Cryptocurrency Fraud Defense &
Crypto Money Laundering Defense

Act immediately. Retain a cryptocurrency fraud defense attorney before you speak with anyone.

Federal crypto investigations frequently begin with a grand jury subpoena, a target letter, a search warrant, agent contact from the FBI or IRS-CI, or the seizure of digital assets. Multi-agency teams conduct these investigations. DOJ's Criminal Division, U.S. Attorney's Offices, the FBI, IRS-CI, HSI, and the Secret Service often work together to build and charge cryptocurrency fraud and money laundering cases. The SEC or CFTC may pursue parallel civil actions based on the underlying fraudulent conduct.

What you say and produce in the early stages shapes the entire case. An experienced defense attorney will communicate with the government on your behalf, preserve your access to seized assets, manage interactions with investigators, and develop a defense strategy before charging decisions are made. The DOJ Justice Manual governs how federal prosecutors make these critical charging decisions.

Scott Armstrong supervised and led the nation's most significant cryptocurrency fraud investigations as a senior prosecutor at DOJ's Fraud Section. Drew Bradylyons led cryptocurrency and financial crimes prosecutions as Chief of EDVA's Financial Crimes Unit. Together, they bring that firsthand prosecutorial experience to defend individuals at every stage of a federal crypto investigation, case, and at trial.

A grand jury subpoena in a cryptocurrency investigation means a federal grand jury is gathering evidence related to potential criminal charges. The subpoena may seek documents including wallet records, exchange account data, communications, and financial records. It may also compel testimony before a grand jury.

Receiving a subpoena does not necessarily mean you are a target. You may be a subject or a witness. The distinction matters. The DOJ Justice Manual defines these categories and the protections that attach to each.

A top defense attorney with experience in these cases can assess your status, negotiate the scope of document production, assert applicable privileges, prepare you for any grand jury appearance, and develop a strategy to avoid or challenge an indictment. Scott Armstrong and Drew Bradylyons have handled grand jury proceedings in cryptocurrency cases from both sides.

Scott Armstrong and Drew Bradylyons defend individuals nationwide across the full range of federal cryptocurrency fraud and crypto money laundering investigations and cases. These cases include crypto Ponzi schemes and investment fraud, NFT fraud and rug pulls, pig butchering and romance-based or affiliation crypto schemes, crypto market manipulation (including spoofing, wash trading, and pump-and-dump schemes), cryptocurrency money laundering (including the use of tumblers, mixers, privacy coins, and chain-hopping), ransomware and cyber extortion, SIM swap fraud and social engineering exploits or hacks, unregistered securities offerings involving digital assets, and insider trading involving cryptocurrency.

Scott Armstrong and Drew Bradylyons defend crypto exchange executives, token founders, DeFi developers, crypto traders, fund managers, and other individuals facing federal investigation or indictment.

The firm's crypto fraud defense practice is built on direct federal trial experience involving crypto fraud cases at DOJ's Fraud Section and the U.S. Attorney's Office for EDVA. Scott Armstrong tried the first-ever cryptocurrency manipulation case under Title 15 in the Southern District of Florida involving over $300 million in alleged spoof orders and wash trades.

The penalties are severe. The specific charges and statutory maximums depend on the alleged conduct.

Wire fraud (18 U.S.C. § 1343), which is the most common charge in crypto fraud cases, carries a maximum of 20 years imprisonment per count. Money laundering (18 U.S.C. §§ 1956–1957) carries up to 20 years per count. Conspiracy (18 U.S.C. § 371) carries up to 5 years. Conspiracy under Section 1349 carries up to 20 years of imprisonment.

Beyond imprisonment, defendants face substantial fines, restitution orders, and forfeiture of cryptocurrency holdings and other assets. Federal prosecutors regularly seek forfeiture of digital wallets, exchange accounts, and proceeds of alleged fraud. Scott Armstrong and Drew Bradylyons defend individuals facing these charges in federal courts nationwide.

Wire fraud under 18 U.S.C. § 1343 requires proof that the defendant acted with specific intent to defraud. That is a high bar. The government must prove several elements beyond a reasonable doubt.

Most critically, the government must show that the defendant knowingly devised or participated in a scheme to defraud and acted with the intent to defraud.

Intent to defraud means the defendant acted with the purpose of deceiving someone to obtain money or property. Recklessness is not enough. Negligence is not enough. The government must prove the defendant knew the scheme was fraudulent and intended to deceive.

Good faith is a complete defense. A defendant who genuinely believed the representations were true, or who genuinely believed the business model was legitimate, lacks the required intent.

Federal prosecutors rarely have direct evidence of a defendant's state of mind. They prove intent through circumstantial evidence. The most common categories include false statements made to investors, counterparties, or exchanges. Concealment of material information about the project, token, or use of funds. The use of fake identities, pseudonymous wallets, or shell entities to obscure ownership. The timing and pattern of fund movements after receipt, particularly rapid conversion to fiat currency or transfers to personal accounts. Destruction or alteration of communications. And the gap between public representations and internal knowledge, often shown through emails, text messages, and Slack, WhatsApp, or Telegram communications.

In cryptocurrency cases, prosecutors frequently rely on blockchain analytics to reconstruct the flow of funds and demonstrate that the defendant moved investor assets in ways inconsistent with stated purposes. Prosecutors also use cooperating witnesses who testify about what the defendant said privately versus publicly. These cooperators are often susceptible to cross-examination on bias and credibility issues.

Scott Armstrong and Drew Bradylyons defend individuals facing a wire fraud charge by attacking the government's proof on these essential elements. The firm has collectively tried 25 federal jury trials, including cases where the government's theory of intent depended entirely on circumstantial evidence. They attack the government's inferences, present the defendant's good faith basis for conduct, and retain experts where the technical complexity of blockchain transactions undercuts the government's narrative of deception.

Materiality is an essential element of wire fraud under 18 U.S.C. § 1343. The Supreme Court confirmed this in Neder v. United States, 527 U.S. 1 (1999). Without materiality, there is no fraud. The government must prove that the defendant's false statements or omissions were material to the victim's decision. This element is required regardless of the type of cryptocurrency scheme alleged.

The legal standard is objective. A statement is material if it has a natural tendency to influence, or is capable of influencing, a person's decision. The government does not need to prove that any specific victim was actually deceived. It does not need to prove actual reliance. It is sufficient that the misrepresentation was the type of statement that a reasonable person would consider important when making a financial decision. See Neder, 527 U.S. at 16; United States v. Gaudin, 515 U.S. 506 (1995).

In cryptocurrency fraud cases, the government typically alleges materiality as to several categories of false statements.

False statements about use of investor funds. A representation that investor capital will be used for platform development, trading operations, or liquidity when the funds are actually diverted to personal accounts or unrelated expenditures is material. The intended use of funds is central to any investment decision. Federal prosecutors trace blockchain transactions and bank records to show the divergence between stated use and actual use.

False statements about project development and technology. Token founders and DeFi developers frequently make representations about the status of product development, the functionality of smart contracts, the existence of partnerships, and the technical roadmap for a project. When those representations are false, the government argues they are material because investors relied on them to assess the project's viability. Prosecutors introduce marketing materials, white papers, website content, social media posts, and pitch decks to establish what was represented. They then present testimony and documentary evidence showing the actual state of development.

False statements about risk. The omission or concealment of material risks is actionable. If a project faces insolvency, a token has no liquidity, a protocol has an unpatched vulnerability, or funds are being misappropriated, the failure to disclose those facts to investors is material. Prosecutors argue that investors would not have committed funds if they had known the true risk profile.

False statements about identity and credentials. Misrepresentations about who is behind a project, their qualifications, or their track record are material. The background and credibility of the people managing investor funds is a factor any reasonable investor would consider. Prosecutors introduce KYC records, corporate filings, and public statements to establish false identities or fabricated credentials.

False trading volume and market data. In market manipulation cases, false representations about trading volume, liquidity, or market activity are material. Wash trading that inflates volume creates a false impression of market interest. Spoofed orders that create the appearance of supply or demand mislead other market participants. Prosecutors use exchange data, order book records, and blockchain analytics to demonstrate that the reported market activity was fabricated.

The government proves materiality primarily through the statements themselves and the context in which they were made. Prosecutors present the false statements to the jury and argue that no reasonable person would consider them unimportant. They introduce victim testimony to show the type of information investors considered. They present expert testimony on industry standards and investor expectations. In securities fraud cases under 18 U.S.C. § 1348, prosecutors may also rely on the SEC's disclosure framework to argue that the information withheld fell within recognized categories of material information.

Materiality is a jury question. That matters. The defense can contest materiality at trial by demonstrating that the alleged misstatements were opinions, forward-looking projections, or puffery rather than actionable statements of fact. Statements of belief, aspiration, or general optimism about a project's future are not material misrepresentations. The line between a false statement of fact and a nonactionable statement of opinion is a recurring issue in crypto fraud cases. Many representations in the crypto industry involve predictions about technology, market adoption, and token value that are inherently speculative.

The defense also challenges materiality by showing that the information was already publicly available, that the victim had access to accurate information and chose to disregard it, or that the alleged misstatement was too vague or too peripheral to influence a reasonable person's decision. In cases involving sophisticated counterparties or institutional investors, the defense argues that the victims conducted independent due diligence and did not rely on the defendant's representations.

Scott Armstrong and Drew Bradylyons have tried federal fraud cases where materiality was the decisive issue at trial. They challenge the government's materiality theory through pretrial motions, cross-examination of victim witnesses, and presentation of defense experts who testify about the speculative nature of the crypto market and the distinction between fraud and failed business ventures.

Federal cryptocurrency investigations are multi-agency operations. The FBI, IRS Criminal Investigation, Homeland Security Investigations, the Secret Service, and the DOJ Fraud Section each bring distinct capabilities. They use a combination of legal process, blockchain analytics, financial forensics, cooperating witnesses, and electronic surveillance to build cases. Understanding each tool is critical to mounting an effective defense.

Grand jury subpoenas. The grand jury subpoena is the government's primary evidence-gathering instrument. Under Federal Rule of Criminal Procedure 17, a grand jury subpoena compels the production of documents and testimony. In crypto cases, prosecutors issue subpoenas to centralized exchanges for account records, KYC documentation, IP logs, and transaction histories. DOJ subpoenas banks for wire transfer records, account statements, and suspicious activity reports. DOJ also subpoenas internet service providers for subscriber information and connection logs. Prosecutors also subpoena email providers, cloud storage companies, and social media platforms for communications and account data. A single crypto investigation may involve hundreds of subpoenas across dozens of entities.

Search warrants. When agents need to seize physical evidence or access protected digital content, they obtain search warrants under the Fourth Amendment and Federal Rule of Criminal Procedure 41. In cryptocurrency cases, search warrants authorize the seizure of phones, laptops, hardware wallets, servers, and paper records including handwritten seed phrases. Agents also obtain warrants to search email accounts, cloud storage, and messaging platform data. The affidavit supporting a search warrant must establish probable cause. That affidavit is a critical document. It reveals the government's theory, the scope of the investigation, and the evidence already in the government's possession.

Blockchain analytics. Federal agencies use commercial blockchain tracing software to analyze on-chain data. These tools map transaction flows, cluster related wallet addresses, flag interactions with sanctioned entities or known illicit services, and trace funds across multiple blockchains. The FBI has an in-house Virtual Asset Exploitation Unit. IRS-CI has a Cyber Crimes Unit with dedicated blockchain analysts. Agencies also contract with private firms including Chainalysis, TRM Labs, and Elliptic. The government presents blockchain evidence at trial through summary exhibits under Federal Rule of Evidence 1006 and expert testimony under Rule 702.

Financial forensics. IRS-CI leads the financial tracing component of most large-scale crypto cases. Agents reconstruct the flow of funds between crypto wallets, exchanges, bank accounts, and shell entities. They analyze tax returns for unreported income from crypto activity. They trace fiat on-ramps and off-ramps to identify who converted cryptocurrency to cash and where that cash went. They examine real estate purchases, luxury goods transactions, and wire transfers to establish how fraud proceeds were spent or laundered. This analysis forms the basis for both the substantive fraud charges and any money laundering counts under 18 U.S.C. §§ 1956 and 1957.

Cooperating witnesses. The government recruits cooperating witnesses in virtually every significant crypto fraud investigation. These are co-conspirators, employees, business partners, or associates who agree to provide testimony and assistance in exchange for favorable treatment at sentencing. Cooperators provide inside knowledge of the scheme, identify who controlled wallets and made decisions, explain communications in context, and sometimes wear recording devices to capture conversations with targets. Cooperator testimony is often the most damaging evidence at trial. It is also the most vulnerable to cross-examination.

Electronic communications. The evidentiary backbone of any crypto fraud or crypto money laundering case is electronic communications. Prosecutors obtain emails, text messages, Slack messages, Telegram chats, Discord logs, and Signal messages through subpoenas, search warrants, and device forensics. Encrypted messaging platforms present challenges for collection, but the government frequently obtains message content through seizure of the device itself rather than the platform.

Metadata alone can be significant. Prosecutors use the timing, frequency, and recipients of communications to corroborate the existence and scope of a conspiracy even when message content is unavailable.

Undercover operations. In some cases, federal agents conduct undercover operations. Agents may pose as investors, money launderers, or co-conspirators to gather evidence directly. The FBI and HSI have used undercover techniques in crypto cases involving darknet markets, money laundering services, and investment fraud schemes.

Mutual legal assistance treaties. Cryptocurrency cases frequently cross international borders. The government obtains evidence from foreign jurisdictions through mutual legal assistance treaties (MLATs) and informal law enforcement cooperation. This includes exchange records from offshore platforms, foreign bank records, and communications data held by companies outside the United States.

Every one of these tools has legal constraints. Subpoenas can be challenged for overbreadth. Search warrants can be attacked for lack of probable cause or deficient particularity. Blockchain analytics depend on assumptions that can be contested by defense experts. Cooperator testimony is subject to aggressive cross-examination on bias and motive. Electronic evidence raises authentication and chain-of-custody issues. Undercover operations implicate entrapment defenses.

Scott Armstrong and Drew Bradylyons built federal crypto fraud cases using every one of these tools as prosecutors at the DOJ Fraud Section and the U.S. Attorney's Office for the Eastern District of Virginia. They now use that experience to challenge the government's evidence collection at every stage. They file motions to suppress unlawfully obtained evidence, retain independent blockchain analysts, cross-examine cooperating witnesses, and contest the admissibility and reliability of the government's financial tracing and analytics evidence.

For its data evidence, federal agencies investigate crypto money laundering using blockchain analytics and on-chain tracing tools. The FBI, IRS-CI, HSI, and FinCEN use commercial tracing software to analyze transaction patterns, identify wallet clusters, attribute wallet ownership to certain individuals, trace funds across blockchains, and de-anonymize users through centralized exchange records and KYC data.

For its other evidence, federal agencies identify and interview victims, conduct search warrants to collect ephemeral messages, obtain bank records and other information from financial institutions, and attempt to obtain the cooperation of any individuals involved in the investigated conduct.

The government targets individuals who allegedly use tumblers and mixers, chain-hopping between blockchains using bridges, privacy coins, DeFi protocols, and unregistered or offshore exchanges to conceal the source, movement, or ownership of cryptocurrency derived from illegal activity. Money laundering charges under 18 U.S.C. §§ 1956 and 1957 carry up to 20 years imprisonment per count.

A defense attorney who understands both blockchain technology and federal prosecution strategy can challenge the government's tracing methodology, the attribution of wallets to specific individuals, assumptions in a tracing methodology, and the government's theory of concealment.

Scott Armstrong built these cases as a DOJ prosecutor. Drew Bradylyons prosecuted complex money laundering cases as Chief of the Financial Crimes Unit at the U.S. Attorney's Office for the Eastern District of Virginia. Scott and Drew now use that experience to identify and exploit any weaknesses in the government's blockchain evidence.

Federal investigators use multiple methods to attribute cryptocurrency wallets to specific individuals. Wallet attribution is often the central battleground in a crypto fraud or money laundering case. The government does not need to recover your private key. Circumstantial evidence connecting you to a wallet address is sufficient.

The most direct method is exchange records. Centralized exchanges that comply with Bank Secrecy Act obligations collect know-your-customer (KYC) data from users. That data includes government-issued identification, photographs, addresses, and bank account information. When a defendant deposits cryptocurrency into or withdraws cryptocurrency from an exchange, the exchange's internal records link the external wallet address to a verified identity. Federal agents obtain these records through grand jury subpoenas, search warrants, and mutual legal assistance treaties for offshore exchanges.

Blockchain analytics is the second major tool. The FBI, IRS-CI, and HSI use commercial software from firms like Chainalysis, TRM Labs, and Elliptic to cluster wallet addresses based on transaction patterns. These tools identify wallets that are likely controlled by the same entity based on common inputs, change addresses, and timing patterns. The clustering algorithms do not identify the person behind the wallet on their own. But once investigators link one address in a cluster to a known identity through exchange data or other evidence, every address in the cluster becomes attributable.

IP address data provides another avenue. Exchanges log the IP addresses used to access accounts. Blockchain nodes may record the IP address of the first node to broadcast a transaction. Investigators obtain IP records from exchanges and internet service providers through legal process and use them to tie wallet activity to a specific device or location.

Device forensics is powerful evidence. When agents execute a search warrant on a phone, laptop, or hardware wallet, agents look for installed wallet applications, saved seed phrases or private keys, transaction histories, screenshots of wallet balances, and browser histories showing access to DeFi platforms or exchanges. A seed phrase recovered from a defendant's device is direct evidence of wallet control.

Cooperating witnesses also play a significant role. Co-conspirators, business partners, and employees who agree to cooperate with the government testify about who controlled specific wallets, who directed transfers, and who held the private keys. This testimony, combined with corroborating blockchain evidence, is often critical at trial.

Finally, investigators trace fiat on-ramps and off-ramps. Bank records showing wire transfers to or from an exchange, peer-to-peer cash transactions, and ATM withdrawals linked to crypto debit cards all connect the defendant to specific wallet activity. IRS-CI specializes in this financial tracing.

Each of these attribution methods has vulnerabilities. Exchange KYC records can be falsified. Blockchain clustering algorithms produce false positives. IP address evidence can reflect VPN usage or shared networks. Device forensics depend on the integrity of the search and seizure. Cooperator testimony carries inherent credibility problems. Scott Armstrong and Drew Bradylyons challenge the government's wallet attribution evidence at every link in the chain. They retain blockchain analytics experts, challenge the reliability of clustering methodologies, and cross-examine cooperating witnesses who claim knowledge of wallet ownership.

Crypto market manipulation encompasses trading practices that DOJ and federal regulators allege are designed to artificially influence the price or trading volume of a digital asset.

Spoofing involves placing large orders with the intent to cancel before execution. Wash trading involves simultaneously buying and selling the same asset without any change in beneficial ownership to inflate artificial volume of a token or digital asset. Layering involves placing multiple non-bona fide orders at different price levels, similar to spoofing. Pump-and-dump schemes involve artificially inflating a token's price through false promotion before selling at the inflated price. In crypto parlance, a pump-and-dump scheme is a "rug pull."

DOJ's Criminal Division and U.S. Attorney's Offices prosecute market manipulation under wire fraud, commodities fraud, and securities fraud statutes. The SEC and CFTC bring parallel civil enforcement actions. Federal law enforcement is still working out in real time the classification (i.e., security or commodity) for many digital assets.

Scott Armstrong tried the first-ever cryptocurrency manipulation case under Title 15 in the Southern District of Florida. That case involved over $300 million in alleged spoof orders and wash trades. That direct trial experience is foundational to how the firm defends individuals accused of crypto market manipulation.

Yes. Federal prosecutors have brought charges against DeFi developers and operators under existing fraud and money laundering statutes.

DOJ has taken the position that individuals who develop or operate decentralized protocols face criminal liability when those protocols are allegedly used to facilitate fraud, market manipulation, or money laundering. This applies even where the protocol operates through automated smart contracts. Charges have included wire fraud, conspiracy, money laundering, and operating an unlicensed money transmitting business (18 U.S.C. § 1960). The SEC has also asserted that many DeFi platforms offer unregistered securities.

A DeFi fraud defense lawyer must understand the underlying technology. That means understanding the ins and outs of smart contract mechanics, liquidity pools, and automated market makers. The lawyer must also understand the evolving legal theories prosecutors apply to decentralized systems and whether those theories are accepted by courts. Scott Armstrong combines deep knowledge of blockchain technology with his experience as a senior DOJ prosecutor to defend DeFi protocol developers and operators facing federal investigation and charges.

A DOJ criminal investigation can result in an indictment carrying imprisonment, criminal fines, restitution, and asset forfeiture. The government must prove guilt beyond a reasonable doubt.

An SEC or CFTC civil enforcement action results in civil penalties, disgorgement of profits, injunctions, and industry bars. It does not carry incarceration. The standard of proof is preponderance of the evidence.

Crypto cases frequently involve parallel investigations. DOJ's Criminal Division or the local U.S. Attorney's Office pursues criminal charges while the SEC or CFTC simultaneously brings civil claims based on the same conduct. This is one of the most dangerous dynamics in crypto enforcement. Statements, documents, or concessions made in the civil proceeding can be used in the criminal case.

Drew Bradylyons and Scott Armstrong respectively coordinated parallel criminal and civil enforcement matters as Chief of EDVA's Financial Crimes Unit and as an Assistant Chief in DOJ's Fraud Section. Drew and Scott understand firsthand how DOJ and the regulatory agencies share information, align strategy, and pursue individuals in investigations.

Scott Armstrong and Drew Bradylyons defend individuals nationwide in federal courts in cryptocurrency fraud and money laundering investigations and prosecutions.

Federal cryptocurrency cases are not confined to a single jurisdiction. DOJ's Criminal Division in Washington, D.C. coordinates national-level prosecutions through the Fraud Section and the Money Laundering and Asset Recovery Section (MLARS). U.S. Attorney's Offices bring cases in their respective districts. The Health Care Fraud Strike Force model has been adapted for crypto enforcement, with concentrated prosecution activity in specific districts. Venue in a federal crypto case can be established in any district where a wire communication was sent or received, which means prosecutors have broad discretion in choosing where to bring charges.

The districts that generate the highest volume of federal cryptocurrency prosecutions include the Southern District of New York, which houses DOJ's largest concentration of crypto prosecutors and has brought many of the most prominent digital asset cases in the country. The Southern District of Florida, where Scott Armstrong tried the first-ever cryptocurrency manipulation case under Title 15. The Eastern District of Virginia, where Drew Bradylyons served as Chief of the Financial Crimes Unit and led cryptocurrency and money laundering prosecutions. The Central District of California, the Northern District of California, and the Northern District of Illinois, each of which maintains active crypto fraud caseloads. The District of New Jersey, the Eastern District of New York, the Northern District of Texas, the District of Maryland, and the District of Columbia also bring significant crypto cases.

The firm obtains pro hac vice admission in any federal district where a client faces investigation or prosecution. Scott Armstrong and Drew Bradylyons have tried cases and handled investigations in federal courts across the country. Their experience is not limited to any single district or region.

Cryptocurrency investigations also involve regulatory enforcement actions that are not tied to a specific federal district. The SEC files civil enforcement actions in federal courts nationwide and conducts investigations through its headquarters in Washington, D.C. and its regional offices. The CFTC similarly brings enforcement actions in multiple jurisdictions. FinCEN pursues civil monetary penalty actions for Bank Secrecy Act violations involving virtual currency money transmission. OFAC enforces sanctions compliance obligations that apply to any person or entity within U.S. jurisdiction. The firm is positioned to represent clients before each of these agencies.

International dimensions add further complexity. Federal crypto cases frequently involve evidence, assets, and co-conspirators located outside the United States. The government obtains foreign evidence through mutual legal assistance treaties and informal law enforcement cooperation. Defendants may face parallel investigations by foreign authorities. The firm coordinates with foreign counsel where cross-border issues arise and advises clients on the interplay between U.S. federal proceedings and foreign regulatory or criminal investigations.

Scott Armstrong, Drew Bradylyons, and Andrea Savdie have over 25 years of combined DOJ experience and have participated in 25 federal jury trials. The firm's defense practice is built on the national scope of federal crypto enforcement. They defend clients wherever DOJ, the SEC, the CFTC, or any other federal agency brings a cryptocurrency fraud or money laundering investigation or case.