DOJ says forfeited crypto was moved before it took control

A new US Justice Department case shows a weak point in crypto seizures: a court can order forfeiture, but the assets may still move if the government does not control the wallet. Prosecutors say about $290,000 in cryptocurrency linked to convicted money launderer Rossen Iossifov was transferred in January 2024, even though the funds had already been ordered forfeited to the United States.

According to the DOJ, the crypto was routed through multiple exchanges and mixing services, which blocked the government from taking possession. Iossifov is serving a prison sentence tied to a fraud scheme in which Romanian scammers used fake listings for cars and other expensive goods on Craigslist and eBay, took payments from at least 900 Americans, and converted the proceeds into crypto. He owned the Bulgaria-based exchange RG Coins.

The filings leave major questions open. The DOJ did not say where the crypto was held, who controlled the keys, which platforms were used, or how the transfers were carried out while Iossifov was in prison.

DOJ policy says seized crypto should be moved at once to an agency-controlled wallet because others may still hold working copies of the private key. The new indictment charges Iossifov with removal of property to prevent seizure and conspiracy to commit money laundering, with a combined maximum sentence of 25 years if convicted.