As cryptocurrency and digital assets continue to expand in popularity, federal prosecutors have increasingly focused on crimes involving blockchain transactions, crypto exchanges, and online investment schemes. Being charged with crypto fraud can feel overwhelming as these cases involve complex financial rules, fast-moving technology, and aggressive federal enforcement. If you are under investigation or facing charges, understanding the basics is the first step toward protecting your rights.

What Is Crypto Fraud?

Crypto fraud refers to any intentional deception involving cryptocurrency or digital assets for the purpose of gaining money, property, or an unlawful advantage. While cryptocurrency itself is legal, its relative anonymity and decentralized structure can make it vulnerable to misuse. In many cases, prosecutors pursue crypto fraud under existing federal laws such as wire fraud, securities fraud, commodities fraud, and money laundering.

In general, crypto fraud may involve:

• Misrepresenting the nature or value of a cryptocurrency investment
• Using digital assets to disguise the source of illegal funds
• Operating crypto exchanges or trading platforms without proper registration
• Deceiving investors through online or blockchain-related schemes

Because cryptocurrency transactions can cross state and national borders, federal authorities often claim broad jurisdiction in these cases.

What Are Examples of Crypto Fraud?

Federal agencies investigate many different types of fraud involving digital assets. Some of the most common examples include:

Investment and Trading Scams: These cases involve promising unrealistic returns, manipulating markets, or operating fake cryptocurrency investment programs. “Pump-and-dump” schemes, fraudulent token offerings, and online trading scams fall into this category.

ICO and Token Fraud: Initial Coin Offerings (ICOs) and token sales may be considered securities under federal law. Promoting or selling tokens without proper disclosures or registration can lead to securities fraud charges.

Ponzi or Pyramid Schemes: Scams that use funds from new investors to pay earlier participants are increasingly carried out through cryptocurrency platforms, often collapsing once investor funds are depleted.

Rug Pulls and Developer Fraud: Some crypto developers launch tokens or projects, attract investment, and then abandon the project while keeping investor funds.

Money Laundering Using Crypto: Cryptocurrency can be used to hide the origin of illegal proceeds, move funds across borders, or bypass banking regulations. This may lead to charges under federal money-laundering statutes.

Hacking and Unauthorized Access: Accessing digital wallets or exchanges unlawfully, or using malware or ransomware to extort cryptocurrency, can result in federal cybercrime charges.

These cases often involve multiple overlapping allegations, and prosecutors may add additional charges—such as wire fraud, computer fraud, or tax violations—to increase penalties.

Is Crypto Fraud a Federal Offense?

Yes. Crypto fraud is frequently charged at the federal level, and several agencies may be involved in the investigation. Because digital assets cross state lines and often involve online communication, federal prosecutors assert jurisdiction in most crypto-related cases. Penalties can be severe, including lengthy prison sentences, forfeiture of assets, restitution, and substantial fines.

Federal agencies that commonly investigate crypto fraud include:

• Department of Justice (DOJ) and the National Cryptocurrency Enforcement Team (NCET)
• Federal Bureau of Investigation (FBI)
• Internal Revenue Service–Criminal Investigation (IRS-CI)
• Securities and Exchange Commission (SEC)
• Commodity Futures Trading Commission (CFTC)
• Department of Homeland Security (DHS)
• Financial Crimes Enforcement Network (FinCEN)

Because these agencies often work together and use advanced blockchain analysis tools, even transactions believed to be anonymous can often be traced.

What Should You Do If You Are Under Investigation or Charged With Crypto Fraud?

Crypto fraud allegations must be taken seriously from the very beginning. Investigators may have been collecting information for months or even years before approaching a suspect. The biggest mistake people make is talking to investigators without counsel or trying to explain transactions on their own. Anything said can be used against you and misunderstandings about cryptocurrency are common.

If you believe you are under investigation or have been contacted by federal agents, you should:

• Avoid speaking to investigators without a lawyer present
• Preserve all digital records, wallets, transaction logs, and communications
• Refrain from transferring or concealing funds, which can result in additional charges
• Contact a defense attorney with experience in cryptocurrency-related cases

Because crypto cases involve technical issues, digital forensics, and fast-evolving legal theories, you need a defense team that understands both the law and the technology behind it.

The attorneys at Burnham & Gorokhov, PLLC have extensive experience defending individuals accused of complex federal crimes, including cryptocurrency fraud, money laundering, and online financial offenses. If you are facing allegations involving digital assets or have been charged with crypto fraud, contact Burnham & Gorokhov immediately. We can help you understand the charges, assert your rights, and build a strong defense tailored to the unique technical and legal challenges of your case.