Cryptocurrency and Wire Fraud: What You Need to Know

Cryptocurrency fraud is on the rise, and the Department of Justice is devoting a lot of resources to stopping it.  

While some argue over how cryptocurrency should be classified, the DOJ isn’t waiting. As reported in Reuters, they’re using the federal wire fraud statute to prosecute cases, instead. So far, they’ve used it to go after rug pulls, insider trading, and the market manipulation of digital assets. 

The Wire Fraud Statute

The federal wire fraud statute, 18 U.S. Code Section 1343, states:

“Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.” 

The language certainly fits the most common cryptocurrency scams.

Common Crypto Currency Scams

Common scams include:

  • Fake websites
  • Phishing scams
  • Pump and dump schemes
  • Fake apps
  • Fake celebrity endorsements
  • Giveaway scams
  • Blackmail or extortion scams
  • Cloud mining scams 
  • Fraudulent initial coin offerings (ICOs)

Cryptocurrency is often used to commit other crimes rather than acting as the subject of a direct scam. Examples include:

  • Money laundering
  • Securities fraud 
  • Tax evasion
  • The sale or purchase of contraband

If you are buying, selling, or trading in cryptocurrencies it’s vital for you to understand the federal and state laws that govern your activities. For example, here in New York, there is a push to make certain bitcoin mining operations illegal.

You’ll also want to watch the representations you make in your marketing materials, including your website and email marketing. Many of the bitcoin fraud cases revolve around false or exaggerated claims made by sellers. Misrepresentation or perceived misrepresentation can quickly lead to criminal charges. 

Accused of Cryptocurrency Crime?

You could be facing either federal charges or state charges.

Either way you will need a highly experienced criminal defense lawyer on your side, one with experience handling wire fraud, computer crimes, and other high tech criminal charges.

Reach out to Koch Law to schedule a case review today.

See also: 

Can You Hire a Federal Criminal Attorney Before Charges Are Filed? 

4 Mistakes to Avoid if You’re Under Investigation for White Collar Crime 

How to Resolve a Federal Criminal Case Before Charges Are Filed