Rosen Iossifov, owner of cryptocurrency exchange RGcoins, was convicted by a federal jury in Kentucky of two counts of conspiracy to commit racketeering and money laundering. The conviction came after a two-week trial where Iossifov was accused of orchestrating a sophisticated scheme to steal money from unsuspecting victims in America and then launder their funds using cryptocurrency.
The founder of the small-scale Bulgarian exchange, which was heavily focused on local Eastern European clients, caught the eye of the US investigators last year due to suspicions that he helped a Romanian money laundry gang.
Iossifov is expected to receive his sentence on January 12, 2021. He might face up to twenty years in prison, three years of supervised release and a fine of $250,000.
According to court documents, Iossifov and his co-conspirators victimized at least 900 Americans through phishing attacks between 2014 and 2015. They posted fake advertisements to online auction and sales websites, such as Craigslist and eBay, for high-cost goods that did not actually exist. The products sold during the auctions were never received by the buyers and the proceeds were misappropriated by a group of 14 Romanian citizens, who then used RGCoins to launder the stolen money by purchasing Bitcoin
However, RGCoins founder claims that he was not aware of the fact that the Romanians were involved in criminal activities and only used its service to launder their proceeds.
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Rosen Iossifov was arrested in Bulgaria in 2018 and was extradited to the United States in 2019 so that the case could be further investigated overseas where the trial took place.
However, the US authorities said he was aware of the aim of the transactions made by the Romanian fraudsters. While RGCoins had a limitation of 5 BTC for anonymous orders, Iossifov exchanged over $4.9 million worth of Bitcoin for just four other members of the criminal enterprise without implementing know-your-customer authentication procedures.
“According to court documents, once victims were convinced to send payment, the conspiracy participants engaged in a complicated money laundering scheme wherein domestic associates would accept victim funds, convert these funds to cryptocurrency, and transfer proceeds in the form of cryptocurrency to foreign-based money launderers,” US prosecutors said.
The RGCoins case was related to the earlier arrest of Vlad Nistor, CEO of Coinflux, a top crypto exchange operating in Romania. Furthermore, he was handed over to the US authorities after evidence presented to a local court that connected him to the same group of 14 named Romanians.
Nistor’s and Iossifov’s arrest came amidst a series of US operations against crypto criminals in Europe, including Alexander Vinnik, an alleged Russian hacker accused of laundering $4 billion of criminal proceeds through BTC-e.