Extradition for allegations of money laundering involving an illicit Bitcoin Exchange

01 Nov 2023, 59 mins ago

As an individual just extradited from Greece to the US for allegations of money laundering involving an illicit Bitcoin Exchange has found out, one can be extradited to another jurisdiction for alleged offences involving crypto.  This can happen even if the individual has not stepped foot in that jurisdiction.

In the right circumstances, prior to issuing an extradition request, a jurisdiction could also utilise INTERPOL and a Red Notice to locate an individual and seek their arrest for crypto offences.

Background

On 5 August 2022, the US Department of Justice (“DoJ”) announced the successful extradition of an individual from Greece to the US.  The DoJ contend this individual to have operated BTC-e, a cryptocurrency exchange that allegedly laundered more than $4 billion of criminal proceeds. 

As the DoJ Press Release states “Despite doing substantial business in the United States, the indictment alleges that BTC-e was not registered as a money service business [….] Had no anti-money laundering process [….] and no anti-money laundering program as required by federal law”.

Criminal actions against individuals allegedly using cryptoassets for nefarious purposes are increasing in the US.  Indeed, in a blog entitled “US DoJ brings charges in relation to allegations of insider trading concerning an increasingly wide variety of cryptoassets”, Gherson’s criminal litigation, investigations and regulatory team blogged about how the US has again brought charges in relation to alleged insider trading involving a cryptoasset, this time specifically concerning cryptocurrency markets.  This followed a previous blog by the team entitled “NFTs and Insider Trading”, which described previous separate charges bought by the DoJ, involving alleged insider trading concerning another type of cryptoasset, specifically – non-fungible tokens (“NFT”s). 

As well as bringing criminal fraud and money laundering charges in relation to allegations of insider trading concerning an increased wide variety of cryptoassets, jurisdictions will also, in the right circumstances, try to extradite those outside the jurisdiction who have allegedly committed criminal offences involving crypto which have had an effect inside their jurisdiction. 

Indeed, this can occur whether or not the individual has ever stepped foot in the requesting jurisdiction. 

International dimension of offences involving crypto

Due to the borderless nature of crypto transactions, any allegation of criminality will inevitably involve multiple jurisdictions.  As such, there may be numerous jurisdictions asserting jurisdiction and trying to extradite an alleged perpetrator to their jurisdiction to face justice.  Indeed, the individual just extradited to the US was previously extradited to France to face charges of money laundering there. 

The vast majority (if not all) of criminal allegations that underpin a crypto criminal investigation are of a financial crime nature, e.g. fraud, money laundering and insider dealing.

These offences, by their very nature, can take place across multiple jurisdictions and are therefore types of offences for which multiple countries can assert jurisdiction, including in relation to conduct outside their own country (hence extradition can be an option). 

Indeed, due to the borderless nature of the effect of these crimes, a jurisdiction could assert jurisdiction against an individual who has not even stepped foot in that jurisdiction.

As such, jurisdictions might additionally utilise INTERPOL to locate an individual and seek their arrest prior to issuing any extradition request.

Asserting jurisdiction for cross-border allegations

It is generally accepted that the US’s reach in these types of cases is far-extending.  Indeed, so long as there is some aspect of the case which is alleged to have taken place in the US, there is the risk of criminal charges being brought in the US, and therefore extradition to the US.  This could be applicable to other jurisdictions.

Certainly, the issue of extra-territorial reach and extradition for financial crime offences is an issue that the team have previously discussed in a separate blog entitled “Meng Wanzhou Huawei extradition and cross-border allegations”.

Meanwhile, back in the UK

We have previously provided comment on how HMRC have seized three NTFs in relation to an investigation into suspected VAT fraud

In addition, the Crown Prosecution Service announced on 22 July 2022 how four offenders were convicted on 21 July 2022 for fraudulently obtaining and laundering Bitcoin and other cryptocurreny worth tens of millions of pounds from an Australian-based cryptocurrency exchange

Going forwards, in the UK we will certainly be seeing increasing charges brought by UK prosecuting authorities or regulatory agencies directly against those alleged to be involved in crooked schemes involving cryptoassets. 

This will undoubtedly include the UK authorities and/or agencies being involved in more cases with an international dimension.  In such a case, extradition could be a potential option.  However, whether the UK has the same appetite as the US to pursue extradition in these types of cases, remains to be seen. 

The Gherson team have also previously argued that there is potentially an imbalance between the US and UK jurisdictional reach in relation to specific financial crime offences.

International crypto dimension – criminal investigations, litigation and extradition

Those who fear they may be subject to an extradition request from the UK, or who are just concerned about liability across multiple jurisdictions including the UK, should get in touch.

Gherson’s criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law underpinned with a firm understanding of digital assets and blockchain technology.  As such, the team is able to provide expert strategic advice to anyone facing investigation in relation to any allegation of criminality involving cryptoassets. Working alongside the extradition team, Gherson’s criminal litigation, investigations and regulatory team is able to provide an unparalleled service in any case with an international dimension.  The team is also able to call upon lawyers in multiple other jurisdictions and build multi-jurisdictional teams to assist with any suitable defence.

INTERPOL, Red Notices and crypto

In addition, those who fear that a jurisdiction may have requested INTERPOL to process data relating to them involving any allegations of offences involving crypto, or are just concerned about potential liability, should get in contact.

Indeed, Gherson Solicitors continue to receive requests for expert advice and assistance from those who fear they may have outstanding financial issues arising. That advice tackles:   

  1. How to best approach a possible INTERPOL red notice;
  2. Preparing for potential criminal proceedings / an extradition request;
  3. Preparing for a situation where a civil matter or commercial dispute could be used to initiate bogus criminal proceedings; and
  4. Even exploring the possibility of instigating civil litigation proceedings to recover any misappropriated assets.

Gherson have previously written a series of blogs designed to assist those who fear they might be subject to INTERPOL measures (including a Red Notice):

Regulation and compliance

In these constantly changing times, firms that deal with cryptoassets, and additionally have exposure to firms that do, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations

How Gherson can assist

Gherson’s white-collar crime and regulatory team are able to provide advice and assistance with AML and sanctions compliance, including in situations involving cryptoassets

Additionally, the team has recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector.  In addition, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.

Please do not hesitate to contact us for further advice, send us an e-mail, or, alternatively, follow us on TwitterFacebook or LinkedIn to stay up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2023