Cryptocurrency Fraud Defense Attorneys in Washington, DC
Cryptocurrency and digital assets have rapidly transformed global finance, investment, and commerce. As this industry has grown, federal agencies have aggressively expanded enforcement efforts, treating cryptocurrency fraud as a major priority area. Federal prosecutors frequently investigate cases involving blockchain transactions, online trading, digital wallets, exchanges, and decentralized finance (DeFi) platforms.
Cryptocurrency fraud cases vary widely and can involve highly technical issues. Because of this, it can be difficult to generalize about every type of case. However, in this post we discuss topics that are relevant to most cryptocurrency fraud investigations and prosecutions. If you do not find the answer to your question here, please contact us directly.
What is Cryptocurrency Fraud?
Cryptocurrency fraud encompasses a broad range of white-collar offenses involving digital assets. These cases typically involve allegations of deception, misrepresentation, market manipulation, or misuse of blockchain technology. Cryptocurrency fraud may include, but is not limited to:
- Investment fraud and trading scams
- Ponzi or pyramid schemes involving cryptocurrency
- Fraudulent Initial Coin Offerings (ICOs) or token sales
- Misrepresentations about a project’s technology, value, or future returns
- Rug pulls, where developers abandon a project after attracting investment
- Market manipulation, such as pump-and-dump schemes
- Unlicensed money transmission involving cryptocurrency
- Misuse of exchanges or mixers for money laundering
Under federal law, cryptocurrency fraud is often prosecuted through statutes such as wire fraud, securities fraud, commodities fraud, money laundering, or unlicensed money transmitter statutes. Penalties vary depending on the statute but can be extremely severe, including years or decades in federal prison.
Cryptocurrency cases are factually and legally complex. They may require technical experts, blockchain analysts, or forensic accountants who can assist your attorney in evaluating the government’s claims and preparing a defense. It is critical to have a federal cryptocurrency fraud attorney experienced in both digital asset investigations and federal criminal practice.
Where Do Cryptocurrency Fraud Cases Originate?
Cryptocurrency fraud investigations may originate from a wide variety of sources. We highlight two of the most common:
- Complaints from Investors, Exchanges, or Financial Institutions. Crypto exchanges, wallet providers, and financial institutions are required to maintain compliance programs and report suspicious activity. When a platform detects unusual transactions, possible fraud, or potential money laundering, it may:
- Freeze accounts
- File Suspicious Activity Reports (SARs)
- Notify federal regulators or law enforcement
- Whistleblowers and Private Lawsuits. Several federal laws—including the SEC whistleblower program, the CFTC whistleblower program, and other False Claims Act mechanisms enable private individuals to report suspected fraud and receive financial rewards. Whistleblower submissions related to crypto exchanges, token offerings, and investment schemes have become major sources of cryptocurrency-related enforcement actions. Other investigations may arise from tax audits, exchange account reviews, cybersecurity incidents, or suspicious blockchain activity detected through forensic tools.
Blockchain Technology and Cryptocurrency Fraud Cases
Blockchain transactions are transparent, but interpreting them requires expertise. Federal investigators frequently rely on:
- Blockchain forensics tools (e.g., Chainalysis, TRM Labs)
- Exchange records and KYC data
- Digital wallet tracing
- IP address and device analysis
Understanding technical issues, such as smart contracts, decentralized governance, DeFi metrics, or token allocation structures, is often essential to defending the case.
A significant misconception is that cryptocurrency is “anonymous.” In reality, most digital asset transactions leave a permanent trail. However, technical complexity is not equivalent to criminal intent. Many alleged inconsistencies may reflect:
- Market volatility
- Coding errors
- Regulatory uncertainty
- Misunderstandings of blockchain mechanics
- Normal business risk
Establishing intent is often the key issue in these cases.
Defenses to Cryptocurrency Fraud
Cryptocurrency fraud cases frequently hinge on whether the defendant acted with fraudulent intent. These examples are not exhaustive. Every crypto fraud case requires a detailed factual and technical analysis. Common defenses include:
- Good Faith and Lack of Intent: If a defendant acted in good faith—believing the statements or representations were accurate—this can be a strong defense. Crypto markets are volatile, and predictions often fail without criminal intent.
- Regulatory Ambiguity: Many questions around classification of tokens, staking programs, DeFi platforms, and exchanges remain unsettled. In some cases, alleged violations stem from unclear regulatory guidance rather than criminal behavior.
- Technical Disputes and Coding Errors: Smart contract failures, liquidity collapses, or token malfunctions may be the result of technical errors—not fraud.
- Mistaken Identity: Attribution on blockchain networks can be difficult. Investigators may misidentify wallet owners, IP addresses, or account holders.
- Overreach in Multi-Party Environments: Crypto projects often involve developers, marketers, exchanges, and investors. Responsibility is not always clear, and federal agents may misunderstand decentralized governance structures.
Cryptocurrency Fraud Sentencing Guidelines
Crypto fraud sentences are calculated under the same federal guidelines that apply to other financial fraud cases (USSG § 2B1.1). Key factors include:
- Loss amount
- Number of victims
- Use of sophisticated means
- Whether the conduct involved commodities or securities
- Whether laundering allegations apply
Because cryptocurrency valuations fluctuate dramatically, determining “loss amount” can be highly contested and may significantly affect the guidelines.
Pre-Indictment Representation
Early representation is especially critical in cryptocurrency cases. Many investigations last months or years before an indictment. During this period, counsel can:
- Communicate with prosecutors
- Correct misunderstandings about blockchain technology
- Limit the scope of subpoenas
- Prepare clients for interviews
- Prevent avoidable exposure to additional charges
If federal agents approach you or you receive a target letter, search warrant, or subpoena, you should consult counsel before making any statements.
Experienced Federal Cryptocurrency Fraud Defense Attorneys
If you are being investigated or prosecuted for cryptocurrency fraud, speak with a federal criminal defense attorney who understands both the technological and legal complexities involved.
At Burnham & Gorokhov, PLLC, we defend clients charged with or under investigation for cryptocurrency offenses, including developers, traders, crypto entrepreneurs, project founders, and exchange operators. In many cases, we have resolved crypto investigations without charges ever being filed. Contact us to schedule a confidential case evaluation.