Prison inmate charged over $290,000 in forfeited crypto transfers

A convicted crypto money launderer already in federal prison is facing new charges tied to $290,000 in digital assets the government says had been ordered forfeited. For everyday crypto investors, the case is a reminder that blockchain assets can still sit at the center of old-school court fights over seizure, restitution and fraud proceeds.

The Justice Department said Rossen Iossifov, a 53-year-old Bulgarian national, appeared this week in the Eastern District of Kentucky on charges including removing property to prevent seizure, aiding and abetting, and conspiracy to commit money laundering.

Prosecutors allege Iossifov helped move cryptocurrency in January 2024 while he was already serving a federal sentence. The funds, according to the Justice Department, had been forfeited under a prior court order, meaning the court had directed that the assets be surrendered to the government.

The alleged transfers ran through multiple crypto exchanges and mixing services, the Justice Department said. A mixing service, sometimes called a mixer, combines crypto from different users to make the path of funds harder to trace on a public blockchain.

What prosecutors say happened

The Justice Department said Iossifov conspired to withdraw and transfer the forfeited cryptocurrency to keep it away from the government. The agency did not say in its announcement which specific cryptocurrencies, exchanges or mixing services were involved.

Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division said defendants who disregard court orders entered in earlier cases will face prosecution for obstruction. The U.S. Secret Service, which investigated both Iossifov’s earlier case and the new matter, described the alleged conduct as a direct challenge to the courts and to victims.

If convicted in the new case, Iossifov could receive as much as 25 years in prison, according to the Justice Department. That would come on top of the sentence he is already serving.

The earlier RG Coins case

Iossifov owned and operated RG Coins, a cryptocurrency exchange based in Sofia, Bulgaria. In 2021, he was convicted of racketeering and money-laundering conspiracies connected to the Alexandria Online Auction Fraud network, according to the Justice Department.

That Romanian fraud network posted fake listings for cars and other expensive items on platforms including eBay and Craigslist, the Justice Department said. Prosecutors said the group collected money from at least 900 victims in the United States and sent proceeds through overseas money launderers.

At trial, evidence showed Iossifov laundered nearly $5 million in cryptocurrency over less than three years, according to the Justice Department. Prosecutors said his role came near the end of the chain, converting crypto into cash.

After that conviction, Iossifov was ordered to pay more than $2.6 million in restitution and to forfeit the cryptocurrency now at issue in the new case, the Justice Department said. Restitution is money a court orders a defendant to pay back to victims.

He was serving a 111-month federal prison term when the alleged January 2024 transfers occurred, according to prosecutors.

The Justice Department said its computer crime section handled the prosecution and has obtained convictions of more than 180 cyber and intellectual property offenders since 2020. The agency also said it has secured court orders returning more than $350 million to victims.

This story draws on original reporting from Decrypt.