Cryptocurrency Investment Fraud
& Crypto Ponzi Scheme Defense
Scott Armstrong prosecuted cryptocurrency fraud cases as an Assistant Chief at DOJ’s Fraud Section, including the first federal criminal trial involving cryptocurrency market manipulation. Drew Bradylyons supervised cryptocurrency Ponzi scheme prosecutions as Chief of Financial Crimes at the Eastern District of Virginia. They now defend individuals and entities facing cryptocurrency investment fraud charges in federal courts nationwide.
Scott Armstrong — Former DOJ Fraud Section Assistant Chief
Scott Armstrong served for nearly a decade at the Criminal Division’s Fraud Section, including as an Assistant Chief in the Market Integrity and Major Frauds Unit. Scott prosecuted and supervised cryptocurrency fraud cases at DOJ. He tried the first federal criminal case involving cryptocurrency market manipulation in the Southern District of Florida, involving over $300 million in spoofing and wash trading on cryptocurrency exchanges. He tried 16 federal jury trials overall.
$650 Million Ponzi Scheme Trial
Scott Armstrong tried a Ponzi scheme case at DOJ’s Fraud Section involving approximately $650 million raised from investors across the country. The defendants solicited hundreds of millions of dollars from investors by falsely representing that their investments were backed by short-term returns of 10% to 20% over periods as short as several weeks. Investor funds were used to repay earlier investors and to enrich the defendants. Investors lost tens of millions of dollars. Scott tried the case to a jury verdict in the District of Colorado. That trial experience with large-scale investment fraud translates directly to the cryptocurrency Ponzi scheme cases the government is bringing today.
Cryptocurrency Investment Fraud and Cherry-Picking Prosecutions
Scott Armstrong prosecuted and supervised cryptocurrency-specific investment fraud cases at DOJ’s Fraud Section. He prosecuted a cryptocurrency investment fraud case in the Eastern District of New York involving a former investment banker and FINRA-registered broker who solicited investors with false promises of cryptocurrency investments and guaranteed returns, misappropriating approximately $1.5 million in investor funds for personal use, gambling, and to repay earlier investors in a Ponzi-style structure. He also supervised DOJ’s first criminal prosecution of a commodities trading adviser for engaging in a cherry-picking scheme involving cryptocurrency futures contracts, a transnational scheme involving an investment firm managing over $720 million in assets where the CEO fraudulently allocated profitable crypto and foreign exchange futures trades to his own accounts while saddling investors with losses. The CFTC brought a parallel civil enforcement action in that case.
Drew Bradylyons — EDVA Financial Crimes & Crypto Ponzi Schemes
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, one of the most active federal prosecution offices in the country. At EDVA, Drew supervised cryptocurrency Ponzi scheme and investment fraud prosecutions. Crypto Ponzi schemes are among the highest-priority enforcement targets in the current environment. Drew understands how the government traces cryptocurrency fund flows across wallets and exchanges, identifies the Ponzi structure through blockchain analytics, and builds the case against operators, promoters, and recipients of scheme proceeds. Drew previously served at DOJ’s Fraud Section, where he supervised complex financial fraud investigations and prosecutions nationwide.
Cryptocurrency investment fraud is one of the most active federal enforcement areas. DOJ’s May 2025 White Collar Enforcement Plan identified “fraud that victimizes U.S. investors, including Ponzi schemes and investment fraud” as a high-impact enforcement area. The plan separately identifies “crimes that use digital assets in furtherance of other criminal conduct” as a standalone priority. The SEC and CFTC are bringing parallel civil enforcement actions against crypto investment platforms, token issuers, and fund operators at an accelerating pace.
The collapse of major cryptocurrency platforms generated a wave of federal prosecutions that is still producing new cases. DOJ and the SEC brought charges against operators of crypto lending platforms, yield farming protocols, DeFi investment pools, crypto trading funds, and token-based multi-level marketing schemes. The government treats crypto investment fraud the same as traditional investment fraud. The technology is new. The fraud is old. False promises, fabricated returns, and misappropriated investor funds are charged under the same wire fraud, securities fraud, and money laundering statutes that have been used for decades.
The enforcement message from both DOJ and the SEC is consistent: fraud is fraud whether it involves cryptocurrency or traditional securities. SEC Chairman Paul Atkins has stated that enforcement resources are being directed toward “rooting out fraud and remedying investor harm.” SEC Enforcement Director Margaret Ryan has reinforced the agency’s commitment to prosecuting “lying, cheating, and stealing” that harms investors. The SEC’s Crypto Task Force is focusing enforcement on schemes involving fraud and investor harm rather than on registration violations. The March 2026 SEC/CFTC joint interpretive release and Memorandum of Understanding are creating a more coordinated enforcement framework between the agencies. The shift away from regulation-by-enforcement does not mean reduced scrutiny for crypto investment fraud. It means the opposite. Enforcement resources that were previously spread across registration cases are now concentrated on the cases that cause direct investor harm.
The penalties are severe. Wire fraud under 18 U.S.C. § 1343 carries up to 20 years per count. Securities fraud under 18 U.S.C. § 1348 carries up to 25 years. Commodities fraud under 18 U.S.C. § 1348 carries up to 25 years. Money laundering under 18 U.S.C. § 1956 carries up to 20 years. These sentences can run consecutively. Defendants also face mandatory restitution, criminal forfeiture of cryptocurrency and fiat assets, and parallel SEC and CFTC civil penalties including disgorgement and permanent injunctions.
Cryptocurrency Ponzi Schemes
Crypto Ponzi schemes promise outsized returns from crypto trading, DeFi yield farming, staking, liquidity provision, or algorithmic strategies. Operators create the appearance of legitimate returns by using new investor deposits to pay fabricated yields to earlier investors. These schemes inevitably collapse when inflows slow. DOJ charges crypto Ponzi schemes under the wire fraud, securities fraud, and money laundering statutes. The SEC and CFTC bring parallel civil enforcement actions and appoint federal receivers who pursue clawback demands against investors and counterparties.
Crypto Fund and Trading Adviser Fraud
Fund managers and trading advisers who misrepresent their crypto trading strategies, fabricate performance records, misappropriate investor funds, or engage in cherry-picking face federal criminal prosecution and parallel SEC and CFTC enforcement. Cherry-picking involves fraudulently allocating profitable trades to the adviser’s own accounts while saddling investors with losing trades. The government uses trade allocation records, account statements, and blockchain analytics to prove the scheme. The SEC charges investment adviser fraud under Section 206 of the Investment Advisers Act. The CFTC charges commodities fraud when the fund involves futures or swaps.
DeFi Protocol and Platform Fraud
DeFi protocol fraud involves operators who create decentralized finance platforms or liquidity pools to attract investor deposits and then misappropriate the funds. Rug pulls occur when developers drain liquidity from a protocol and disappear. DOJ and the SEC charge these schemes under the wire fraud and securities fraud statutes. The decentralized structure does not insulate operators from federal prosecution. The government uses blockchain analytics to trace fund flows and identify the individuals behind pseudonymous wallets.
Crypto Multi-Level Marketing Fraud
Crypto MLM schemes combine investment fraud with a multi-level marketing recruitment structure. Operators sell membership packages promising returns from crypto trading or mining and offer referral incentives to recruit new investors. New investor funds pay fabricated returns to earlier participants and commissions to recruiters. The MLM structure accelerates the growth of the scheme and expands the pool of victims. DOJ charges crypto MLM fraud under the wire fraud, securities fraud, and money laundering statutes. The SEC brings parallel civil enforcement actions.
Crypto Lending and Yield Platform Fraud
Crypto lending platforms that accept customer deposits and promise yield or interest face federal prosecution when the platform misrepresents the safety of customer assets, commingles customer funds with operating capital, or uses customer deposits for undisclosed trading or investment activities. The collapse of major crypto lending platforms in 2022 and 2023 produced federal criminal charges against platform executives for securities fraud, wire fraud, commodities fraud, and money laundering. DOJ charges individual executives. The government uses platform records, internal communications, and blockchain tracing to prove the fraud.
Cryptocurrency investment fraud cases are built on blockchain analytics, financial records, and investor testimony. The government uses the public nature of blockchain transactions to its advantage.
Blockchain Analytics
The government uses blockchain analytics tools from firms like Chainalysis and TRM Labs to trace the flow of cryptocurrency from investor wallets through the scheme and into the operator’s personal wallets, exchanges, and off-ramps. Blockchain transactions are permanent and publicly visible. The government reconstructs the entire flow of funds and proves that investor deposits were not used as promised. This evidence is often devastating. Effective defense requires counsel who understand blockchain tracing methodology and can challenge the government’s analysis.
Financial Records and Platform Data
The government subpoenas records from cryptocurrency exchanges, banks, payment processors, and custodians. Exchange records reveal deposit and withdrawal histories, trading activity, and the flow of funds between accounts. Internal platform records reveal how customer funds were managed, whether funds were commingled, and whether reported returns were fabricated. Fabricated account statements showing fictional yields are among the most damaging exhibits at trial.
Cooperating Witnesses and Insider Testimony
Federal prosecutors use cooperating witnesses to prove the fraud from the inside. Former employees, co-founders, and business partners cooperate under plea agreements and testify about the internal operations of the scheme. Cooperators provide context that blockchain evidence alone cannot. They explain what was said in private meetings, what the defendants knew, and when they knew it. Effective cross-examination of cooperators is one of the most important skills in a crypto fraud trial.
Ephemeral and Encrypted Messaging
The cryptocurrency industry relies heavily on Signal, Telegram, Discord, and WhatsApp for internal and external communications. Federal prosecutors target these platforms aggressively. The government obtains this evidence through search warrants for devices and cloud backups, through cooperating witnesses who preserved or screenshot messages, and through metadata showing the timing and frequency of contact even when message content has been deleted. The deliberate use of disappearing messages in the context of investor communications or internal discussions about fund management can become evidence of consciousness of guilt. Prosecutors argue that the choice to use an ephemeral channel reflects awareness that the communications were improper.
Scott Armstrong prosecuted cryptocurrency fraud cases at DOJ’s Fraud Section and tried the first federal crypto market manipulation trial. He knows how the government assembles blockchain evidence, financial records, cooperator testimony, and encrypted communications to build a crypto fraud case. He now uses that knowledge to defend against these charges.
Challenging the Fraud Characterization
Not every crypto platform failure is a fraud. Markets crashed. Protocols were hacked. Counterparties defaulted. The government must prove that the defendant intended to defraud investors, not that the investment lost money in a volatile market. The defense presents evidence of legitimate operations, genuine trading activity, market conditions that caused losses, and the defendant’s good faith belief that the platform or strategy was viable.
Attacking Falsity and Materiality
Cryptocurrency investment fraud cases require the government to prove that the defendant made materially false representations to investors. The defense attacks both elements. Falsity: the representations may have been accurate when made, may have been forward-looking projections about market performance or platform development, or may have been statements of opinion rather than statements of fact. Materiality: not every misstatement is material. The government must prove that the alleged misrepresentation was significant enough that a reasonable investor would have considered it important. Risk disclosures, terms of service, and platform documentation that investors received can undercut the government’s materiality argument.
Blockchain Tracing Challenges
The government’s blockchain analysis is only as reliable as the assumptions underlying it. Wallet attribution can be wrong. Transaction interpretation can be disputed. The defense retains independent blockchain forensic experts to challenge the government’s tracing methodology, dispute wallet ownership attributions, and present alternative interpretations of on-chain activity. Commingled wallets, cross-chain bridges, and DeFi protocol interactions can create ambiguity that the defense exploits.
Trial-Tested Crypto Defense
Crypto fraud cases go to trial. When they do, the government presents blockchain tracing evidence, forensic accounting reconstructions, and cooperating witness testimony to a jury that may have no familiarity with cryptocurrency. Winning requires counsel who can cross-examine government blockchain analysts, challenge forensic accountants, and deconstruct cooperator testimony. It also requires the ability to explain DeFi protocols, wallet mechanics, staking, yield farming, and on-chain transactions to twelve jurors in plain language. Scott Armstrong tried the first federal cryptocurrency market manipulation trial and has tried 16 federal jury trials in complex financial fraud cases. That trial experience with crypto-specific evidence is rare among defense attorneys.
Knowledge and Intent
In multi-defendant cases, the government must prove that each defendant personally knew the platform was fraudulent and intended to participate in the fraud. Developers, marketing employees, community managers, and promoters who genuinely believed the project was legitimate have a powerful defense. The defense presents evidence of the defendant’s role, access to information, and state of mind to demonstrate that they were deceived by the operators, not complicit in the fraud.
Parallel Investigations Strategy
Crypto fraud cases generate simultaneous DOJ criminal investigations, SEC civil enforcement actions, CFTC proceedings, and federal receiver clawback demands. Each proceeding operates under different rules, different burdens of proof, and different consequences. Testimony provided to the SEC or CFTC can be used in a criminal prosecution. Documents produced to a federal receiver can be shared with DOJ. A cooperation decision in one proceeding can foreclose options in another. Defense counsel must coordinate strategy across all tracks simultaneously. Drew Bradylyons coordinated parallel criminal and civil enforcement at EDVA. Scott Armstrong prosecuted crypto cases alongside parallel SEC and CFTC actions at DOJ’s Fraud Section. They understand the risks at each stage and across each agency.
Cryptocurrency investment fraud cases almost always involve parallel proceedings. DOJ brings criminal charges. The SEC brings civil enforcement actions when the crypto assets are classified as securities. The CFTC brings civil enforcement actions when the assets are classified as commodities. Federal receivers are appointed to marshal assets and pursue clawback demands. All of these proceedings can run simultaneously. Statements made in one proceeding can be used in another.
The March 2026 SEC/CFTC Memorandum of Understanding formalizes the coordination between the two agencies on crypto enforcement. The SEC and CFTC share investigative information, coordinate parallel filings, and refer matters to DOJ for criminal prosecution. This means that a crypto operator facing a CFTC civil complaint may also be under simultaneous SEC investigation and DOJ criminal grand jury proceedings. The consequences of a misstep in one proceeding cascade across all of them.
Drew Bradylyons served as Chief of the Financial Crimes and Public Corruption Unit at the Eastern District of Virginia. At EDVA, Drew supervised cryptocurrency Ponzi scheme prosecutions and coordinated parallel criminal and civil enforcement matters involving the SEC and CFTC. Scott Armstrong prosecuted cryptocurrency fraud cases at DOJ’s Fraud Section alongside parallel SEC and CFTC enforcement actions. Together, they defend clients across every front of a cryptocurrency investment fraud investigation.
Cryptocurrency fraud is not a new area for this firm. It is a core practice built on direct DOJ prosecution experience.
Scott Armstrong tried the first federal criminal case involving cryptocurrency market manipulation in the Southern District of Florida. He prosecuted a cryptocurrency investment fraud case involving a former investment banker who defrauded investors of approximately $1.5 million through false promises of crypto returns. He supervised DOJ’s first criminal prosecution of a commodities trading adviser for cherry-picking involving cryptocurrency futures, a transnational scheme involving over $720 million in assets under management. Scott tried 16 federal jury trials at DOJ’s Fraud Section.
Drew Bradylyons supervised cryptocurrency Ponzi scheme and investment fraud prosecutions at the Eastern District of Virginia. Drew coordinated parallel criminal and civil enforcement matters and understands how DOJ, the SEC, and the CFTC share information and pursue individuals across parallel proceedings.
Armstrong & Bradylyons PLLC defends individuals and entities facing cryptocurrency investment fraud and crypto Ponzi scheme charges in federal courts nationwide. The firm also handles cryptocurrency fraud defense, cryptocurrency market manipulation defense, investment fraud and Ponzi scheme defense, securities fraud defense, and broader white-collar defense matters.
What Is Cryptocurrency Investment Fraud?
Cryptocurrency investment fraud involves the use of false representations to induce investors to deposit funds into cryptocurrency-related investment schemes. The fraud can take many forms: Ponzi schemes promising outsized returns from crypto trading, DeFi protocols designed to drain investor deposits, crypto lending platforms that misrepresent the safety of customer assets, and trading advisers who fabricate performance records. The government charges crypto investment fraud under the same federal statutes used for traditional investment fraud, including wire fraud (18 U.S.C. § 1343), securities and commodities fraud (18 U.S.C. § 1348), and money laundering (18 U.S.C. § 1956).
What Is a Cryptocurrency Ponzi Scheme?
A cryptocurrency Ponzi scheme operates the same way as a traditional Ponzi scheme but uses cryptocurrency as the investment vehicle. Operators promise outsized returns from crypto trading, DeFi yield farming, staking, or algorithmic strategies. New investor deposits fund fabricated returns to earlier investors. The scheme collapses when inflows slow. Recent crypto Ponzi schemes have involved alleged losses ranging from tens of millions to hundreds of millions of dollars. Federal prosecutors and the SEC treat crypto Ponzi schemes as a top enforcement priority.
Drew Bradylyons supervised cryptocurrency Ponzi scheme prosecutions at the Eastern District of Virginia. Scott Armstrong tried a $650 million Ponzi scheme case to a jury verdict at DOJ’s Fraud Section.
How Does the Government Trace Cryptocurrency in Fraud Cases?
The government uses blockchain analytics tools from firms like Chainalysis and TRM Labs to trace the flow of cryptocurrency from investor wallets through the scheme and into the operator’s personal wallets, exchanges, and off-ramps. Blockchain transactions are permanent and publicly visible. The government also subpoenas records from centralized exchanges that maintain KYC (know-your-customer) records linking wallet addresses to real identities. Effective defense requires counsel who understand blockchain tracing methodology and can challenge the government’s wallet attributions and transaction interpretations.
Scott Armstrong prosecuted cryptocurrency fraud cases at DOJ’s Fraud Section and assembled blockchain evidence as part of the government’s case. He now uses that knowledge to challenge the government’s tracing methodology from the defense side.
Is a Crypto Platform Failure the Same as Fraud?
No. The cryptocurrency market experienced severe volatility and widespread platform failures in 2022 and 2023. Not every failure is a fraud. The government must prove that the defendant intended to defraud investors, not that the platform lost money in a volatile market. A legitimate platform that fails due to market conditions, hacking, counterparty defaults, or poor risk management is not a criminal enterprise. The defense presents evidence of legitimate operations, genuine trading activity, and good faith to distinguish a business failure from a fraud.
Scott Armstrong tried investment fraud cases at DOJ’s Fraud Section and understands the line the government draws between a failed business and a criminal enterprise. That distinction is the central issue in most crypto investment fraud cases.
What Should I Do If I Am Under Investigation for Crypto Investment Fraud?
Retain experienced federal defense counsel with cryptocurrency prosecution experience immediately. Do not speak with federal agents, respond to a grand jury subpoena, or make any statements without counsel. Do not move, transfer, or convert cryptocurrency assets. Do not delete communications, wallet data, or platform records. Preservation of evidence is critical. Destruction of evidence can result in additional obstruction charges.
Common signs that you may be under investigation include receiving a grand jury subpoena or target letter, receiving document requests from the SEC or CFTC, learning that the SEC has filed a complaint and sought a TRO or receiver, being contacted by FBI, IRS Criminal Investigation, or Postal Inspection Service agents, or learning that a business partner, employee, or investor has been contacted by the government.
What Is Cherry-Picking in Crypto Trading?
Cherry-picking is a fraud in which a trading adviser or fund manager executes trades in a combined account and then fraudulently allocates profitable trades to their own account while saddling investors with losing trades. In the cryptocurrency context, cherry-picking can involve cryptocurrency futures, options, or spot trades. Scott Armstrong supervised DOJ’s first criminal prosecution of a commodities trading adviser for cherry-picking involving cryptocurrency futures contracts. The case involved a fund managing over $720 million in assets. Cherry-picking is charged as commodities fraud or wire fraud and the CFTC brings parallel civil enforcement actions.
What Defenses Are Available in a Crypto Investment Fraud Case?
The available defenses depend on the specific charges and facts. Common defenses include the following.
Good faith. The defendant genuinely believed the platform, protocol, or investment strategy was legitimate and did not intend to defraud investors.
Attacking falsity and materiality. The representations were accurate when made, were forward-looking projections about market performance or platform development, or were not material enough to influence a reasonable investor’s decision. Risk disclosures and terms of service that investors received can undercut the government’s case.
Market volatility. Losses resulted from market conditions, hacking, or counterparty defaults rather than from fraudulent conduct by the defendant.
Blockchain tracing challenges. Independent forensic analysis disputes the government’s wallet attributions, transaction interpretations, or fund-flow reconstruction.
Trial-tested crypto defense. Effective defense at trial requires counsel who can cross-examine government blockchain analysts and forensic accountants, deconstruct cooperator testimony, and explain complex crypto concepts to a jury in plain language.
Lack of knowledge. In multi-defendant cases, employees and promoters who were themselves deceived by the operators have a powerful defense.
Parallel investigations strategy. Crypto cases generate simultaneous DOJ, SEC, CFTC, and receiver proceedings. Defense counsel must coordinate strategy across all tracks because testimony or documents produced in one proceeding can be used in another.
Can I Be Charged If I Was a Promoter or Influencer for a Crypto Project?
Yes. The government charges promoters, influencers, and recruiters who solicited investors for a fraudulent crypto project with conspiracy and substantive fraud counts. The government must prove that the promoter knew the project was fraudulent and participated in soliciting investors based on false representations. If the promoter genuinely believed the project was legitimate, that belief is a defense. The SEC also charges influencers for failing to disclose compensation received for promoting crypto tokens, which is a separate violation.
Can SEC or CFTC Testimony Be Used Against Me in a Criminal Case?
Yes. Testimony provided to the SEC or CFTC under oath in a civil investigation can be used by DOJ in a criminal prosecution. Both agencies conduct investigative testimony in which witnesses are placed under oath and examined by enforcement staff. The testimony is transcribed and becomes part of the investigative record. DOJ can obtain access to SEC and CFTC investigative files, including testimony transcripts, through information-sharing arrangements between the agencies. The March 2026 SEC/CFTC Memorandum of Understanding formalizes this coordination.
This creates a serious trap. A crypto operator who cooperates with an SEC or CFTC civil investigation without understanding that a parallel DOJ criminal investigation may be underway risks providing sworn testimony that becomes the foundation of a criminal case against them. Federal receivers appointed in SEC or CFTC enforcement actions also share information with DOJ. Defense counsel must carefully evaluate the criminal exposure before allowing a client to provide testimony or documents to any civil regulator or receiver.
Drew Bradylyons coordinated parallel criminal and civil enforcement matters at EDVA involving the SEC and CFTC. He understands firsthand how testimony and documents flow between agencies and how to protect clients from the specific risks that parallel proceedings create.
When Is a Crypto Token a Security Under the Howey Test?
Whether a crypto token is a security depends on the Howey test: whether the token represents an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. The SEC’s March 2026 joint interpretive release with the CFTC (Release Nos. 33-11412, 34-105020) supersedes the SEC’s 2019 Framework and establishes a five-category token taxonomy: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.
The release classifies 18 major cryptocurrencies, including BTC, ETH, SOL, and XRP, as digital commodities that are not securities. Investment contract status now turns primarily on the representations and promises an issuer makes to purchasers. A non-security crypto asset can become subject to an investment contract when an issuer offers it with explicit promises to undertake essential managerial efforts from which purchasers would reasonably expect profits. Critically, investment contract status is not permanent. A token sold as part of an investment contract can transition out of that classification as the network decentralizes and the token’s value no longer depends on the issuer’s efforts. This evolving classification framework is directly relevant to defense strategy in crypto fraud cases.
Why Does Crypto Prosecution Experience Matter in a Defense Attorney?
Crypto fraud cases are technically complex. They involve blockchain analytics, DeFi protocol mechanics, token economics, wallet attribution, and cross-chain tracing. Defense counsel who have never prosecuted a crypto case are at a significant disadvantage against government prosecutors and forensic analysts who work with this evidence daily.
Scott Armstrong tried the first federal crypto market manipulation trial and prosecuted cryptocurrency investment fraud cases at DOJ’s Fraud Section. Drew Bradylyons supervised crypto Ponzi scheme prosecutions at EDVA. That direct prosecution experience with cryptocurrency evidence is a significant advantage in defending against these charges.
What Sentencing Exposure Do I Face in a Crypto Investment Fraud Case?
Sentencing exposure in crypto investment fraud cases is driven by the U.S. Sentencing Guidelines loss calculation under U.S.S.G. § 2B1.1. The loss amount is the primary driver of the guideline range. Additional enhancements apply for number of victims, sophisticated means, use of mass marketing, role in the offense, and obstruction of justice. Loss amounts in crypto Ponzi scheme cases can be enormous. The statutory maximums compound the exposure: wire fraud carries up to 20 years per count (30 years if a financial institution is affected), securities fraud carries up to 25 years, and money laundering carries up to 20 years. These sentences can run consecutively.
Recent crypto fraud sentences reflect the severity. The CEO of a DeFi platform was sentenced to over 8 years in prison in February 2026. Other defendants have received sentences of 4 to 5 years for schemes involving $7 million to $14 million. Beyond imprisonment, defendants face mandatory restitution to victims, criminal forfeiture of cryptocurrency and fiat assets, and parallel SEC or CFTC civil penalties including disgorgement, permanent injunctions, and industry bars.
Scott Armstrong handled sentencing proceedings at DOJ’s Fraud Section and understands how the government calculates loss, argues for enhancements, and drives the guideline range in investment fraud cases. Effective sentencing advocacy requires counsel who know how to challenge the loss calculation and present mitigating evidence.