US Man Admits Using Bitcoin to Help Launder $630K From Romance, Lottery Scams

A man from Northborough, Mass., has pleaded guilty to involvement in scams that reaped over $600,000 by targeting the elderly and vulnerable.

• Making the plea at the federal court in Worcester, Mass., Austin Nedved also acknowledged laundering the proceeds of such schemes via peer-to-peer cryptocurrency exchanges, and other crimes.
• In a news release from the U.S. Department of Justice, the Massachusetts Attorney's Office said Nedved admitted running a business buying and selling cryptocurrencies, including bitcoin, on LocalBitcoins.com and Paxful.com.
• From around 2017 to 2019, he worked for romance and lottery scams targeting "vulnerable victims."
• "Despite knowing or being willfully blind to the fact that his customers were fraud victims, Nedved sold bitcoin to them so that they could send money overseas to the fraudsters," according to the release.
• In romance schemes, victims are persuaded to send money abroad to individuals that purport to be romantic interests, while lottery schemes trick victims into thinking they can obtain lottery winnings or government grants by sending funds for administrative fees or expenses.
• In one case, Nedved helped a 78-year-old victim send bitcoin to a fake marriage prospect going by the name “Jonathan G.” who said his oil business needed money amid a crisis.
• On June 25, 2018, the victim met Nedved in a parking lot and gave him a cashier’s check to purchase around $100,000 in bitcoin. Days later, Nedved and a co-conspirator took another $40,000 from the victim.
• In total, Nedved and his co-conspirators converted over $630,000 of victims' cash into bitcoin, knowing that the funds were the proceeds of scams and other unlawful activities, per the DOJ release.
• While in some cases bitcoin was returned to the providers of the cash, in others it was sent on to "unidentified third parties."
• Nedved was charged with aiding and abetting wire fraud and money laundering conspiracy, both of which bring maximum sentences of 20 years in prison, plus fines.
• The case is another reminder to take extreme care and carry out due diligence when handing over funds for cryptocurrency purchases or investments.

See also: New to Bitcoin? Stay Safe and Avoid These Common Scams