The owner and manager of the RG Coins cryptocurrency exchange, Rossen Iosifov, was sentenced to ten years in prison for helping a group of Romanian scammers launder nearly $ 5 million.
This was announced by representatives of the US Department of Justice. The government agency estimates that at least 900 Americans have been victims of a fraudulent scheme. We will tell you what the exchange’s participation in it was.
Recall that cryptocurrencies are often trying to associate with money laundering, that is, the transfer of funds obtained illegally to the legal side. Moreover, this has been happening for a long time: critics of Bitcoin often accuse it of using it for crimes, and some cryptocurrency exchanges a few years ago began to get rid of anonymous coins, which are allegedly also used for criminal activity.
In general, it all comes down to getting a cryptocurrency, knocking down the traces of ownership using so-called mixers, which mix users’ coins with each other and send them back in different portions, and bring the crypt into regular currencies. It is quite difficult to do this with large volumes anonymously, which is why scammers use outside help. In the current situation, this is exactly how it happened.
It is important to note that the problem of money laundering is also common for ordinary banks. As we learned the day before, in 2020, various financial institutions paid about $ 13 billion in fines for violations. The latter also included laundering and the organization of illegal financial flows.
Cryptocurrencies in criminal activity
Here is a quote from the official announcement of the Ministry, which details what happened. The cue is from Decrypt.
Iosifov owned and operated the RG Coins cryptocurrency exchange headquartered in Sofia, Bulgaria. According to the testimony in court, Iosifov knowingly and intentionally participated in business transactions aimed both at assisting fraudsters in laundering proceeds from their illegal activities, and to protect himself from criminal liability.
That is, the head of the cryptocurrency platform helped the criminals by their own consent. In addition, he tried to cover up his tracks so that in the end, law enforcement officers did not come out on his trail. However, the outcome of the case turned out to be the opposite.
At least five of Iosifov’s «clients» were members of the so-called AOAF network – a group of Romanian scammers who used cryptocurrencies to launder illicit funds. The 53-year-old former Bulgarian citizen was charged with «conspiracy to commit an offense related to the Racketeers and Corrupt Organizations (RICO) Act» and «conspiracy to launder money.»
In general, the scammers’ tactics were simple. Romanian AOAF members ran fake advertisements on trading platforms like Craigslist and eBay to sell fake high-value items. Most often these were cars, according to a source. When victims sent their payments for a fake product, the funds were converted into cryptocurrency and sent abroad.
Since cryptocurrencies are decentralized, all coin users are equal and there is no central authority on the networks themselves. Accordingly, it is impossible to prohibit the sending of stolen funds. In addition, cryptocurrencies can be sent to a user anywhere in the world, which is what scammers used. They sent coins to a distant country, where the owner of the marketplace was already ready to withdraw funds into cash under the guise of some kind of operation.
The loss of the affected Americans was estimated at $ 7 million, while Iosifov’s personal benefit was more than $ 184,000. Now the fraudster and several other members of the AOAF will spend the coming years behind bars.
We believe that the story turned out to be indicative. And although fraudsters carried out operations with stolen funds in the form of cryptocurrencies in a country far from the United States, they still fell on the hook of law enforcement officers. I would like to believe that as many people as possible, including critics of Bitcoin and other coins, will learn about this situation. Thanks to this, they will clearly change their minds regarding cryptocurrencies, which blockchain haters are trying to position as a universal tool for criminals, making them almost elusive.
