Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Robert Sica, Special Agent-in-Charge of the New York Field Office of the United States Secret Service, announced yesterday the unsealing of criminal complaints charging Anthony R Murgio and Yuri Lebedev with running an unlicensed Internet Bitcoin exchange, which they operated through a phony front-company and, at times, a federal credit union that Mr Murgio acquired for purposes of the scheme.
The defendants were arrested today at their residences in Florida, and are expected to be presented today in federal court in the Middle District of Florida.
According to the allegations contained in the criminal complaints unsealed today in Manhattan federal court:
Since at least late 2013, Mssrs Murgio and Lebedev, along with their co-conspirators have knowingly operated Coin.mx, a Bitcoin exchange service, in violation of federal anti-money laundering (“AML”) laws and regulations, including those requiring money services businesses like Coin.mx to meet registration and reporting requirements set forth by the United States Treasury Department.
Through Coin.mx, MURGIO, LEBEDEV, and their co-conspirators enabled their customers to exchange cash for Bitcoins, charging a fee for their service. In doing so, they knowingly exchanged cash for people whom they believed may be engaging in criminal activity.
Mr. Murgio and his co-conspirators have also knowingly exchanged cash for Bitcoins for victims of “ransomware” attacks, that is, cyberattacks in which criminals (here, distributors of the ransomware known as “Cryptowall”) electronically block access to a victim’s computer system until a sum of “ransom” money, typically in Bitcoins, is paid to them.
In doing so, Mr. Murgio and his co-conspirators knowingly enabled the criminals responsible for those attacks to receive the proceeds of their crimes, yet, in violation of federal anti-money laundering laws, MURGIO never filed any suspicious activity reports regarding any of the transactions.
In total, between approximately October 2013 and January 2015, Coin.mx exchanged at least $1.8 million for Bitcoins on behalf of tens of thousands of customers.
Transferring funds to Cyprus, Hong Kong and Eastern Europe
In addition, in the course of the scheme, Mr. Murgio transferred hundreds of thousands of dollars to bank accounts in Cyprus, Hong Kong, and Eastern Europe, and received hundreds of thousands of dollars from bank accounts in Cyprus and the British Virgin Islands, in furtherance of the operations of his unlawful business.
Mssrs. Murgio, Lebedev and their co-conspirators engaged in substantial efforts to evade detection of their scheme by operating through a phony front-company, “Collectables Club,” and maintaining a corresponding phony “Collectables Club” website. In doing so, they sought to trick the major financial institutions through which they operated into believing that their unlawful Bitcoin exchange business was simply a members-only association of individuals who discussed, bought, and sold collectable items, such as sports memorabilia.
More recently, in an effort to evade potential scrutiny from these institutions and others, Mr. Murgio obtained beneficial control of a New Jersey-based federal credit union (the “Credit Union”) which served primarily low-income local residents.
Mr. Murgio then installed Mr. Lebedev and others on the Credit Union’s Board of Directors, and transferred Coin.mx’s banking operations to the Credit Union, which Mssrs. Murgio, Lebedev and other co-conspirators operated, at least until early 2015, as a captive bank for their unlawful business. At that time, after discovering that substantial payment processing activity was being conducted through the Credit Union, the National Credit Union Administration forced the Credit Union to cease engaging in such activity, and Mr. Murgio thereafter found new, overseas payment processing channels for his unlawful business.
Background
31 year old Mr. Murgio of Tampa, Florida, and 37 year old Mr. Lebedev of Jacksonville, Florida, are each charged with one count of conspiracy to operate an unlicensed money transmitting business, and one count of operating an unlicensed money transmitting business, each of which carries a maximum sentence of five years in prison.
Mr. Murgio is also charged with one count of money laundering, which carries a maximum sentence of 20 years in prison and one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years in prison.The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the investigative work of the FBI and the Secret Service. He also thanked the National Credit Union Administration for their assistance with the investigation.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicole Friedlander, Sarah Lai, and Eun Young Choi are in charge of the prosecution. Assistant U.S. Attorney Alexander Wilson of the Office’s Money Laundering and Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.
The charges contained in the criminal complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
As the introductory phrase signifies, the entirety of the text of the complaints, and the description of the complaints set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
For the official notice from the FBI, click here. Prosecution notice courtesy of CoinDesk