I’ve Been Accused of Running a Cryptocurrency Scam: What Should I Do?

Over 20,000 cryptocurrency companies are currently operating with a combined trade value of over $87 billion every 24 hours. This volume of business attracts a lot of attention, especially from law enforcement. Keep reading to learn more about cryptocurrency regulation and what to do if you’ve been accused of committing a cryptocurrency scam. 

What is Cryptocurrency?

Cryptocurrency (or “crypto”) is a digital currency used as an alternative payment method or as an investment. Cryptocurrencies get their name from the cryptographic techniques that enable people to buy, sell or trade them securely without the need for a controlling authority, such as a government or financial institutions. The first, and most widely known, cryptocurrency is Bitcoin. 

People invest in cryptocurrencies with the hope that the value will rise and net them a profit–usually a very large profit. The creation and use of cryptocurrency is complicated, but it has become very popular. With the rise of crypto companies, comes a rise in fraud and scams associated with these companies. This rise in scams and fraud has gotten the attention of the federal government. 

Crimes Associated with Cryptocurrency 

Cryptocurrency crimes are offenses that include cryptocurrency in some way. Because there are very few crypto-specific laws in the books, how cryptocurrency is used can lead to federal charges. Some common federal charges associated with cryptocurrency crimes include: 

Money Laundering: Money Laundering disguises the illegal source of funds to make them look legal. Since cryptocurrency works on an anonymous network, money laundering is common using cryptocurrency. 

Securities Fraud: The Securities of Exchange Commission (SEC) defines bitcoin as a “virtual currency” and not a security. Thus, federal securities laws only apply to a cryptocurrency if: 1) there is an investment of money; 2) there is an expectation of profits from the investment; 3) the investment of money is in a common enterprise; and, 4) any profit comes from the efforts of a promoter or third party.

Tax Evasion: There are two main types of tax evasion. 1) the intentional attempt to dodge the assessment of a tax by the federal government, and 2) the intentional attempt to avoid the payment of a tax. Again, because cryptocurrency is on an anonymous network, people will try to avoid tax liability by hiding money in cryptocurrency. 

Cryptocurrency Theft: Cryptocurrency is easy to steal because it exists in digital form. Many of these crimes involve gaining access to someone’s computer, “locking it up” and demanding to be paid in cryptocurrency to unlock it. 

These are a few of the crimes connected with the use of cryptocurrency. Most money-related crimes can include the use of cryptocurrency in some way. 

Agencies that Investigate Cryptocurrency Offenses

If you’ve been accused of committing a cryptocurrency crime, chances are you will be investigated by one or more of the following organizations: 

  • Federal Bureau of Investigation (FBI)
  • Federal Trade Commission (FTC)
  • Commodity Futures Trade Commission (CFTC)
  • Securities and Exchange Commission (SEC) 

Speaking with a federal criminal defense attorney when facing criminal allegations linked to cryptocurrency is essential to your defense. 

Possible Penalties for Cryptocurrency Crimes 

The possible penalties for cryptocurrency crimes depend on which government agency brings the charges, and what the facts and circumstances are involving the cryptocurrency. However, the penalty for any crime involving cryptocurrency can be severe. Some examples include: 

  • Money laundering can carry a maximum potential penalty of 20 years in prison and a fine of $500,000.
  • Counts of securities fraud carry a maximum potential penalty of 20 years in prison and a fine of $5 million. 
  • Wire fraud can carry a maximum potential penalty of 20 years in prison and a fine of $250,000.

The Importance of Securing a Federal Defense Attorney 

If you’ve been accused of committing a crime involving cryptocurrency you need to secure the advice and assistance of an experienced federal criminal defense attorney. Your attorney will protect your rights and help build your defense against the accusations. The laws surrounding crimes that include cryptocurrency can be vague and circumstantial, so enlisting the help of an attorney is vital to shielding you from unwarranted charges. 

The Law Offices of Robert J. DeGroot has been assisting clients with a sound defense against criminal charges since 1972. We have the experience to provide you with expert advice and reduce the consequences of damaging criminal charges. 

Have you or someone you know been accused of a cryptocurrency scam? Reach out to the experienced team of criminal defense attorneys at the Law Offices of Robert J. DeGroot for help!