In a historic case highlighting the risks of unfettered bitcoin investment, former investment banker Rashawn Russell was sentenced to 41 months in federal prison.
Russell signed a guilty plea to wire fraud and identity theft, therefore initiating a significant crackdown on digital asset crime. The Eastern New York District Court then determined on the fine.
Cryptocurrency Fraud Scheme Busted
The Department of Justice claims Russell’s bitcoin fraud resulted in roughly $1.5 million in investor losses. His sentencing is a part of a bigger DOJ endeavour to combat rising fraud, which has obviously lately become somewhat important.
From November 2020 until August 2022, Russell’s strategy included friends, former college colleagues, and colleagues. Drawing on his experience in the industry and broker registration, Russell raised money for his R3 Crypto Fund.
Using the popular enthusiasm and faith in digital coin investments, he attracted investors with promises of a 25% return and even assured likely increases of up to 100%. Russell moved bank accounts and created false wire transfer confirmations to keep appearance of legitimacy.
These false records deceive investors on the situation and profitability of their investments. In a conventional Ponzi scheme, Russell really diverted big amounts for personal needs and gambling and used some of the money to pay back past investors.
Starting with Russell’s April 2023 arrest, his strategy collapsed. Further investigations between September 2021 and June 2023 revealed Russell had acquired over 100 credit and debit cards under other people’s names, intended for use in fraudulent operations.
Beginning with Russell’s April 2023 arrest, his scheme collapsed. Further investigations between September 2021 and June 2023 revealed Russell had acquired over 100 credit and debit cards under other people’s names, intended for use in fraudulent operations.
DOJ’s Recent Crackdown Efforts
The DOJ has increased its fight against fraud and criminal conduct under the direction of the National Cryptocurrency Enforcement Team (NCET). Aiming at people who promote illicit activities including money laundering and investment scams, the government targets crypto exchanges allowing criminals to easily profit from their crimes and pay out.
Often referred to as “pig butchering,” investment frauds—where con artists establish rapport with victims over several months—have been aggressively sought after by law enforcement. In April 2023, the FBI confiscated bitcoin holdings worth more than $112 million for six similar schemes.
Concentrating on cross-chain bridges, which have been a primary target for hostile acts, the DOJ also wants to combat theft and hacking in the distributed finance (DeFi) arena. Apart from stopping crypto fraud, the DOJ’s projects also aim to provide infrastructure for a conceivable future when the Federal Reserve (Fed) distributes its own digital money at the consumer level, hence maybe leading to a paperless society.
With crypto-related schemes accounting for over $2.5 billion of the expected $3.31 billion lost from individuals via investment fraud in 2022, the FBI projects Over the previous four years, the Department of Justice has observed a strong increase in crypto-related criminal activity; an 183% surge in bitcoin scams from 2021 to 2023, valued at $2.57 billion in one year.
Featured image from Getty Images, chart from TradingView