Cryptocurrency Fraud Defense &
Crypto Money Laundering Defense

DOJ’s Criminal Division operates through several components, including DOJ’s Fraud Section to coordinate and lead the department’s cryptocurrency enforcement cases. DOJ’s Criminal Division investigates and charges complex cryptocurrency fraud, money laundering, and sanctions evasion cases involving digital assets. As a former Assistant Chief at DOJ’s Fraud Section and federal trial attorney who has tried 16 federal jury trials, including the first-ever cryptocurrency market manipulation case under Title 15, Scott Armstrong brings direct knowledge of how DOJ cryptocurrency investigations and prosecutions are built, staffed, and pursued.

Cryptocurrency fraud and money laundering cases are prosecuted by Assistant United States Attorneys in federal judicial districts across the country. The most active districts for cryptocurrency prosecutions include the Southern District of New York, the Eastern District of New York, the District of Columbia, the Northern District of California, the Eastern District of Virginia, and the Southern District of Florida. USAOs independently investigate and prosecute cryptocurrency fraud cases and frequently partner with DOJ’s Fraud Section or other DOJ components on major cryptocurrency prosecutions. Drew Bradylyons served as Chief of EDVA’s Financial Crimes and Public Corruption Unit, one of the most active white-collar prosecution offices in the country.

The FBI investigates cryptocurrency fraud and money laundering as a component of its financial crimes and cyber crimes missions. FBI agents are frequently assigned to cryptocurrency task forces and work closely with DOJ prosecutors on complex digital asset fraud cases. The FBI also operates undercover operations targeting cryptocurrency money laundering networks and dark web marketplaces.

IRS-CI is one of the most active federal agencies investigating cryptocurrency fraud, tax evasion involving digital assets, and money laundering. IRS-CI agents are trained in blockchain analysis and financial forensics and play a leading role in tracing cryptocurrency transactions and identifying wallet ownership in federal investigations.

HSI investigates cryptocurrency-facilitated crimes, including money laundering, fraud, darknet marketplace activity, and sanctions evasion. HSI agents use blockchain analytics tools to trace the flow of digital assets and identify individuals involved in cryptocurrency-facilitated criminal activity.

The SEC brings civil enforcement actions against individuals and entities involved in cryptocurrency fraud, the sale of unregistered digital asset securities, market manipulation, and insider trading involving digital assets. SEC investigations frequently run in parallel with criminal investigations by DOJ.

The CFTC brings civil enforcement actions involving fraud, manipulation, and false reporting in cryptocurrency spot markets and derivatives markets. The CFTC has asserted jurisdiction over Bitcoin and other digital assets as commodities and pursues enforcement actions against individuals and platforms that allegedly engage in fraudulent or manipulative conduct in these markets.

FinCEN administers and enforces the Bank Secrecy Act (BSA) as it applies to cryptocurrency businesses, including money services businesses (MSBs) that deal in virtual currencies. FinCEN takes enforcement action against individuals and entities that fail to register as MSBs, fail to implement adequate AML programs, or fail to file required reports. FinCEN violations frequently form the basis of parallel criminal charges under 18 U.S.C. § 1960.

State securities regulators, money transmitter licensing authorities, and state attorneys general pursue enforcement actions against cryptocurrency businesses and individuals operating without required licenses or engaging in fraudulent conduct. State investigations may proceed in parallel with federal proceedings. The firm defends individuals in state regulatory proceedings arising from cryptocurrency activity.

Wire fraud is the cornerstone charge in most federal cryptocurrency fraud prosecutions. The statute targets schemes to defraud that use interstate wire communications, including internet communications, electronic fund transfers, cryptocurrency transactions, and blockchain transmissions. Convictions carry penalties of up to 20 years’ imprisonment. Federal prosecutors use § 1343 to charge a wide range of cryptocurrency fraud conduct, including false representations about token utility or development, fraudulent investment schemes, rug pulls, pig butchering schemes, and misappropriation of investor funds.

Federal money laundering charges under 18 U.S.C. § 1956 target individuals who conduct or attempt to conduct financial transactions involving the proceeds of specified unlawful activity with the intent to promote the unlawful activity, conceal the nature, source, or ownership of the proceeds, or avoid reporting requirements. Section 1957 targets the knowing engagement in monetary transactions in criminally derived property exceeding $10,000. Money laundering charges carry penalties of up to 20 years’ imprisonment under § 1956 and up to 10 years under § 1957. In cryptocurrency cases, the government targets the use of mixers, tumblers, chain hopping, privacy coins, and decentralized exchanges to launder proceeds.

The SEC and DOJ bring securities fraud charges involving cryptocurrency when the government classifies a digital asset as a security under the Howey test. Securities fraud charges under 15 U.S.C. § 78j(b) and SEC Rule 10b-5 apply to individuals who allegedly make material misstatements or omissions in connection with the purchase or sale of digital asset securities, engage in insider trading, or manipulate the market for digital asset securities. Securities fraud carries penalties of up to 20 years’ imprisonment in criminal cases.

The CFTC and DOJ bring commodities fraud charges involving cryptocurrency when the government classifies a digital asset as a commodity. Federal prosecutors charge individuals with commodities fraud under 7 U.S.C. § 9(1) and 18 U.S.C. § 1348 for schemes to defraud in connection with commodity transactions, market manipulation, spoofing, wash trading, and false reporting of cryptocurrency prices and volumes. Scott Armstrong served as lead trial counsel in the first-ever cryptocurrency market manipulation case charged under Title 15, including 7 U.S.C. § 9(1), a landmark prosecution involving over $300 million in alleged spoof and wash trades. The firm brings that direct trial experience to every commodities fraud defense engagement involving digital assets.

The CFAA targets unauthorized access to computer systems and is frequently charged in cryptocurrency cases involving hacking, exploits, SIM swap attacks, and unauthorized access to cryptocurrency exchanges, wallets, and smart contracts. Penalties range from 5 to 20 years’ imprisonment depending on the nature and scope of the alleged unauthorized access.

Federal prosecutors charge individuals under § 1960 who allegedly operate cryptocurrency businesses that qualify as money transmitting businesses without registering with FinCEN or obtaining required state licenses. This charge frequently accompanies money laundering charges in cases involving cryptocurrency mixers, peer-to-peer exchanges, and over-the-counter trading operations. Convictions carry penalties of up to 5 years’ imprisonment.

DOJ commonly brings additional federal charges alongside the primary cryptocurrency fraud and money laundering counts. The firm defends individuals against these related charges in federal cryptocurrency prosecutions nationwide. These charges include conspiracy to commit wire fraud (18 U.S.C. § 371, § 1349), conspiracy to commit money laundering (18 U.S.C. § 1956(h)), bank fraud (18 U.S.C. § 1344), tax evasion (26 U.S.C. § 7201), structuring financial transactions (31 U.S.C. § 5324), sanctions violations (IEEPA), identity theft (18 U.S.C. § 1028A), and conspiracy to defraud the United States (18 U.S.C. § 371). Each of these additional charges increases the sentencing exposure a defendant faces under the Federal Sentencing Guidelines.

Retain experienced federal defense counsel before taking any action. A target letter signals that a federal grand jury is considering charging you, that the prosecutor has evidence implicating you, and that you have the right to invoke the Fifth Amendment if subpoenaed. The letter usually offers the recipient the opportunity to testify before the grand jury, to make a written submission, or to meet with prosecutors. Each of those options carries significant risk and should not be exercised without counsel.

The firm advises target letter recipients on whether and how to engage with prosecutors at this stage, manages voluntary submissions and proffer sessions, and works to persuade the government to decline prosecution or to charge a lesser offense. As a former Assistant Chief at DOJ’s Fraud Section who issued target letters in cryptocurrency and complex financial fraud investigations, Scott Armstrong directly understands how prosecutors evaluate target letter responses and what factors affect charging decisions.

Do not respond to the subpoena, produce documents, or contact the prosecutor without legal representation. A federal grand jury subpoena — whether a subpoena ad testificandum compelling testimony or a subpoena duces tecum compelling the production of documents, exchange records, wallet addresses, or communications — is often the first indication that an individual is a witness, subject, or target of a federal cryptocurrency investigation. Your status determines your exposure, your obligations, and your defense strategy.

The firm assesses the recipient’s status, asserts applicable privileges and Fifth Amendment rights, negotiates the scope and terms of production with the prosecutor, and, where appropriate, moves to quash or limit the subpoena under Federal Rule of Criminal Procedure 17(c). Scott Armstrong issued and directed responses to grand jury subpoenas as an Assistant Chief at DOJ’s Fraud Section. Drew Bradylyons supervised grand jury investigations at the U.S. Attorney’s Office for the Eastern District of Virginia.

Under the DOJ Justice Manual § 9-11.151, a target is a person against whom the prosecutor has substantial evidence linking the individual to the commission of a crime and who, in the prosecutor’s judgment, is a putative defendant. A subject is a person whose conduct is within the scope of the grand jury’s investigation. A witness is everyone else — a person with information the grand jury wants to hear. The distinction is consequential. Targets face the highest immediate risk of indictment. Subjects can move toward or away from target status as the investigation develops. Witnesses can become subjects or targets based on what they say.

The prosecutor’s designation is not always reliable and can change. The firm assesses each client’s actual exposure based on the underlying facts, the prosecutor’s statements and behavior, the questions the grand jury is asking, and the documents being subpoenaed. Scott Armstrong and Drew Bradylyons made these designations as federal prosecutors and now use that experience to evaluate where their clients actually stand.

Federal seizure of cryptocurrency under 18 U.S.C. § 981 (civil forfeiture) or as part of a criminal proceeding under 18 U.S.C. § 982 and 21 U.S.C. § 853 can result in the permanent loss of the seized assets. Owners have specific procedural rights, including the right to receive notice, the right to file a verified claim contesting the forfeiture, the right to a hearing, and the right to challenge the government’s blockchain tracing evidence and the nexus between the seized assets and alleged criminal activity.

Strict deadlines apply. In an administrative civil forfeiture proceeding, a claimant must file a verified claim within thirty-five days of the date the seizing agency mails the notice of seizure under 18 U.S.C. § 983(a)(2). In a judicial civil forfeiture proceeding, claim deadlines are governed by Supplemental Rule G of the Federal Rules of Civil Procedure. Missing the deadline forfeits the right to contest. Scott Armstrong supervised forfeiture motions in cryptocurrency and complex financial fraud cases at DOJ’s Fraud Section.

Retain experienced federal defense counsel immediately, and do not produce documents or respond to questions without legal representation. SEC and CFTC investigations frequently run in parallel with DOJ criminal investigations into the same conduct. What you say or produce in the civil investigation can be used against you in any subsequent criminal prosecution. A Wells notice is an even more serious signal: it indicates that the SEC staff intends to recommend an enforcement action against you and gives you the opportunity to respond before the recommendation is finalized.

The firm structures document productions and witness testimony to preserve the client’s position in any parallel criminal proceeding, prepares Wells submissions where appropriate, and negotiates with SEC and CFTC staff to narrow or resolve the matter before charges are filed. The firm represented executives of a leading U.S. token in an SEC investigation concerning alleged misrepresentation, misappropriation, and market manipulation.

The decision to cooperate is one of the most consequential a defendant or potential defendant can make. Cooperation can produce significant sentencing benefits under Federal Rule of Criminal Procedure 35(b), 18 U.S.C. § 3553(e), and U.S. Sentencing Guidelines § 5K1.1. It can also result in self-incrimination, exposure on additional charges, and the destruction of viable defenses if the cooperation falls apart. The right answer depends on the strength of the government’s case, the client’s actual conduct, the value of the information the client has to offer, and the existence of available defenses.

Scott Armstrong and Drew Bradylyons negotiated and structured cooperation agreements with defendants as federal prosecutors at DOJ’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Virginia. The firm uses that experience to evaluate cooperation honestly, structure productive proffer sessions, and advise clients on whether cooperation actually serves their interests.

Federal cryptocurrency fraud and money laundering charges carry substantial statutory maximums and Federal Sentencing Guidelines exposure. Wire fraud under 18 U.S.C. § 1343 carries up to 20 years’ imprisonment, increased to 30 years where the fraud affects a financial institution. Money laundering under 18 U.S.C. § 1956 carries up to 20 years. Money laundering of criminally derived property under 18 U.S.C. § 1957 carries up to 10 years. Securities fraud under 15 U.S.C. § 78j(b) carries up to 20 years in criminal cases.

The actual sentence depends heavily on the loss amount calculation under U.S. Sentencing Guidelines § 2B1.1, the application of role enhancements, the sophisticated means enhancement under § 2B1.1(b)(10), and the defendant’s criminal history. In cryptocurrency cases, the government typically constructs the loss calculation from blockchain transaction data and exchange records. The firm challenges that loss calculation aggressively at every stage. Scott Armstrong tried 16 federal jury trials, including the first-ever cryptocurrency market manipulation case under Title 15 involving over $300 million in alleged spoof and wash trades.

Under Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011), and its application in criminal cases, the government can establish the knowledge element of a federal offense by proving that the defendant subjectively believed that there was a high probability that a fact existed and took deliberate actions to avoid learning the fact. In cryptocurrency money laundering cases, federal prosecutors use willful blindness theories to charge individuals who facilitated the conversion or movement of funds without confirming that the funds were proceeds of fraud. This frequently arises in cases involving over-the-counter (OTC) cryptocurrency desks, peer-to-peer transactions, money mule activity, and downstream participation in foreign-orchestrated fraud schemes.

Defending willful blindness charges requires careful analysis of what the defendant actually knew, when, and based on what information. Scott Armstrong and Drew Bradylyons charged and tried money laundering cases involving willful blindness theories as federal prosecutors. The firm uses that experience to attack the government’s circumstantial inferences and reconstruct the defendant’s actual knowledge at the time of the conduct.

A proffer session is a meeting between a defendant or potential defendant and federal prosecutors where the defendant provides information about criminal conduct, often under the protection of a proffer letter (sometimes called a “queen for a day” letter). The proffer letter typically provides limited protection: the prosecutor agrees not to use the proffered statements in the government’s case-in-chief, but reserves the right to use them for impeachment, to derive leads, and to use them against the defendant if the cooperation falls apart or if the defendant makes any false statement.

Proffer sessions are high-risk. False statements expose the defendant to additional charges under 18 U.S.C. § 1001. Incomplete disclosure can void the proffer protection. Statements made in a proffer can be the foundation of a sentencing enhancement or a superseding indictment. Scott Armstrong and Drew Bradylyons conducted proffer sessions as federal prosecutors at DOJ’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Virginia. The firm uses that experience to prepare clients for proffers, to negotiate the terms of the proffer letter, and to assess whether a proffer actually advances the client’s position.

The vast majority of federal cryptocurrency fraud cases resolve before trial. They resolve favorably when the defendant has the credible capacity to take the case to trial — not because trials are the goal, but because federal prosecutors evaluate plea offers and declination decisions based on their assessment of the defendant’s trial readiness. Trial-credible defense forces the government to charge what it can actually prove to a jury beyond a reasonable doubt, not what it can leverage through the threat of a higher charge.

The firm’s attorneys have tried 25 federal jury trials in complex white-collar fraud cases. Scott Armstrong served as lead trial counsel in the first-ever cryptocurrency market manipulation case charged under Title 15, a multi-week trial involving over $300 million in alleged spoof and wash trades on cryptocurrency exchanges placed via an automated trading bot. That trial record changes the calculus at the investigation stage, in plea negotiations, and at sentencing.

Federal cryptocurrency criminal cases are built, charged, and tried by DOJ, components of DOJ’s Criminal Division, and U.S. Attorney’s Offices. Counsel who supervised these cases from inside the government understand how prosecutors evaluate evidence, structure charging decisions, prepare witnesses, present blockchain analytics at trial, and respond to specific defense theories. That perspective is not replicable from outside the prosecution.

Scott Armstrong served as an Assistant Chief at DOJ, where he supervised cryptocurrency fraud investigations and prosecutions around the country. He tried 16 federal jury trials, including the first-ever cryptocurrency market manipulation case under Title 15. Drew Bradylyons served as Chief of the Financial Crimes and Public Corruption Unit at the U.S. Attorney’s Office for the Eastern District of Virginia and previously supervised complex financial fraud cases at DOJ. Andrea Savdie charged and tried complex fraud cases at DOJ’s Miami Strike Force. Collectively, the firm’s attorneys have tried 25 federal jury trials.

Armstrong & Bradylyons PLLC defends individuals in federal cryptocurrency fraud and money laundering criminal cases in federal courts nationwide. The firm is particularly active in the districts where DOJ and federal agencies most aggressively investigate and prosecute these cases: the Southern District of New York (SDNY), the Eastern District of New York (EDNY), the District of Columbia (DDC), the Eastern District of Virginia (EDVA), the Southern District of Florida (SDFL), the Northern District of California (NDCA), the Southern District of Texas (SDTX), and the Northern District of Illinois (NDIL). The firm obtains pro hac vice admission in any federal district where a client faces charges.

The firm also represents clients in civil cryptocurrency disputes through its cryptocurrency and digital asset litigation practice, including TRO and asset freeze defense, federal receiver clawback defense, token offering disputes, smart contract disputes, and digital asset recovery.