Cryptocurrencies have exploded in popularity in recent years. More and more people are entering the web’s crypto markets, all in hopes of becoming the next “Bitcoin millionaires.”
With millions of people now actively trading in cryptocurrencies, these markets have now come under the microscope of federal investigators. Cryptocurrencies like Ethereum, Ripple and Bitcoin can be used in and used for criminal activity, and agencies like the FBI are moving to aggressively prosecute cryptocurrency crimes.
The federal government works quickly and aggressively. They never “go easy.” If you believe you are a suspect in a federal investigation for a cryptocurrency related crime, it’s important to speak with a defense attorney as soon as possible.
- How does the government treat cryptocurrency?
- Money Laundering with Cryptocurrency
- Cryptocurrency Fraud and Theft
- How Do I Know if the Federal Government Is Investigating Me?
- How Do I Fight Cryptocurrency Charges?
- Contact Robert M. Helfend Today
- Money laundering with cryptocurrency
- Cryptocurrency fraud or theft
- How do I know if the federal government is investigating me?
- How do I fight cryptocurrency charges?
How does the government treat cryptocurrency?
Despite their high-tech mystique, cryptocurrencies are treated no differently than other assets when it comes to law enforcement. There is no special exemption for Bitcoin or digital tokens – if you misuse crypto for illegal purposes, federal agencies will treat it as a crime like any other.
Common federal charges linked to cryptocurrency include money laundering, fraud, tax evasion, wire fraud, and even securities fraud (when investments or markets are manipulated). Prosecutors typically use existing laws (for example, wire fraud statutes or the Money Laundering Control Act) to charge crypto-related crimes. In other words, digital currency is not a legal gray area – it’s subject to all the same fraud and financial crime laws.
Federal jurisdiction often applies to cryptocurrency cases, especially for California residents. The federal government handles crimes that cross state or national boundaries, which is almost always the case with online crypto transactions.
For example, if a Bitcoin trader in California uses an overseas exchange or a server in another state to facilitate a scheme, the case can fall under federal jurisdiction. Even purely online conduct can trigger federal authority under laws like wire fraud (which covers interstate communications).
In practice, that means a Californian can be charged in federal court if their crypto activities involve out-of-state exchanges, international platforms, or victims across state lines. Federal agents (from FBI, IRS, and other agencies) will investigate just as they would any major crime – gathering evidence, serving subpoenas, and building a case for federal prosecutors.
Money laundering with cryptocurrency
Cryptocurrency is often portrayed as “anonymous” money, which has made it attractive to those looking to launder illicit funds.
However, that is a myth – crypto transactions are recorded on public blockchains, and investigators can trace them with the right tools. In fact, every transfer of Bitcoin or other crypto leaves a digital trail that federal agents can follow.
Determined launderers try to cover their tracks by using “tumblers” or “mixers” (services that obscure the source of funds) or by trading coins on unregulated foreign exchanges. While this can make tracing harder, law enforcement has become much more sophisticated in tracking cryptocurrency flows.
The FBI and IRS Criminal Investigation units use advanced blockchain analytics to unravel even complex laundering webs. For instance, in one recent case, a San Francisco man laundered proceeds from an online drug operation through cryptocurrency and was sentenced to over seven years in federal prison. He and his co-conspirators converted Bitcoin to cash and shuffled funds through hundreds of transactions in an attempt to hide the money – but agents still traced the trail.
Federal prosecutors are also not shy about using powerful tools like RICO (racketeering) charges when crypto is part of organized criminal schemes. In May 2025, the DOJ unsealed a major indictment charging 12 individuals in a $263 million crypto theft and money laundering ring under the RICO statute; several suspects were arrested in California as part of that takedown.
The government also treats tax evasion via cryptocurrency as a serious offense. Failing to report crypto income or using digital assets to hide money from the IRS can lead to federal tax fraud charges. IRS Criminal Investigation has ramped up scrutiny of crypto transactions, and the IRS now directly asks taxpayers about virtual currency activity on tax returns.
In short, using cryptocurrency to skirt financial laws (whether money laundering or tax evasion) can and will be prosecuted aggressively.
Cryptocurrency fraud and theft
Along with money laundering, fraud is the other major focus of federal crypto enforcement.
The DOJ, FBI, SEC, and even the IRS-CI have all stepped up efforts to crack down on cryptocurrency fraud schemes. There are many forms of crypto-related fraud and theft, but authorities are getting more adept at identifying and prosecuting all of them.
Common cryptocurrency-related offenses we see include:
- Unregistered Exchanges / Unlicensed Money Services – Operating a cryptocurrency exchange or trading platform without proper licenses can violate federal law. This often falls under unlicensed money transmitting charges. For example, a California man recently pled guilty to operating an unlicensed crypto business after converting Bitcoin to cash for clients without the required money transmitter license. Such offenses are taken seriously because unregistered exchanges are seen as hotbeds for money laundering and fraud.
- Pump-and-Dump Schemes (Market Manipulation) – Crypto “pump and dump” schemes involve artificially inflating the price of a coin or token through false hype, then “dumping” it by selling off holdings, leaving investors with losses. Federal prosecutors treat these schemes as securities fraud or wire fraud, depending on the circumstances. In late 2024, for instance, federal authorities charged multiple individuals for manipulating prices of altcoins using bots and fake trading to boost volume. Similarly, two California men were indicted in Los Angeles for a $22 million NFT rug pull scam – they hyped up fake NFT projects, raised millions, then abruptly abandoned the projects and kept the money. These cases show that even in the “Wild West” of crypto, old-fashioned fraud laws still apply.
- ICO Fraud and Securities Violations – The SEC and DOJ have been targeting fraudulent initial coin offerings (ICOs) and crypto investment schemes. If someone raises money for a new cryptocurrency or DeFi project by lying to investors or failing to register the offering, they can face charges for investment fraud. A notable recent case in San Francisco involved the founder of “AML Bitcoin,” who was convicted of wire fraud and money laundering after raising millions on false claims about his token’s technology and business partnerships. He diverted investor funds to buy luxury goods and real estate, and a jury found him guilty at trial. The lesson: promoting a crypto project with misleading statements or without proper regulatory compliance can lead straight to federal court.
- Theft via Hacking or Phishing Scams – Not all crypto crimes are investment schemes; many involve outright theft of cryptocurrency from individuals. Phishing scams are rampant – criminals may pose as customer support or wallet providers to trick people into giving up their private keys or recovery phrases. One common scam observed by federal agents involves fraudsters planting fake “crypto help desk” numbers online. Panicked investors who call these numbers are instructed to provide access to their digital wallet for a “maintenance” or “security” check – and the scammers then steal all the crypto from the wallet. Similarly, hackers might breach an exchange or use malware to steal cryptocurrencies. These activities can result in federal wire fraud, computer fraud, and identity theft charges. In large-scale thefts, the DOJ has shown it will pursue conspirators across the globe. (In one infamous example outside California, federal agents tracked billions in Bitcoin stolen from a cryptocurrency exchange hack and charged the suspects with money laundering, seizing back a record amount of crypto in the process.) The key point for Californians is that if you’re accused of stealing crypto or executing a scam online, federal authorities will likely handle the case, given the interstate nature of these crimes.
Federal agencies are evolving quickly to address crypto fraud.
The Department of Justice established a National Cryptocurrency Enforcement Team (NCET) dedicated to digital asset cases, and it launched a nationwide network of over 150 federal prosecutors focused on crypto crimes.
The FBI has a Virtual Assets Unit and works closely with crypto tracing experts to follow the money.
IRS-CI (Internal Revenue Service – Criminal Investigation) has trained agents to follow cryptocurrency transactions in tax and fraud cases, even creating specialized cyber crime units.
And the Securities and Exchange Commission is actively suing crypto companies and individuals for violating securities laws, from unregistered coin offerings to celebrity pump-and-dump promotions. In short, multiple federal agencies now coordinate on cryptocurrency enforcement – sharing data, expertise, and leads – to an extent we’ve never seen before. Crypto might be new, but prosecutors are applying long-standing laws and innovative techniques to catch offenders. This trend is only growing: federal officials in 2024 and 2025 have signaled that while they support innovation, they will aggressively pursue any crypto use that harms investors or facilitates crime.
How do I know if the federal government is investigating ne?
Federal investigations are typically conducted in secret. You likely won’t know you’re under investigation until agents are nearly ready to bring charges. This process can take months or even years. However, there are some warning signs for suspects in California (or anywhere) that a federal crypto investigation is underway:
- Direct Contact – You receive a phone call or visit from a federal agent (FBI, IRS, Secret Service, etc.) asking to talk about your cryptocurrency activities. Any outreach by federal agents is a red flag that you’re on their radar.
- Target Letter – You get an official target letter from a U.S. Attorney’s Office, informing you that you are a target of a federal grand jury investigation.
- Search Warrant or Surprise Visit – Agents show up unannounced at your home or business with a search warrant or simply to ask questions. They might seize computers, phones, or records if they have a warrant.
- Grand Jury Subpoena – You or your associates receive subpoenas for records or testimony related to cryptocurrency transactions. A grand jury subpoena means a federal prosecution is being developed.
- Others Are Contacted – Federal investigators interview your friends, business partners, or anyone in your crypto circle. They often try to gather information from people around the target before approaching you directly.
If any of these events occur – or even if you just have a strong suspicion that you’re being investigated – do not delay. Speak with an experienced federal defense attorney immediately. Early legal guidance can make a huge difference in the outcome of the case.
Importantly, do not speak to federal agents without an attorney. You have the right to remain silent and to legal counsel. Exercising those rights is crucial to protect yourself, even if you believe you’ve done nothing wrong.
How do I fight cryptocurrency charges?
Facing federal criminal charges related to cryptocurrency is serious, but you are not powerless. A strong defense can often be mounted, especially with an attorney who understands both federal law and the nuances of digital assets. Remember, federal prosecutors must prove your guilt beyond a reasonable doubt, and cryptocurrency technology can sometimes make that harder than it looks.
Here are steps to take and factors that can help in fighting crypto charges:
- Hire a Knowledgeable Defense Attorney – This is step one. You need a lawyer who knows federal court procedures and has experience with crypto cases. Robert M. Helfend is such an attorney – with over 40 years of criminal defense experience in California, he stays at the cutting edge of cryptocurrency defense. We will investigate the allegations, challenge weak evidence, and push back against overzealous prosecutors.
- Examine the Evidence Trail – Crypto cases often rely on digital evidence (blockchain transactions, exchange records, emails, chat logs). A good defense will scrutinize how this evidence was obtained and whether it truly links you to the crime. Blockchain analysis isn’t foolproof – mistakes can be made in attribution of wallets or decoding transaction patterns. If there’s reasonable doubt about whether you conducted a transaction, that can be a powerful defense.
- Challenge the Intent – Many crypto charges (like fraud or money laundering) require proving you knew about the scheme or intended to break the law. Perhaps you were caught up in something you didn’t fully understand, or your role was more minor than prosecutors allege. We can argue lack of intent or knowledge in the right cases. For example, not every person who traded on an unregistered exchange realized it was illegal.
- Leverage the Newness of Crypto – Because cryptocurrency is relatively new and technical, law enforcement agents don’t always get it right. There have been instances where innocent transactions were misinterpreted as criminal, or where defendants were wrongly accused due to wallet addresses being mixed up. The evolving nature of crypto technology can sometimes work in the defense’s favor, creating doubt about what really happened and who was responsible.
- Negotiation and Mitigation – Finally, a seasoned attorney will know when it’s best to negotiate. In some cases, cooperating with authorities or reaching a plea agreement for lesser charges can dramatically reduce potential penalties. The federal penalty for a single count of wire fraud, for example, can be up to 20 years in prison and $250,000 in fines. If you’re facing multiple counts, the stakes are extremely high. Our goal is to protect your freedom – whether that means fighting the charges at trial or persuading prosecutors to settle for a reasonable outcome.
Bottom line: Do not face federal crypto charges alone.
These cases involve complex intersections of technology and law. As a National Trial Lawyers Top 100 Attorney and a SuperLawyers honoree, Robert M. Helfend has the knowledge to dissect the prosecution’s case and the track record to defend your rights.
Contact Robert M. Helfend today
If you or someone you know is being investigated or charged in a cryptocurrency-related case, take action now.
The sooner you have a skilled attorney on your side, the better your chances of a positive outcome. Call Robert M. Helfend at 805-273-5611 for a free case review today.
We offer confidential consultations and will help you understand your options and rights.
Published December 29, 2019. Updated May 30, 2025.
References
- California Penal Code § 186.10. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=186.10&lawCode=PEN
- California Penal Code § 502. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=502.&lawCode=PEN
- 18 U.S. Code § 1030. https://www.law.cornell.edu/uscode/text/18/1030
- 18 U.S. Code § 1343. https://www.law.cornell.edu/uscode/text/18/1343