Crypto Exchange Owner Laundered $1.8M In Fake Auctions Scheme

The U.S. Department of Justice (DoJ) has received two more guilty pleas from individuals involved in a fraudulent scheme fueled by cryptocurrency, the DoJ said in a press release on 11 June.

According to the announcement, 15 people have pleaded guilty so far for their involvement in a racketeering ring and cyber fraud scheme, which have defrauded millions of dollars from U.S. citizens, with four of the pleas taking place in the last 24 days. On 11 June the DoJ received the most recent pleas, for one count of RICO conspiracy each, from Romanian nationals Liviu-Sorin Nedelcu and Bogdan-Stefan Popescu, the latter being the ringleader of the operation and owner of a car wash in Bucharest.

Per the release, in 2013 the syndicate started posting fake ads on sites such as eBay and Craigslist, for goods that did not exist. Most often, the group used stolen identities and pretended to be U.S. military personnel looking to sell their goods before a tour of duty. Upon receiving payment, the group would convert the funds into cryptocurrency, usually Bitcoin, and launder it through a Romanian cryptocurrency platform CoinFlux.

Assistant Director Michael D’Ambrosio, U.S. Secret Service, Office of Investigations said in the press release:

“Through the use of digital currencies and trans-border organizational strategies, this criminal syndicate believed they were beyond the reach of law enforcement. However, as this successful investigation clearly illustrates, with sustained, international cooperation, we can effectively hold cyber criminals accountable for their actions, no matter where they reside.”

The 33 year old Vlad-Calin Nistor, founder and operator of CoinFlux, pleaded guilty to one count of RICO conspiracy back in May 2020. Under the orders of Popescu, Nistor would use CoinFlux to exchange the illicit funds out of bitcoin and into the local currency, and then send it to selected bank accounts, usually created under the names of Popescu’s employees and family members. According to the DoJ, Nistor laundered over $1.8 million worth of Bitcoin, despite “knowing that the Bitcoin represented the proceeds of illegal activity”.

Nistor was arrested in Romania back in December 2018 through an international warrant on charges of money laundering, fraud, and involvement in organized crime. Less than a month later, he was extradited to the United States, with his lawyers arguing to the Romania’s Court of Appeal that he had no way of knowing that the Bitcoin came from criminal proceeds. Five days after his arrest, CoinFlux’s Twitter account said the exchange is in “the unpleasant situation to temporarily stop any digital currency exchanges”.