Cryptocurrency Fraud, Money Laundering, and Manipulation Defense

Scott has first-chair trial and investigation experience to defend and counsel individuals in the cryptocurrency market.

As a federal prosecutor, Scott tried the first-ever federal criminal case involving the manipulation of a cryptocurrency through an algorithm that placed over $300 million in spoof orders and wash trades. As a senior supervisor at DOJ, Scott also supervised investigations and prosecutions involving Ponzi schemes for cryptocurrency investments, “rug pulls” involving NFTs, “pig butchering” schemes, “cherry picking” schemes involving cryptocurrency futures, and investment-fraud schemes involving various cryptocurrencies.

By coupling his deep knowledge of blockchains and trading protocols with his trial experience in cryptocurrency cases, Scott now defends individuals facing a range of allegations of fraud, money laundering, and manipulation in the cryptocurrency markets.

Cryptocurrency Defense

Fraud & Manipulation Defense

Scott defends individuals in investigations and cases involving allegations of fraud and manipulation in the cryptocurrency markets. Scott uses his critical trial experience involving cryptocurrency fraud and manipulation to defend individuals in matters across blockchains and trading protocols, whether decentralized exchanges (“DEXs”) or more traditional centralized exchanges (“CEXs”).

As in other areas, Scott harnesses his trial skills to protect individuals in the emerging cryptocurrency markets. His expertise in navigating the cryptocurrency market ensures that robust defense strategies are tailored to the unique legal and factual issues in this emerging digital space.

Blockchain Analysis

Scott defends individuals in the cryptocurrency market by understanding, investigating, and presenting the full picture of cryptocurrency transactions. This work involves analyzing the movement of assets across wallets, blockchains, and through various defi protocols. Put simply, Scott knows where to look to understand cryptocurrency transactions and can easily explain it to others.   

Scott’s ability to dissect and interpret the details of digital transactions is critical to building a strong defense and ensures his clients are well-represented in all phases of a case.

Defi Defense

Scott has first-hand experience in a range of defi protocols at the center of recent enforcement actions, including defi-lending protocols, mixers, and algorithmic trading systems. By blending his traditional trial skills with an insider’s knowledge of cryptocurrencies, Scott defends individuals in all corners of the cryptocurrency markets.  His experience with the technological aspects and legal implications of these protocols allows him to effectively advocate for his clients.

Scott’s approach ensures that individuals facing scrutiny in the cryptocurrency space are strategically defended.

Scott’s Representative Experience in Complex Cryptocurrency Cases

  • Secured the complete dismissal of an Emergency Cease and Desist Order filed by the Texas State Securities Board against executives of the Apertum Foundation for alleged fraud relating to the APTM or Apertum Token

  • Represented a foreign national against a federal indictment charging conspiracy to commit wire fraud and conspiracy to commit money laundering for allegedly orchestrating a $260 million “social engineering” crypto heist

  • Represented a cryptocurrency mining and lending protocol, as well as its CEO, against a federal investigation involving alleged investment fraud relating to cryptocurrency investments.

  • Represented the founder of a leading defi protocol in connection with an investigation by the New York Attorney General into whether the protocol offered unregistered securities and did not disclose alleged protocol risks to defi users

  • Represented the leader of a decentralized swap protocol (DEX) in connection with inquiries from federal law enforcement agencies relating to blockchain transactions on the protocol

  • Represented a corporate executive at a major cryptocurrency exchange in connection with an SEC investigation into alleged false and misleading statements in annual and quarterly filings

  • Represented an executive and founder of a private investment fund in connection with a federal investigation into misappropriation of the investment fund’s assets

  • At DOJ, served as lead trial counsel in a week-long trial in the first-ever trial conviction for conspiracy to commit securities price manipulation under Title 15 involving cryptocurrency and over $300 million in spoof orders and wash trades placed via an automated trading bot.

  • At DOJ, served as lead counsel in the first-ever criminal “cherry picking” scheme against a commodity-trading advisor and CEO of an investment firm involving cryptocurrency futures

Find Coverage of Scott’s Cryptocurrency Experience at DOJ

'Crypto' CEO faces 5 years in prison over cherry-picking scheme
Ex-Deutsche Bank investment banker gets 41 months prison in crypto fraud.
Headline announcing that hydrogen technology executives have been jailed for manipulating HYDRO prices, with further details about the incident in smaller text below.

FAQs in Cryptocurrency Fraud Investigations

  • Cryptocurrency fraud includes deceptive schemes involving digital assets.  The U.S. Department of Justice (DOJ) prosecutes these cases under federal statutes, such as wire fraud and conspiracy to commit wire fraud.  Additional charges also often include money laundering offenses.  Federal indictments involving cryptocurrency generally involve:

    • Initial Coin Offering (ICO) fraud

    • Pump-and-dump schemes

    • Crypto investment scams promising exaggerated rates of return on crypto assets

    • Fake NFT or DeFi platforms or protocols

    • Crypto Ponzi or pyramid schemes

    • Unregistered securities offerings

    • Market manipulation (spoofing, wash trading)

    • Money laundering through crypto mixers, tumblers or privacy coins

    • Social engineering hacks or impersonation scams in which an individual pretends to be a representative of a trusted company, such as an exchange or wallet company

  • Federal crypto investigations are typically handled by the FBI, SEC, IRS Criminal Investigation, CFTC, and Homeland Security Investigations (HSI). These agencies often coordinate in task forces focused on digital asset crimes and frequently collaborate with other law enforcement agencies, both domestic and international.  The DOJ then prosecutes these cases on the federal level.

  • Federal agencies rely on a mix of digital and traditional evidence, including:

    • Blockchain transaction records

    • Blockchain analysis to trace illicit transactions and identify funds connected to scams

    • Exchange account histories and KYC information (Coinbase, Binance, etc.)

    • IP logs and device data

    • Encrypted communications (Telegram, Signal, Signal, WhatsApp)

    • Email or social media promotions (X, Instagram, Reddit)

    • Bank transfers connected to centralized exchanges, such as Coinbase or Kraken

    • Transaction hash, as a unique identifier for verifying and tracking specific transactions

    • Statements from victims, whistleblowers or alleged co-conspirators

    • Smart contract and code audits

    • Other identifiers such as phone numbers, web domains, or communication platforms used by scammers

    This evidence is often obtained through subpoenas, search warrants, and forensic blockchain tracing.

  • Crypto-related prosecutions often involve:

    • Wire Fraud (18 U.S.C. § 1343)

    • Securities Fraud (15 U.S.C. § 78j, § 78ff)

    • Money Laundering (18 U.S.C. § 1956) — these charges often involve the transfer of fraud proceeds to disguise the ownership of the funds

    • Conspiracy (18 U.S.C. § § 371, 1349)

    • Operating an Unlicensed Money Services Business (18 U.S.C. § 1960)

  • Signs you may be under federal investigation include:

    • Receiving a subpoena

    • Being served with a search warrant

    • Receiving a target letter

    • Contact from federal agents

    • Being notified of a complaint or report filed against you

    If any of these occur, it’s critical to consult a cryptocurrency defense attorney immediately.

  • A target letter is a formal notice that you are the subject of a federal investigation and may soon be indicted by DOJ. In the context of crypto cases, this letter often involves allegations of fraud, market manipulation or money laundering.

  • Many states use a combination of (a) the State Attorney General (AG) Office (often the Investor Protection / Financial Enforcement or Consumer Protection division), (b) the State Securities Regulator (sometimes part of the AG or an independent Securities / Corporations Department), (c) the State Department of Financial Services or Banking & Finance Department (e.g., New York Department of Financial Services (NYDFS); Florida Office of Financial Regulation), and (d) State Consumer Protection or Money Transmitter Licensing units. Some states have a dedicated Cybercrime, High‑Tech Crime, or Digital Assets Task Force housed within the AG or state police.

    In New York, the Office of the Attorney General (OAG)—primarily the Investor Protection Bureau (IPB) and sometimes the Bureau of Internet and Technology (BIT) and Criminal Enforcement and Financial Crimes Bureau (CEFCB)—takes a leading role in policing crypto fraud targeting or affecting New York residents. The NY Department of Financial Services (NYDFS) handles prudential and licensing oversight (BitLicense / limited purpose trust charters), while OAG pursues enforcement actions, restitution, and injunctions.

    The NYAG leverages: (a) New York Executive Law § 63(12) (persistent fraud or illegality in business), (b) the Martin Act (General Business Law (GBL) Article 23-A) for securities / commodities fraud (broad investigative and anti‑fraud powers without needing to prove scienter or reliance), (c) GBL §§ 349–350 (deceptive acts and false advertising), and (d) referral / coordination for criminal statutes (larceny, scheme to defraud, money laundering) where appropriate.

  • Key differences:

    • Jurisdictional Scope: States focus on conduct impacting their residents; federal agencies (DOJ, SEC, CFTC, IRS-CI, FBI, Homeland Security Investigations) pursue schemes with interstate or international reach or implicating federal statutes.

    • Legal Theories: States rely on state statutes and regulations, money transmitter statutes, UDAP provisions, and state anti‑fraud and securities or commodities codes.  Federal cases involve federal securities laws (Securities Act), Commodities Exchange Act, Bank Secrecy Act, wire/mail fraud, money laundering or sanctions statutes.

    • Remedies: State cases are generally civil in nature and emphasize restitution to local victims, disgorgement, civil penalties, licensing revocations, or state court injunctions.  Federal cases generally involve the risk of imprisonment and more robust asset forfeiture.

    • Process Speed: State administrative orders and emergency cease‑and‑desists can be issued more quickly than a full federal civil or criminal action.

    • Evidentiary Threshold: Some state administrative actions use “preponderance” or “public interest” standards.  Federal criminal cases require proof “beyond a reasonable doubt.”

    • Resource Depth: Federal agencies typically have broader forensics and international MLAT channels; states compensate with targeted focus and faster local victim interviews.

  • Yes. Federal agencies can seize crypto held in wallets, exchanges, or cold storage devices if they have sufficient proof that the assets are directly linked to criminal activity. Seizure of cryptocurrency is common in fraud and money laundering investigations involving digital currencies. However, due to the nature of cryptocurrency, recovery of stolen or misappropriated crypto assets is often difficult.

  • Promoting a crypto token, exchange, or NFT project on a website can lead to criminal or civil liability—especially if the promotion is misleading, involves undisclosed financial terms, or involves unregistered securities. The SEC has increasingly targeted influencers and marketers for these activities.  Prosecutors also target developers, marketers, exchange operators, and promoters who prosecutors believe participated in or benefitted from a fraudulent scheme.

  • Potential defenses include:

    • Lack of fraudulent intent

    • Acting in good faith

    • Insufficient evidence as to an individual’s involvement in the alleged fraudulent activity and knowledge of it

    • Disputing whether the asset is a security or commodity

    • Procedural violations in how evidence was obtained

    Every case is different, and a defense should be built based on a close analysis of the facts and applicable law.  A crypto defense attorney can do just that.

  • Federal cryptocurrency fraud cases are complex and fast-moving. A knowledgeable attorney can intervene early, challenge the government's evidence, protect your digital assets, and defend you at trial if necessary. If you are under investigation or charged with a cryptocurrency-related offense, experienced legal representation is essential.