Comparative Study Of Blockchain Crime Prosecutions

05 Nov 2025 --
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Comparative Study of Blockchain Crime Prosecutions

Blockchain crimes generally involve fraud, money laundering, theft of cryptocurrency, or illegal fundraising schemes. Courts have had to interpret traditional criminal statutes in the context of cryptocurrency’s pseudonymous and decentralized nature.

1. United States v. Ross Ulbricht (Silk Road Case, 2015)

Facts

Ross Ulbricht created and operated Silk Road, an online marketplace on the darknet, primarily for illegal drugs. Bitcoin was the main currency for transactions.

Crimes

Conspiracy to commit narcotics trafficking

Money laundering

Computer hacking

Participation in a continuing criminal enterprise

Judicial Analysis

Court treated Bitcoin as “money” and used blockchain transaction records to trace payments from buyers to the platform.

Pseudonymity did not protect Ulbricht; multiple digital traces linked him to the marketplace.

Outcome

Ulbricht was convicted on all counts and sentenced to life imprisonment.

The case set a precedent for applying traditional criminal law to blockchain-facilitated illicit activity.

2. United States v. Gerard “Jerry” Cotten / QuadrigaCX (2019)

Facts

QuadrigaCX, a Canadian cryptocurrency exchange, lost access to $190 million in user funds after the death of its founder, Gerard Cotten. Investigations revealed mismanagement and potential misappropriation.

Crimes

Fraud

Misrepresentation of financial status

Breach of fiduciary duty

Judicial Analysis

Court examined how blockchain could trace remaining assets.

Highlighted regulatory gaps and the difficulty of reconciling pseudonymous blockchain transactions with fiduciary responsibilities.

Outcome

No criminal convictions due to Cotten’s death, but civil proceedings recovered part of the funds for investors.

Key takeaway: Exchanges are accountable under fiduciary and financial fraud laws, even when assets are in crypto form.

3. United States v. Sergey Vinnik (BTC-e Money Laundering Case, 2017–2021)

Facts

Vinnik operated BTC-e, a cryptocurrency exchange used to launder billions of dollars in illicit proceeds, including from hacks and darknet activity.

Crimes

Money laundering

Operating an unlicensed financial service

Conspiracy

Judicial Analysis

The court emphasized that cryptocurrency exchanges cannot shield operators from criminal liability.

Blockchain forensic analysis traced illicit transfers to multiple wallets and exchanges.

Outcome

Vinnik was extradited, prosecuted, and convicted of money laundering.

Authorities seized significant crypto assets, showing the effectiveness of blockchain traceability in prosecution.

4. United States v. Michael Patryn / QuadrigaCX Co-conspirator (2020)

Facts

A co-conspirator of QuadrigaCX was implicated in misappropriating investor funds and laundering cryptocurrency through shell accounts.

Crimes

Fraud

Money laundering

Misrepresentation to investors

Judicial Analysis

Blockchain records revealed complex layering of transfers to hide origins of funds.

Court treated the blockchain as admissible evidence for tracing illicit funds.

Outcome

Conviction for fraud and money laundering; partial restitution ordered.

Reinforced that complex blockchain movements do not prevent prosecution.

5. United States v. John McAfee / ICO Misrepresentation (2019)

Facts

John McAfee promoted initial coin offerings (ICOs) on social media while secretly receiving payments to endorse them.

Crimes

Securities fraud

Money laundering

Misleading investors about the nature and profitability of ICOs

Judicial Analysis

Court ruled that ICO tokens can be considered securities under federal law.

Blockchain transaction analysis traced payment flows to McAfee and revealed undisclosed conflicts of interest.

Outcome

McAfee faced criminal charges; the case underscored the application of securities and fraud laws to blockchain projects.

6. United States v. James Zhong / Silk Road Bitcoin Theft (2022)

Facts

Zhong exploited Silk Road’s withdrawal system to steal over 50,000 Bitcoins in 2012, worth billions at the time of seizure.

Crimes

Wire fraud

Theft of property

Money laundering

Judicial Analysis

Court treated Bitcoin as property subject to seizure.

Blockchain tracing allowed law enforcement to recover the stolen Bitcoins despite their pseudonymous nature.

Outcome

Zhong pled guilty; all Bitcoin was seized and returned to the U.S. government.

Demonstrated that blockchain records are critical evidence for recovery and conviction.

7. United States v. Le Anh Tuan / NFT Rug Pull (2025)

Facts

Defendant and co-conspirators created an NFT project, collected investor funds, then abandoned the project in a “rug pull,” transferring funds across multiple blockchains.

Crimes

Wire fraud

Money laundering

Securities fraud

Judicial Analysis

Court ruled NFTs could be treated as investment contracts, subject to fraud laws.

Cross-chain transfers were analyzed using blockchain forensics.

Outcome

Indictment issued; prosecution ongoing.

Established that NFTs and new blockchain assets are legally scrutinized like traditional financial instruments.

Comparative Observations

Aspect	Silk Road	QuadrigaCX	BTC-e	McAfee ICO	Zhong Theft	NFT Rug Pull
Crime Type	Drug marketplace, money laundering	Fraud, misappropriation	Money laundering	Securities fraud	Theft, fraud	Fraud, laundering
Blockchain Role	Medium of illicit transactions	Asset mismanagement	Exchange transactions	Payment tracing	Theft tracing	Fund laundering
Evidence	Blockchain transactions	Crypto account analysis	Wallet tracing	Token payments	Bitcoin ledger	Multi-chain forensic tracing
Outcome	Life imprisonment	Civil restitution	Conviction, asset seizure	Criminal charges	Guilty plea, Bitcoin seized	Indictment ongoing