The owner of a cryptocurrency exchange used to launder millions of dollars gained from fake online auctions has been jailed for 10 years.
Rossen Iossifov, the Bulgarian owner of RG Coins, was sentenced for his role in laundering criminal proceeds obtained from defrauded victims that were converted and funneled through cryptocurrency exchanges in order to hide the criminal sources of the dirty cash.
The 53-year-old “intentionally engaged in business practices designed to both assist fraudsters in laundering the proceeds of their fraud and to shield himself from criminal liability,” the US Department of Justice (DoJ) said on Tuesday.
The multimillion-dollar criminal scheme began with criminals based in Romania who operated a “large-scale” online auction scam that roped in at least 900 US citizens. Websites including Craigslist and eBay were used to list high-ticket items — usually vehicles — that did not exist.
Once a victim won an auction and paid for their goods, these funds would then be converted into cryptocurrency and sent onwards to money launderers.
According to US prosecutors, Iossifov was one of the money launderers who facilitated the “final steps” in the scheme.
The DoJ says that Iossifov’s cryptocurrency exchange, located in Sofia, Bulgaria, catered to at least five clients who belonged to the Alexandria Online Auction Fraud (AOAF) network and he would provide “favorable” exchange rates specifically to clients in the criminal ring.
In addition, the operator did not require any ID or proof relating to the source of the stolen funds, thereby removing that potential tie — and evidence — of criminal activity running through his cryptocurrency exchange.
Prosecutors estimate that close to $5 million in cryptocurrency was laundered on behalf of four of the AOAF clients in less than three years. When converted into fiat currency, this represents close to $7 million stolen from US citizens alone.
Money laundering requires a cut due to risk, and for his efforts, the owner of RG Coins earned himself over $184,000.
However, AOAF has now been picked apart through cooperative investigations conducted by law enforcement agencies across the US, Romania, and Bulgaria.
Following a two-week trial, US District Court Judge Robert Weir sentenced Iossifov to 10 years in prison for conspiracy to commit a Racketeer Influenced and Corrupt Organizations Act (RICO) offense and conspiracy to commit money laundering. At least 8.5 years of the sentence must be served.
In total, 17 AOAF members — including the Bulgarian national — have been convicted, with seven others also now serving prison sentences. Three members are on the run.