What Should You Do If You Are Being Investigated for Cryptocurrency Fraud?

The issue of criminal charges relating to cryptocurrency has been brought to the forefront by the recent arrest of Samuel Bankman-Fried, founder of cryptocurrency exchange FTX, in the Bahamas on charges including multiple forms of fraud and the conspiracy to commit fraud, campaign finance charges, and money laundering. If you are being investigated for cryptocurrency fraud, you may wonder what steps you need to take to protect yourself.

What Is Cryptocurrency?

Cryptocurrency is a virtual currency that is not backed by any nation-state’s government. It is entirely virtual, with all transactions occurring online. “Crypto” is short for ‘cryptography,’ which means in Ancient Greek “hidden writing.” This refers to the secure nature of crypto that has made it so attractive to so many investors.

The security and anonymity of cryptocurrency is based on blockchain technology, a decentralized system in which data is stored and processed across multiple computers instead of one. It allows a database to exist without it being vulnerably stored in only one location. The “block” in blockchain refers to an individual computer and the “chain” refers to the series of computers.

There are many cryptocurrencies, including Bitcoin (the first cryptocurrency), Ethereum, Dogecoin, and Polygon. As of December 2022, Forbes estimates that there are more than 22,000 cryptocurrencies representing a total value of $878 billion.

Who Has Authority to Regulate and Investigate Cryptocurrency Transactions?

As is to be expected of a sprawling, valuable, and—to put it one way—secretive market, the United States Government has several agencies involved in the regulation of cryptocurrency. Most prominent among these is the Securities and Exchange Commission (SEC), the primary watchdog for the financial industry in the U.S. The Internal Revenue Service (IRS) is interested in the taxable aspects of cryptocurrency. The Financial Crimes Enforcement Network (FinCEN) investigates the potential use of cryptocurrency for terrorist financing or money laundering. The Office of Foreign Assets Control (OFAC), the Office of the Comptroller of the Currency (OCC), and the Commodity Futures Trading Commission (CFTC) also exercise oversight of the crypto industry. Of course, the Federal Bureau of Investigations (FBI) has the responsibility for investigating crimes at the Federal level.

What Are Common Cryptocurrency Scams and Crimes?

These many regulatory bodies are on the lookout for a variety of crimes, which often manifest as consumer scams. These many include:

  • Money laundering
  • Pump-and-dump schemes
  • The old-fashioned Ponzi scheme
  • Posing as an investment manager, job recruiter, or love interest to obtain others’ crypto assets
  • Phishing
  • Fake crypto exchanges
  • Illegal sale of crypto

Charges brought for these crimes may include:

  • Money laundering
  • Mail Fraud
  • Securities Fraud
  • Computer Fraud


The penalties for these crimes range from 10 to 20 years per count.

Experienced Defense Attorneys Here for You

If you are under investigation for cryptocurrency fraud or other financial crimes, the best thing you can do is obtain the services of an experienced white-collar federal defense attorney as soon as possible. At Burnham & Gorokhov, LLC, we have the skill and experience you need to defend yourself. In the past, by becoming involved in our clients’ defense early in the investigation, we have helped clients face much-reduced charges or avoid charges altogether. Contact our office to discuss your situation.

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