DOJ charges inmate over alleged $290K forfeited crypto theft

The U.S. Department of Justice has charged a federal inmate over the alleged removal of about $290,000 in cryptocurrency forfeited to the government.

Summary

• Prosecutors allege Iossifov moved $290,000 in forfeited crypto while serving a federal prison sentence already.
• The funds allegedly passed through several crypto exchanges and mixing services to conceal their movement.
• Iossifov faces up to 25 years if convicted, while all charges remain unproven in court.

Bulgarian national Rossen G. Iossifov appeared in federal court in the Eastern District of Kentucky on charges linked to the funds. Prosecutors charged him with removing property to prevent seizure, aiding and abetting, and conspiracy to commit money laundering.

DOJ alleges forfeited crypto was moved through mixers
According to the Justice Department's July 9 statement, Iossifov allegedly conspired to transfer the cryptocurrency in January 2024. A court had already ordered the assets forfeited to the United States following his earlier conviction.

Prosecutors allege that the 53-year-old moved the funds through several cryptocurrency exchanges and "illicit mixing services." The transfers allegedly prevented the U.S. government from taking possession of the assets.

Crypto mixers combine funds from different users before redistributing them to new addresses. The process can make transaction trails harder to follow, although blockchain records may still allow investigators to trace parts of the movement.

In addition, the DOJ finalized the forfeiture of more than $400 million linked to crypto mixer Helix in January. Helix had processed more than 354,000 Bitcoin while serving darknet markets and other users.

Charges follow earlier crypto laundering conviction
The new case stems from assets connected to Iossifov's 2021 conviction. He was serving a 111-month federal prison sentence when the alleged transfers took place.

Evidence presented during the earlier trial showed that Iossifov laundered nearly $5 million in cryptocurrency in less than three years. He owned RG Coins, a Bulgaria-based Bitcoin exchange that prosecutors said served members of an online auction fraud network.

The scheme targeted U.S. buyers through fake advertisements for vehicles and other expensive goods. Victims sent payments for products that did not exist, while members of the network moved the proceeds through bank accounts and cryptocurrency services.

A court ordered Iossifov to pay $2,642,297.43 in restitution to victims. It also ordered him to forfeit the cryptocurrency that is now at the center of the new criminal case. His earlier conviction and sentence were later upheld on appeal.

Prosecutors seek to protect forfeited assets
Assistant Attorney General A. Tysen Duva said Iossifov is accused of moving cryptocurrency obtained through the earlier fraud scheme "in violation of a court's forfeiture order."

Duva added that the DOJ would pursue defendants who disregard court orders tied to earlier criminal sentences. The Secret Service investigated the latest case, while the DOJ's Office of International Affairs also provided support.

The case shows the operational challenge authorities face when taking control of digital assets. A court can issue a forfeiture order, but officials must still secure the wallets, private keys and related accounts before funds can be transferred elsewhere.

Iossifov could face another 25 years
If convicted on the latest charges, Iossifov faces a maximum combined sentence of 25 years in prison. The court will determine any sentence after considering federal guidelines and other legal factors.

The DOJ has not disclosed which exchanges or mixing services allegedly processed the $290,000. It also has not explained how Iossifov allegedly directed the transactions while in federal custody.

However, the indictment represents allegations rather than proof of guilt. Iossifov is presumed innocent unless prosecutors establish the charges beyond a reasonable doubt in court.

The case will proceed in the Eastern District of Kentucky. Senior Counsel Vasantha Rao and Assistant U.S. Attorney Kathryn M. Dieruf are prosecuting it.

Disclaimer: This content is provided for general branding and informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online events, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets or to use any services. Crypto assets are highly volatile and may result in loss. WEEX services and online events may not be available in all regions and are subject to applicable laws, regulations, and eligibility requirements. You are responsible for ensuring that your use of WEEX services complies with local laws and for carefully assessing the risks before participating in any crypto-related activities.