United States attorneys have charged 21 individuals for their alleged participation in a transnational money laundering network involving cryptocurrencies.
According to a press release from the United States Attorney’s Office in the Eastern District of Texas, Operation Crypto Runner has disrupted more than $300 million in annual money laundering transactions and seized extensive reserves of both cryptocurrency and cash from perpetrators. Thousands of individuals fell victim to a series of romance scams, business email compromises, and other fraud schemes.
“These defendants orchestrated highly organized and sophisticated schemes to launder fraud proceeds through cryptocurrency,” U.S. Attorney Brit Featherston remarked. “Today’s announcement sends a clear message that money laundering networks that service fraud schemes targeting American victims, especially the elderly, will not be tolerated, and those operating such networks will be held accountable. By acting as domestic money launderers for foreign co-conspirators, these defendants played indispensable roles that allowed foreign actors to reach from overseas to target victims in communities across the United States.”
Among other co-conspirators, Zenobia Walker of Maryland received cash by mail, money orders, and wire transfers before depositing the funds into her personal bank account and exchanging them for cryptocurrency elsewhere. She pleaded guilty earlier this year and was sentenced to 18 months in federal prison earlier this month.
Deependra Bhusal of Texas was sentenced to 46 months in federal prison for laundering over $1.4 million, while Lois Boyd of Virginia pleaded guilty to cooperating with others in an attempt to exchange more than $450,000 in criminal funds for Bitcoin. Both individuals worked under a scheme orchestrated by Tulasidas Konda of Virginia that ultimately routed victims’ funds to digital wallets controlled by foreigners.
“Cybercrime has become an all-too-common way for foreign criminal actors to prey on Americans,” added Thomas Noyes, Inspector in Charge of the Postal Inspection Service’s Fort Worth Division, noting that Operation Crypto Runner constituted a multi-year endeavor.
The string of convictions occurs at an inauspicious time for the nascent cryptocurrency sector, which faces renewed regulatory scrutiny after the sudden collapse of exchange platform FTX. The company filed for bankruptcy after adjacent trading firm Alameda Research allegedly used customer deposits to make investments. Both firms are controlled by 30-year-old former billionaire Sam Bankman-Fried.
As the Department of Justice and the Securities and Exchange Commission both continue investigations into the defunct cryptocurrency empire, the House Financial Services Committee is attempting to host Bankman-Fried next month for a hearing. The entrepreneur donated nearly $39 million during the midterm elections to Democratic candidates and claimed in a recent interview that he contributed a similar amount to Republicans through dark money channels.
Multiple cryptocurrency platforms, which had already been struggling under a bear market for digital assets, are presently struggling with liquidity crises of their own. BlockFi filed for bankruptcy on Monday, while Genesis indicated the looming possibility of insolvency.
Days after FTX collapsed, the Federal Reserve Bank of New York partnered with leading financial institutions such as BNY Mellon and Mastercard to pioneer a digital dollar simulation. An earlier paper from the Federal Reserve argued that a central bank digital currency would preserve the role of the dollar in the global economy while mitigating pitfalls such as liquidity risk and credit risk.