DOJ Files Action to Recover $54 million in Crypto Laundered by Convicted Drug Trafficker
Earlier this month, the U.S. Attorney's Office for the District of New Jersey filed a civil forfeiture action to recover $54 million of cryptocurrency that it previously seized and is traceable to the proceeds of an illegal narcotics distribution scheme.
According to the complaint, from 2010 to 2015, Christopher Castelluzzo and others conspired to sell various illicit narcotics. In 2013 Castelluzzo and his co-conspirator Luke Atwell began to sell narcotics on darknet sites, including the infamous Silk Road, in exchange for bitcoin.
Castelluzzo and Atwell then used some of the bitcoin they had earned from narcotics sales to purchase 30,000 Ether (ETH) in Ethereum’s Initial Coin Offering in July 2014.
The co-conspirators also received 30,000 Ethereum Classic in 2016. Castelluzzo used the additional cryptocurrency to purchase various other cryptocurrencies. The complaint seeks the forfeiture of all of the cryptocurrency Castelluzzo obtained as a result of his narcotics sales.
Castelluzzo is currently serving concurrent 20-year federal and state prison sentences for drug distribution convictions. While Castelluzzo was incarcerated as a result of these convictions, and as Ethereum increased in value, Castelluzzo allegedly plotted from prison to avoid taxes and to move the 30,000 ETH outside of the United States. Before he could do so, however, the law enforcement authorities learned of Castelluzzo’s efforts to launder the cryptocurrency through recorded prison telephone calls and seized Castelluzzo’s cryptocurrency holdings traceable to his drug trafficking crimes.
Today, the value of the 30,000 ETH is approximately $54 million.
“The civil action we are taking today seeks to recover millions of dollars of cryptocurrency, which the defendant allegedly obtained from drug sales,” said U.S. Attorney Philip R. Sellinger in a press release. Whether it’s as simple as bags of cash or as sophisticated as cryptocurrency, we will take the steps necessary to seize financial gains defendants obtain from criminal activity.”
These cases – the criminal prosecutions and seizure – are the result of close interagency collaboration and coordination by the Department of Justice, the FBI’s Virtual Assets Unit, FBI Newark Atlantic City, the FBI-Denver Field division, Homeland Security Investigations Newark, the New Jersey Special Investigation Division, and the Colorado Springs, Colorado, Police Department.
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