the Department of Justice investigates and pursues crypto allegations. Often, individuals are prosecuted under various federal statutes that carry lengthy maximum terms of imprisonment.

At Friedman Nemecek Long & Grant, L.L.C., L.L.C. Attorneys at Law, our Ohio attorneys are experienced cyber litigators and can help fight your charge. Schedule a consultation with us by calling (216) 928-7700 or submitting an online contact form.

What Is Crypto Fraud?

Cryptocurrency fraud consists of individuals using misrepresentations or false promises to unlawfully obtain the digital currency of another. According to the Federal Trade Commission (FTC), over 46,000 cryptocurrency schemes resulting in over $1 billion in losses have occurred since 2021.

The FTC attributes the growing number of cryptocurrency scams to the characteristics of the digital money platforms and the way transactions are processed. A central agency does not regulate cryptocurrency. Thus, it’s harder to monitor transactions. If something looks suspicious, no red flags are raised, and the fraud is typically only caught after the consumer reports it.

Cryptocurrency fraud is also allegedly being committed at high rates because digital money transactions are handled differently than those with fiat currency. Generally, a crypto transaction cannot be reversed. If someone sends someone else crypto and believes that they have been swindled, they have no way to dispute the transaction to get their money back. Generally, a person can only have their cryptocurrency returned by the individual they sent it to.

What Are Ways Cryptocurrency Fraud Can Be Committed?

Cryptocurrency is everywhere, and it’s likely here to stay. And as it continues to be used for transactions and investments, fraud involving crypto will continue to occur, with schemes taking many forms. The two most popular are investment fraud and romance scams. According to the FTC, between January of 2021 and March of 2022, they resulted in losses of $575 million and $185 million, respectively.

Investment fraud involving cryptocurrency manifests in various ways. For instance, it can consist of an individual or group making misleading statements to get others to invest. To illustrate, a person claiming to be in charge of a cryptocurrency exchange might create a legitimate-looking website, post fake investor reviews about their company, falsely purport to be backed by government agencies, and guarantee easy money. Believing that the individual’s claims are true, others might invest in the crypto, expecting to get high returns. Later, the individual runs off without fulfilling their promises.

In some cases, once an individual unlawfully obtains crypto, they use various methods to attempt to disguise its source. For example, they might convert it to other forms of crypto or route it through several transactions.

Many cryptocurrency investment fraud schemes take on a traditional pyramid scheme structure. Individuals tell investors that the profitability prospects from investments in their particular crypto are high. However, the “returns” seen are generated from the money paid by later investors.

Romance scams involving cryptocurrency generally have an aspect of investment. Typically, the schemes are characterized by a person reaching out to potential matches on online dating sites. The individual claims to be extraordinarily wealthy and offers to show their match how they too can have this much money by investing in crypto. However, their investment tutorials result in crypto being sent to the scammer's wallet. Once the individual gets what they want, they vanish.

Under What Laws Is Crypto Fraud Prosecuted?

The statutes in which someone can be prosecuted for cryptocurrency fraud depend on the nature of the alleged offense. Many of these crimes are pursued as securities fraud, wire fraud, and/or money laundering, each of which has a prison term of up to 20 years.

Contact Our Firm Today

The cryptocurrency landscape is dynamic and complex. Anyone charged with an offense involving digital money should retain the services of a lawyer knowledgeable in this area and prepared to exert the effort necessary to defend against allegations.

For legal counsel in Ohio, contact Friedman Nemecek Long & Grant, L.L.C., L.L.C. Attorneys at Law at (216) 928-7700.