Federal agencies like the FBI, Department of Justice, the Securities and Exchange Commission (SEC) are constantly targeting individuals and organizations suspected of engaging in cryptocurrency fraud.
Some of the common issues usually being investigated include cryptocurrency scams, unlawful ICO’s, and any other unlawful activity associated with cryptocurrency.
Although digital currencies have recently attracted many investors, it is still relatively new to many people. Considering the fact digital currencies have been largely embraced in the country and around the world, efforts are underway to formulate laws to govern them.
However, until now there are no clear laws that address cryptocurrency issues. That’s why cryptocurrency fraud in the United States is currently being prosecuted under common criminal statutes.
Due to the effect cryptocurrency fraud has on the financial and securities sectors, any person or institution found culpable of cryptocurrency fraud allegations can face steep penalties and hefty fines.
Are you being investigated for cryptocurrency fraud?
For anyone facing cryptocurrency fraud investigations, hiring and experienced cryptocurrency lawyer is very in preventing the possibility of an indictment. In case you have already been charged, you need to immediately contact a federal defense lawyer.
It is true that dealing with cryptocurrency presents unique challenges, but the truth is that the principles and regulations governing other types of criminal cases will determine the outcome of the cryptocurrency case as equally.
Federal laws that may affect cryptocurrency fraud cases
Cryptocurrency defense lawyers usually represent coders, investment firms, investment advisors, company owners, and any other individual facing cryptocurrency fraud-related cases.
Cryptocurrency fraud allegations can be charged using the following laws:
• Mail fraud
• Computer Fraud and misuse
• Bank Fraud
• Money Laundering
• Tax Evasion
• Commodity Exchange Act
• Securities Exchange Act of 1934
• Bank Secrecy Act
Common cryptocurrency fraud investigations
There several cryptocurrency allegations that have become common since the cryptocurrency hype started. Several individuals are taking advantage of others who don’t have proper knowledge about cryptocurrency to swindle money from them.
Here are some of the most common fraud allegations:
1. Fraudulent and unregistered Initial Coin Offerings (ICOs)
Initial coin offerings work almost the same way as initial public offers. It is a way of mobilizing funds for a new venture or business through the issuance of cryptocurrency.
Selling of tokens or coins for unregistered ICO is considered a form of securities fraud. The Department of Justice (DOJ) and the Securities Exchange Commission (SEC) have recently increased their search for individuals and organizations promoting and selling tokens to the public unlawfully.
2. Cryptocurrency investment scams
Although most investigations focus on the illegal sale of cryptocurrency, law enforcement agencies also target organizations and individuals involved in other types of digital currency fraud.
A good example of fraud happened in 2019 when the Department of Justice announced that one person had pleaded guilty to cryptocurrency investment fraud.
3. Fraudulent or wrong advice regarding cryptocurrency
Cryptocurrency investment can equally be problematic for investment advisors. Just like any other investment, financial advisors should be very careful when it comes to advising their clients on cryptocurrency.
They should take into account the best interest of their clients while recommending various cryptocurrency investment opportunities to them.
Failing to offer the right advice, holding back important information, charging excess fees, or churning an investor’s portfolio with intention of making more commission can result in criminal or civil fraud charges.
4. Money laundering through cryptocurrency
The Money Laundering and Transnational Criminal Enterprises, the Department of Justice, the Federal Investigations Bureau and other investigating agencies have in recent days increased the search for organizations and individuals alleged to be using cryptocurrency to launder money.
Penalties for cryptocurrency fraud
Considering the fact that cryptocurrency investigation may result in charges under different federal laws, deciding on a potential penalty for a cryptocurrency fraud case means that a specific statute involved must be identified.
Another thing to be determined is whether the cryptocurrency fraud case is either civil or criminal.
Other than the fines involved, a convicted person may also face a prison sentence including the following:
• Computer fraud – 10 years for every count
• Mail fraud – 20 years for every count
• Money laundering – 20 years for every count
• Securities fraud – 20 years for every fraud
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