Facing Crypto Wire Fraud Charges?

When the fraud scheme involves cryptocurrency—such as Bitcoin, Ethereum, or other digital assets—prosecutors charge it as wire fraud because cryptocurrency transactions inherently use interstate wire communications.

Applicable Federal Statutes

18 U.S.C. § 1343 - Wire Fraud

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice.

18 U.S.C. § 1956 - Money Laundering

Any person or business executive can commit money laundering if they intentionally and knowingly

• promote carrying on illegal activity, such as avoid paying taxes or transaction reporting requirements
• conceal the nature, ownership, location, source of funds
• conduct or attempt to conduct a financial transaction involving money they know was derived from unlawful activity
• transport, transfer or transmit (or attempt to do so) funds to or from a foreign country for unlawful purposes
• carry out (or attempt to carry out) a financial transaction involving money represented to be proceeds of unlawful activity or property used to conduct unlawful activity.

18 U.S.C. § 1957 - Monetary Transactions in Criminally Derived Property

Any person or business executive can commit money laundering when they knowingly engage or attempt to engage in a monetary transaction in criminally derived property of a value greater than $10,000.

18 U.S.C. § 1349 - Conspiracy to Commit Fraud

Conspiracy to commit wire fraud occurs when two or more people agree to carry out a scheme designed to defraud another person or entity using interstate communications.

18 U.S.C. § 1960 - Unlicensed Money Transmitting Business

Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business.

18 U.S.C. § 1344 - Bank Fraud

Anyone who knowingly executes, or attempts to execute, a scheme or artifice— (1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promise.

How Do Prosecutors Investigate Crypto Wire Fraud Charges?

Crypto wire fraud investigations typically start in one of these ways: 

1. Victim Complaints 
2. Suspicious Activity Reports (SARs) 
3. Blockchain Analysis & Monitoring 
4. Undercover Operations & Stings 
5. Referrals from Other Investigations 
6. Media Reports & Whistleblowers 

Once a trigger occurs, federal agents conduct a preliminary investigation to determine whether there's enough evidence to justify a full investigation. At this stage, agents will do the following:

1. Gather Publicly Available Information
   
   1. Promotional materials making false claims 
   2. Victim testimonials or complaints 
   3. Evidence of lavish lifestyle inconsistent with legitimate income 
   4. Connections to other known fraudsters 
2. Interview Initial Victims
3. Conduct Preliminary Blockchain Analysis
   
   1. Trace cryptocurrency flows from victims to your wallets 
   2. Identify patterns suggesting fraud 
   3. Estimate the total amount of frauds
4. Check Criminal Databases
   
   1. NCIC (National Crime Information Center) 
   2. FinCEN databases 
   3. Prior SAR filings 
   4. International law enforcement databases (Interpol)

If agents find sufficient evidence of potential federal crimes, they: 

1. Open a full investigation and assign a case agent 
2. Convene a task force (FBI, IRS-CI, Secret Service, prosecutors) 
3. Obtain approval from an Assistant U.S. Attorney (AUSA) to proceed

At this point, you likely have no idea you're under investigation. Next, is the longest and most intensive phase, often lasting 6 months to 3+ years:

1. Subpoena Financial Records
   
   1. Agents issue grand jury subpoenas (or administrative subpoenas) to:
      
      1. Banks 
         
         1. Your personal and business bank accounts
         2. Wire transfer records 
         3. Check images 
         4. Account opening documents 
      2. Cryptocurrency Exchanges 
         
         1. Coinbase, Binance, Kraken, Gemini, etc. 
         2. Your account information, transaction history, KYC documents 
         3. IP addresses used to access accounts 
         4. Withdrawal addresses 
      3. Payment Processors 
         
         1. PayPal, Venmo, Cash App, Zelle
         2. Transaction histories 
      4. Email Providers: 
         
         1. Gmail, Yahoo, Outlook 
         2. Email contents, IP logs, account recovery information 
      5. Phone Companies: 
         
         1. Call detail records (who you called, when, duration) 
         2. Text message records (metadata, sometimes content) 
         3. Cell tower location data 
      6. Social Media Companies: 
         
         1. Direct messages, posts, account information 
      7. Web Hosting Companies:
         
         1. Server logs, website files, databases 
         2. What you'll notice: Nothing. Grand jury subpoenas are served on the companies, not on you. 

You won't know your records are being obtained unless the company notifies you, which is rare. At this point, if agents have probably cause, they will obtain search warrants and seize the following:

1. Your Home 
   
   1. Computers, laptops, tablets, phones
   2. Hard drives, USB drives, external storage 
   3. Paper records, notebooks, ledgers 
   4. Cryptocurrency hardware wallets (Ledger, Trezor) 
2. Your Office/Business:
   
   1. Business computers and servers 
   2. Customer lists, contracts 
   3. Financial records 
3. Digital Accounts: 
   
   1. Email accounts 
   2. Cloud storage (Google Drive, Dropbox, iCloud) 
   3. Cryptocurrency exchange accounts 

Agents will show up at your door (often early morning), present a warrant, and search your property. This is often the first time you learn you're under investigation. 

What to Do If You’re Under Investigation

1. Immediately, contact an experienced attorney. This is the most critical action. Do not delay. Federal agencies have often spent months or years building a case before they contact you. You need a lawyer who specializes in federal white-collar crime and, ideally, has experience handling cryptocurrency and blockchain evidence.
2. Let Your Lawyer Intervene: Your attorney can contact the agent or prosecutor in charge to find out your status, such as if you’re a witness, a subject, or a target. They’ll immediately begin protecting your rights and influencing the direction of the investigation.
3. Do Not Speak to Agents: The single greatest mistake people make is believing they can talk their way out of a problem. If federal agents approach you (e.g., your home, office, or anywhere else), remain polite and calm, but do not answer any questions. Simply and clearly state: "I am happy to cooperate, but I must speak with my attorney first."
4. Do Not Make Promises: Do not promise to speak to them later. Simply state your need for counsel. Agents are trained to extract information, and even seemingly innocent statements can be used to prove "knowledge" or "intent" later.
5. No "Off-the-Record" Discussions: Assume that every communication with law enforcement, even casual conversation, is being recorded or will be used against you.
6. Do Not Delete Anything: Obstruction of justice is a serious, separate felony that can result from destroying documents or tampering with devices. Do not delete emails, text messages, chat logs (Telegram, Signal, etc.), or social media posts related to the investigation.
7. Secure Digital Assets: Preserve all records related to your cryptocurrency activities:
   
   1. Wallet addresses and keys.
   2. Transaction IDs (Hashes).
8. Stop All Communication Related to the Investigation: Communication with co-workers or associates who may also be involved can lead to charges of witness tampering or conspiracy.
9. Avoid Discussion: Only discuss the investigation with your attorney. Do not talk to friends, family, business partners, or co-workers about the facts of the case.
10. Stay Off Social Media: Do not post anything online, even vague or philosophical comments, related to the investigation or cryptocurrency in general. Assume all public (and many private) online communications are monitored.

How We Fight Crypto Wire Fraud Charges

Here are some of our core defense approaches:

1. Challenge Intent to Defraud: “I Believed It Was True”
   
   1. Document your honest belief: Collect every email, text, meeting note, and internal communication showing you genuinely believed in your cryptocurrency project. We're looking for contemporaneous evidence that you thought your statements about the crypto's technology, backing, partnerships, or value were accurate. Being wrong is not criminal, lying is.
   2. Show you relied on experts and advisors: Present evidence that you consulted legal counsel, blockchain developers, accountants, or cryptocurrency consultants before making statements to investors. Document every conversation where you sought guidance on regulatory compliance, technical specifications, or the legitimacy of your project. The cryptocurrency space is notoriously complex, showing you sought expert guidance demonstrates honest intent.
   3. Establish legitimate business operations: Compile evidence of standard business practices, incorporation documents, business plans, marketing materials, employee hiring, office leases, vendor contracts. Show this was a real business venture that failed, not a fraud scheme.
   4. Explain honest mistakes: The crypto market is unpredictable and the technology is complex. If your predictions didn't work out or the technology didn't perform as expected, that's a business failure not fraud, if you honestly believed in them when you made the statements.
2. Attack Materiality: “That Statement Didn't Matter”
   
   1. Separate puffery from fraud: Cryptocurrency marketing is saturated with grand ambitions, forward-looking visions, and soaring optimism. Our perspective is that much of this falls into the category of legally non-actionable “puffery”, those sweeping, vague promotional statements that any reasonable person recognizes as sales talk, not guaranteed fact.
   2. Emphasize investor sophistication: If your investors were sophisticated, accredited investors, experienced crypto traders, or institutional players, we argue they did or should have conducted their own due diligence and didn't rely on your promotional materials. Sophisticated investors understand crypto risks and make independent judgments.
   3. File Daubert motions against government experts: If the government presents expert witnesses claiming your statements were material, we challenge their qualifications and methodology. What's their expertise in cryptocurrency markets? What data supports their opinions? What's their error rate? We expose junk science and exclude unreliable expert testimony
3. Attack Sufficiency of Evidence: “Prove Every Element Beyond a Reasonable Doubt”
   
   1. Challenge the “scheme to defraud’’: We argue your cryptocurrency project was a legitimate business venture that failed due to market conditions, technological challenges, or competitive pressures—not fraud. We present evidence of genuine business operations: incorporation documents, business plans, employee hiring, vendor contracts, office leases, marketing expenses.
   2. Attack intent with circumstantial evidence: The government will rely on circumstantial evidence to prove intent, ‘’red flags’’ like your use of marketing language, failure to disclose certain risks, or the project's ultimate failure. We argue these circumstances are equally consistent with legitimate business practices in the crypto space. Aggressive marketing is standard. Risk disclosures are evolving. Project failures are common. None of this proves fraudulent intent.
   3. Exploit regulatory uncertainty in crypto: The cryptocurrency regulatory landscape is notoriously unclear. SEC and CFTC disagree on whether crypto assets are securities or commodities. Regulators themselves can't define clear rules. We argue this uncertainty makes it impossible to prove you knowingly violated clear legal standards. If even regulators don't know what's legal, how can you be convicted of knowingly defrauding investors?

Possible Sentencing & Penalties in New York

Bank Fraud — 18 U.S.C. § 1344

• Maximum Penalties
  
  • Prison Time: Up to 30 years
  • Fine: Up to $1,000,000
  • Supervised Release: Up to 3 years (after you get out of prison
• Key points:
  
  • For a conviction, the government must prove every element of the offense beyond a reasonable doubt. Crucially, successful theft isn't necessary for the crime to occur; merely attempting to defraud a financial institution is sufficient for a conviction. Furthermore, prosecutors can significantly increase a defendant's exposure by charging each separate fraudulent act even if they were part of one scheme as an individual count.

Wire Fraud — 18 U.S.C. § 1343

• Maximum Penalties
  
  • Prison Time: Up to 30 years
  • Fine: Up to $1,000,000
  • Supervised Release: Up to 5 years (after you get out of prison)
• Key points
  
  • Penalties for wire fraud are significantly escalated if the violation affects a financial institution or involves disaster relief. Targeting victims over age 55 (via telemarketing or email) adds an additional 10 years. The law treats attempted wire fraud the same as a completed offense, and prosecutors can multiply the charges by treating each separate wire communication (e.g., email, text, or call) as a distinct criminal count.

Conspiracy to Commit Fraud — 18 U.S.C. § 1349

• Maximum Penalties
  
  • Prison Time: Same as the underlying fraud offense (e.g., Bank or Wire Fraud)
  • Fine: Same as the underlying fraud offense (e.g., Bank or Wire Fraud)
• Key points
  
  • The federal fraud conspiracy and attempt statute applies to all major fraud offenses (mail, wire, bank, healthcare, etc.), and penalties are the same for attempted or completed fraud. For conspiracy, proof of an "overt act" is not required; only an agreement to commit fraud is needed. For an attempted conviction, the prosecutor must prove the defendant intended the crime and took substantial steps toward committing it.

Money Laundering — 18 U.S.C. § 1956

• Maximum Penalties
  
  • Prison Time: Up to 20 years
  • Fine: Up to $500,000 or twice the value of the property involved, whichever is greater
  • Supervised Release: Up to 3 years (after you get out of prison)
• Key points
  
  • The law is broad, as conspiracy to commit money laundering is penalized with the exact same severity as the actual completed offense. Furthermore, both Sections 1956 and 1957 explicitly cover attempts to launder money, making them subject to the same penalties as successful acts, and critically, all property involved in the illicit transaction is subject to criminal forfeiture by the government.

Monetary Transactions in Criminally Derived Property — 18 U.S.C. § 1957

• Maximum Penalties
  
  • Prison Time: Prison Time: Up to 10 years
  • Fine: Up to $250,000 (for individuals) or twice the amount of criminally derived property involved (alternatively)
  • Supervised Release: Up to 3 years (after you get out of prison)
• Key points
  
  • The federal fraud conspiracy and attempt statute applies to all major fraud offenses (mail, wire, bank, healthcare, etc.), and penalties are the same for attempted or completed fraud. For conspiracy, proof of an "overt act" is not required; only an agreement to commit fraud is needed. For an attempted conviction, the prosecutor must prove the defendant intended the crime and took substantial steps toward committing it.

Examples and Related Cases

As described, the federal wire fraud statute includes broad language which enables federal prosecutors to cast a wide net when investigating this type of criminal activity.

Recently, our office defended an individual charged in the Eastern District of New York with, amongst other things, wire fraud related to the alleged misappropriation of funds through both gambling accounts and cryptocurrency wallets. Indeed, “wallets” and online gambling are two newer areas which are now ripe for federal prosecutors to broaden their investigations and charge wire fraud - whereas in years past, such charges were only brought through more traditional means such as a bank transaction. 

Your Defense Begins Now

If you're being investigated or have been charged with crypto wire fraud, you need an experienced criminal defense attorney who understands both the complexities of blockchain technology and the serious consequences of federal financial crime allegations.

Early action can make all the difference. Contact The Law Offices of Jason Goldman for a confidential consultation.