Man Charged with Laundering Crypto from Kraken Account Under Forfeiture Order

United States prosecutors have charged a man serving a federal prison sentence over the alleged removal and laundering of about $290,000 in crypto assets held in a Kraken account subject to a forfeiture order.

The Department of Justice said on Thursday that Rossen Iossifov, a Bulgarian national, conspired in January 2024 to withdraw and transfer crypto that a federal court had ordered forfeited following his 2021 conviction. Prosecutors allege that the assets were moved through illicit mixing services and crypto exchanges before the US could take possession.

The case shows how attempts to move crypto after a forfeiture order can trigger fresh criminal charges, even after the underlying conviction.

The US Attorney’s Office for the Eastern District of Kentucky said the cryptocurrency was held in an account registered to Iossifov at Kraken and had been restrained during the investigation. The DOJ announcement did not say how the account was accessed or whether the funds were recovered.

Crypto laundering draws wider enforcement scrutiny

Iossifov was previously convicted of racketeering conspiracy and money laundering conspiracy for his role in an online auction fraud network that victimized at least 900 Americans.

Prosecutors said Iossifov owned and operated a crypto exchange called RG Coins, which converted criminal proceeds into crypto and cash for the network. Earlier evidence showed that he laundered nearly $5 million in crypto in less than three years.

The court ordered Iossifov to pay over $2.6 million in restitution and forfeit crypto assets. He is now charged with removing property to prevent seizure, aiding and abetting and conspiracy to commit money laundering. The charges carry a maximum penalty of 25 years if convicted.

An indictment is an allegation, and Iossifov is presumed innocent unless proven guilty.

Related: US DOJ sentences man to 70 months in prison for role in $263M scam group

The charges come as authorities intensify scrutiny of crypto infrastructure used to obscure illicit flows. On Thursday, Interpol said that a wallet tied to a suspected romance-scam money launderer processed over $122 million in 10 months, using cross-chain swaps to move proceeds from online fraud.

The investigation was part of a broader operation involving 97 countries and territories. The campaign led to 5,811 arrests and the interception of $293 million in assets tied to fraud and money laundering.