The owner of a now-defunct Romanian crypto exchange called CoinFlux has pled guilty to laundering roughly $1.8 million in a fraudulent scheme involving fake eBay ads and a car wash.
Vlad-Calin Nistor and 14 other defendants, including the owner of a car wash, have all entered guilty pleas at the Eastern District Court of Kentucky for their involvement in a racketeering conspiracy and cyber fraud scheme that defrauded millions of dollars from U.S. residents by selling goods that didn't actually exist.
Beginning in 2013, the defendants began posting fake advertisements on sites such as eBay and Craigslist for items such as cars. Often using stolen identities, the group would pretend to be U.S. military personnel who needed to sell their goods before beginning a tour of duty. They even set up a fake call center to assuage any concerns victims had about the advertisements.
After the victim had sent payment, the group would begin the process of transferring the money out of the U.S. and back to Romania. Most of the time, this was done by converting illicit funds into crypto, usually bitcoin, and transferring it to Nistor and his crypto platform CoinFlux, where it would then be exchanged into the local currency.
Per a release from the U.S. Department of Justice (DOJ) on Thursday, the ringleader was Bogdan-Stefan Popescu, the owner of car wash in Bucharest, Romania's capital. He provided instructions for Nistor and Coinflux for transferring the illicit funds out of bitcoin and into selected bank accounts, which were usually set up under the names of his employees and family members.
“Through the use of digital currencies and trans-border organizational strategies, this criminal syndicate believed they were beyond the reach of law enforcement,” said Michael D’Ambrosio, assistant director at the U.S. Secret Service's Office of Investigations.
Back in December 2018, Nistor was arrested on an international warrant on charges of money laundering, fraud, and involvement in organized crime. He, alongside the other defendants, was promptly extradited to the U.S. the following month. At the time of his arrest, Nistor's lawyer argued to Romania's Court of Appeal that he had no way of knowing that the bitcoin in question came from criminal proceeds.
CoinFlux advertised itself as a 24-hour marketplace that provide a local fiat gateway for Romanian traders. The exchange had been preparing to celebrate its third anniversary with zero transaction costs, less than a week before Nistor's arrest.
Five days later, following Nistor's arrest, CoinFlux's Twitter account said they were in "the unpleasant situation to temporarily stop any digital currency exchanges." In a follow-up post, CoinFlux's marketing head said an "unexpected investigation" meant their banks accounts had been frozen and they had been temporarily locked out of their site.
"Our expectation is that we will gain control back, within the next days," the post said.
Under U.S law, those found guilty of racketeering can be fined up to $25,000 and face up to 20 years in prison, as well as forfeit all their ill-gotten gains. A guilty plea can bring the penalty down to 10 years. All 15 defendants now await sentencing.