Cryptocurrency Criminal Law Research
1. United States v. Ross Ulbricht (2015)
Facts:
Ross Ulbricht was the creator and operator of the Silk Road, an online black market primarily used for illegal drug sales using Bitcoin.
Legal Issues:
Conspiracy to commit money laundering.
Narcotics trafficking.
Operating a criminal enterprise.
Use of cryptocurrency to facilitate illegal activity.
Holding:
Ulbricht was convicted on all counts and sentenced to life in prison without parole.
Significance:
First major case where cryptocurrency was central to the prosecution of illegal online markets.
Highlighted challenges of tracing cryptocurrency transactions.
Established that using cryptocurrencies does not provide immunity from criminal liability.
2. United States v. Charlie Shrem (2015)
Facts:
Charlie Shrem, co-founder of a Bitcoin exchange, was charged with operating an unlicensed money transmitting business and aiding money laundering by facilitating Bitcoin sales to Silk Road users.
Legal Issues:
Violating money transmission laws.
Willful blindness to illegal transactions involving cryptocurrency.
Holding:
Shrem pled guilty and was sentenced to two years in prison.
Significance:
Demonstrated that cryptocurrency exchanges must comply with financial regulations.
Reinforced the government’s commitment to regulating virtual currencies like traditional money.
3. United States v. Alexander Vinnik (2017)
Facts:
Alexander Vinnik allegedly ran BTC-e, a cryptocurrency exchange accused of laundering billions of dollars in Bitcoin connected to hacking and fraud.
Legal Issues:
Money laundering.
Operating an unlicensed financial business.
Conspiracy.
Holding:
Vinnik was arrested in Greece, extradited, and faced multiple prosecutions globally.
Significance:
Showed international cooperation in cryptocurrency crime enforcement.
BTC-e’s alleged role as a hub for criminal money movement brought attention to exchange regulations.
4. United States v. Ilya Lichtenstein and Heather Morgan (2022)
Facts:
Lichtenstein and Morgan were accused of laundering over $4 billion worth of Bitcoin stolen in the 2016 Bitfinex hack.
Legal Issues:
Conspiracy to commit money laundering.
Handling stolen cryptocurrency.
Holding:
They were arrested and charged with conspiracy and money laundering.
Significance:
Largest known cryptocurrency theft prosecution.
Showed law enforcement’s increasing ability to trace and recover stolen crypto.
Raised issues about the permanence and anonymity of blockchain transactions.
5. United States v. Larry Dean Harmon (2019)
Facts:
Harmon operated Helix, a cryptocurrency “mixing” service used to anonymize Bitcoin transactions to hide the source.
Legal Issues:
Money laundering.
Operating an unlicensed money transmission business.
Holding:
Harmon was charged with conspiracy to launder money; his case underscored criminal use of mixing services.
Significance:
First major prosecution focused on cryptocurrency mixing/tumbling.
Highlighted the government's intent to clamp down on anonymizing services used for illicit purposes.
6. United States v. Jeremy Spence (2021)
Facts:
Spence allegedly stole cryptocurrency by hacking exchanges and wallets, stealing over $1 million.
Legal Issues:
Wire fraud.
Identity theft.
Access device fraud.
Holding:
Spence pled guilty and faced sentencing for hacking-related theft using cryptocurrency.
Significance:
Emphasized hacking as a growing threat in crypto crime.
Illustrated how traditional computer crime laws apply to cryptocurrency theft.
Summary Table
| Case | Key Issue | Outcome | Significance |
|---|---|---|---|
| Ulbricht (Silk Road) | Facilitating illegal sales via Bitcoin | Life imprisonment | Crypto use in online black markets prosecuted |
| Shrem | Unlicensed money transmission, laundering | 2 years prison | Exchanges must comply with money laws |
| Vinnik (BTC-e) | Laundering billions via exchange | Arrested, extradited | Global enforcement cooperation |
| Lichtenstein & Morgan | Laundering stolen Bitcoin from Bitfinex hack | Charged, arrested | Largest crypto theft prosecution |
| Harmon (Helix) | Crypto mixing and money laundering | Charged with conspiracy | Tackling anonymity tools in crypto crime |
| Spence | Crypto theft via hacking | Guilty plea | Application of cybercrime laws to crypto theft |
Legal and Practical Implications:
Cryptocurrency is increasingly treated like traditional financial assets under money laundering and fraud laws.
Running exchanges or mixing services without licenses or compliance with financial laws leads to prosecution.
Law enforcement is developing better tools to trace blockchain transactions despite perceived anonymity.
Theft, hacking, and use of cryptocurrencies for illegal trade remain a major focus for criminal prosecutions.
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