Category:Cryptocurrency Fraud

Cryptocurrency fraud encompasses a wide range of criminal schemes involving digital assets, blockchain technology, and decentralized finance platforms. As the cryptocurrency industry has grown from a niche technology to a multi-trillion dollar market, federal prosecutors have increasingly pursued criminal charges against executives and promoters who defrauded investors through various schemes. The period from 2022 to 2025 has seen some of the largest cryptocurrency fraud prosecutions in history, with defendants facing decades in federal prison and billions of dollars in forfeitures.

Cryptocurrency fraud cases present unique challenges for prosecutors and courts due to the technical complexity of blockchain technology, the global nature of cryptocurrency markets, and the rapid evolution of the industry. However, federal authorities have successfully applied traditional fraud statutes to cryptocurrency schemes, demonstrating that digital asset markets are subject to the same legal requirements as traditional financial markets.

Operators of cryptocurrency exchanges who misappropriate customer funds, misrepresent the safety of deposits, or use customer assets for unauthorized trading or investments. The collapse of FTX in November 2022 represented the largest exchange fraud in history, with approximately $8 billion in customer funds allegedly misappropriated.

Schemes involving cryptocurrencies designed to maintain stable values or provide specific utility. The collapse of TerraUSD (UST) in May 2022 wiped out approximately $40 billion in value when the algorithmic stablecoin lost its dollar peg.

Cryptocurrency lending platforms that promise high yields but engage in undisclosed risky investments or misappropriate customer deposits. Celsius Network's 2022 collapse left approximately 1.7 million customers unable to access their funds.

Artificially inflating the price of cryptocurrencies through false statements and coordinated buying, then selling holdings before the price crashes.

Initial Coin Offering (ICO) fraud involves raising funds through token sales while making false promises about the project's development, utility, or potential returns.

The cryptocurrency industry has seen several landmark criminal prosecutions:

• Sam Bankman-Fried (FTX): Sentenced to 25 years for wire fraud, securities fraud, and money laundering
• Alex Mashinsky (Celsius): Sentenced to 12 years for commodities and securities fraud
• Do Kwon (Terra/LUNA): Pleaded guilty to fraud charges; prosecutors seeking 12 years

Cryptocurrency fraud is prosecuted under various federal statutes:

• Wire fraud (18 U.S.C. Section 1343)
• Securities fraud (15 U.S.C. Section 78j(b))
• Commodities fraud (7 U.S.C. Section 9)
• Money laundering (18 U.S.C. Sections 1956-1957)
• Bank fraud (18 U.S.C. Section 1344)

The SEC, CFTC, and DOJ have all increased enforcement in the cryptocurrency space, with parallel civil and criminal proceedings common in major cases.

• Securities Fraud
• Wire Fraud
• Money Laundering
• FTX Scandal
• Commodities Fraud