Published on June 13th, 2020 📆 | 4427 Views ⚑
0Justice Gets 15 Guilty Pleas for International Crime Ring that Laundered Money Through Cryptocurrency Exchanges
Fifteen people entered guilty pleas for involvement in an international scam that posted fraudulent auctions online and laundered money through cryptocurrency exchanges, according to the Justice Department.Â
One expert says the case could serve as a template for nation-state actors using cryptocurrency exchanges to cover their tracks more in the future.Â
âTodayâs modern cybercriminals rely on increasingly sophisticated techniques to defraud victims, often masquerading as legitimate businesses,â said Assistant Attorney General Brian A. Benczkowski of the Justice Departmentâs Criminal Division in a press release Thursday. âThese guilty pleas demonstrate that the United States will hold accountable foreign and domestic criminal enterprises and their enablers, including crooked bitcoin exchanges that swindle the American public.â
Law enforcement officials have noted that increased use of cryptocurrencies like Bitcoin has made it especially challenging to nail down cybercriminals. But while cryptocurrency exchanges encode transactions hiding the identity of the parties, those codes are permanently and publicly recorded across a large number of computers. Itâs possible to study them and identify patterns in transactions that could eventually lead to the identity of a suspect, and law enforcement might be getting better at this.Â
âCompared to 2016, in 2019 and 2020, weâre seeing more cases where itâs clear that law enforcement is following this stuff and is not totally dumbfounded because something involves a Bitcoin address,â Yaya Fanusie, a former CIA analyst and current senior fellow at the Center for New American Security told Nextgov. âIt gives us the assurance that at least U.S. federal law enforcement is capable of doing an investigation that involves cryptocurrency.â
In the case Justice highlighted Thursday, the defendantsâindividuals in their 30s based both in Romania and the United Statesâadmitted their involvement in a scheme where they established their own cryptocurrency exchange and used it as a passthrough for traditional payments they got from advertising non-existent high-value items such as cars on auction sites such as eBay and Craigslist.Â
âAccording to court documents, members of the conspiracy created fictitious online accounts to post these advertisements and communicate with victims, often using the stolen identities of Americans to do so,â the press release noted.
The defendants also used IP addresses anonymizing services, according to court documents. Fanusie said cryptocurrency exchanges are part of an ecosystem primed for cyber malfeasance. Â
âCyber services like domain names, [virtual private networks], servers, that infrastructure is ready-made to be leveraged through cryptocurrencies,â he said. âItâs already an environment that invites anonymous use. Cryptocurrencies are the native money of the internet. So if we know that weâre going to have more cyber threats, it makes sense that cryptocurrencies are going to play a part.âÂ
So itâs good that law enforcement doesnât seem daunted by the changing landscape of criminal activity, he says, because âthis time [a cryptocurrency exchange] was being used by criminal fraudsters, but there are definitely parallels in what weâve already seen from nation-state actors.â
Fanusie has written about how cryptocurrency exchanges were used to launder and steal money and delay law enforcementâs identification of suspected hackers in high-profile cases involving persons affiliated with China and North Korea and Russia. Â
He said the 2018 indictment leading up to Thursdayâs guilty pleas is âalmost a blueprint for how nation-state actors could be thinking about running their operations,â adding that the case âconfirms that the main thing to look out for is not so much fundraising, the biggest thing is that cryptocurrency is one part of a laundering process. Itâs to move the money to somewhere else so you lose the trace.â Â
For now, law enforcement officials seem empowered by their success after an investigation that involved the U.S. Secret Service, Kentucky State Police, Lexington Police Department, IRS Criminal Investigation, and U.S. Postal Inspection Service, the Justice Departmentâs Organized Crime Drug Enforcement Task Forces and International Organized Crime Intelligence and Operations Center, as well as the Romanian National Police Service for Combating Cybercrime and the Romanian Directorate for Investigating Organized Crime and Terrorism.Â
âThrough the use of digital currencies and trans-border organizational strategies, this criminal syndicate believed they were beyond the reach of law enforcement,â said Assistant Director Michael DâAmbrosio, U.S. Secret Service, Office of Investigations. âHowever, as this successful investigation clearly illustrates, with sustained, international cooperation, we can effectively hold cybercriminals accountable for their actions, no matter where they reside. I commend the hard work and perseverance of all those who joined together in this investigation and prosecution. This includes our partners in Europe, as well as those closer to home.â
It was also helpful that Romanian officials secured and coordinated the arrests and extraditions from that country of more than a dozen defendants, the release said.Â
âThe 15 defendants who have pleaded guilty in this case have yet to be sentenced,â the release notes. âTwo other defendants in the case are scheduled for trial starting on Sept. 14, 2020, before the Honorable Robert E. Wier of the U.S. District Court for the Eastern District of Kentucky. Three others are fugitives. This case is being prosecuted by Senior Trial Attorney Timothy C. Flowers and Senior Counsel Frank H. Lin of the Criminal Divisionâs Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Kathryn M. Anderson and Kenneth R. Taylor of the U.S. Attorneyâs Office for the Eastern District of Kentucky.â
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window,document,'script',
'https://connect.facebook.net/en_US/fbevents.js');
fbq('init', '10155007036758614');
fbq('track', 'PageView');
window.fbAsyncInit = function() {
FB.init({
appId : '622609557824468',
autoLogAppEvents : true,
xfbml : true,
version : 'v2.11'
});
};
(function(d, s, id){
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) {return;}
js = d.createElement(s); js.id = id;
js.src = "https://connect.facebook.net/en_US/sdk.js";
fjs.parentNode.insertBefore(js, fjs);
}(document, 'script', 'facebook-jssdk'));
Gloss