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DOJ says seized crypto moved to unknown wallets during forfeiture fight
The DOJ alleges a prison sentence did not prevent Rossen Iossifov from routing about $290,000 in January 2024 before the government secured practical control of the wallet.
The U.S. Justice Department says a prisoner serving a nine-year sentence for money laundering conspired to move about $290,000 in cryptocurrency in January 2024 after a court ordered the assets forfeited to the United States. The DOJ argues the case shows a potential gap between a forfeiture order and the government obtaining practical control of crypto that can still be transferred.
According to DOJ statements highlighted by CryptoSlate, Rossen Iossifov allegedly routed the cryptocurrency through multiple exchanges and illicit mixing services, preventing the government from obtaining possession. Iossifov, a Bulgaria-based crypto exchange owner, was convicted of RICO conspiracy and conspiracy to commit money laundering tied to Romanian scammers who allegedly used fake vehicle and goods listings to take payments from at least 900 Americans and convert proceeds into crypto.
The DOJ points to its Asset Forfeiture Policy Manual, which says that once agencies obtain authority to seize cryptocurrency, they should quickly move assets to an unhosted, agency-controlled wallet, because others may hold copies of private keys. It adds agencies should keep crypto in cold storage until transferring control to a wallet controlled by the U.S. Marshals Service or its contractor, noting that freezing a court order is not the same as changing usable key and credential control.
Court documents referenced by CryptoSlate say Iossifov received a 121-month sentence in January 2021, reduced to 111 months in May 2024, and was ordered to pay $2.64 million in restitution. The filings do not specify where the crypto was held, who had keys, or the exact failure point in securing it, while a new indictment charges removal of property to prevent seizure and conspiracy to commit money laundering with a combined maximum of 25 years if convicted.