On Monday 9th of January 2017, Anthony Murgio became the third person affiliated to Coin.mx to plead guilty to multiple serious charges including running an unlicensed money transferring business, fraud, bribery, money laundering, and identity theft. Anthony has been found guilty to processing over $10 million in fraudulent Bitcoin transactions through two main companies: “Currency Enthusiasts” and “Collectables Club” which sought to fool the authorities as being a memorabilia company. Murgio agreed to accept any sentence of 12 and a half years or less.
The courtroom in Manhattan has seen a lot of multimillion-dollar frauds but Anthony Murgio’s illegal Coin.mx is one of the most infamous plots in recent history. A total of nine individual arrests took place, including the alleged leader behind cyber hacks against a hand-full of The United States’ largest financial institutions such as JPMorgan Chase, E*Trade, and Scottrade. The cyber breach has been deemed as the “largest theft of customer data from a U.S. financial institution in history” by The Justice Department. Prosecutors say that Israeli Coin.mx owner Gery Shalon, Israeli Ziv Orenstein, and American Joshua Aaron who organized the cyber hacks are responsible for stealing data from 100 million people and affected data of 83 million accounts as part of a complicated securities fraud and stock manipulation plan. The perpetrators used over 75 companies worldwide to launder stolen money.
Murgio’s involvement in the illegal activities started from his frat brother from college, Aaron who showed Murgio the first small-time online schemes. Aaron traveled to Israel as well as Russian where the authorities arrested him on charges of illegal immigration, thus leading the authorities to believe that the actual hacker was Russian. While Anthony Murgio has been accused in connection with Coin.mx stock manipulation, the exact identity of the hacker behind the cyber infiltrations is yet to be known.
Bloomberg released a report in 2015 stating that “a Russian master of digital break-ins known to federal agents and U.S. spy agencies who have tracked him for years, according to three people familiar with the investigation.”
The fact that Russia doesn’t extradite its citizens to the United States because of thin diplomatic relationships makes the whole ordeal much more complicated. Moscow is believed to harbor some of the organized crime syndicates which, in return, closely collaborate with the Russian government and intelligence agencies. Such a system where a hand washes the other may prove incredibly difficult to crack for the US prosecutor as diplomatic relations between Washington and Moscow have become increasingly distant and unpredictable. The apologetic tone towards Russian by President-elect Trump’s further raises the difficulty for US prosecutors.
Preet Bharara, The United States Attorney for the Southern District of New York, said in a statement last year that “Through their criminal schemes, between in or about 2007 and in or about July 2015, Shalon and his co-conspirators earned hundreds of millions of dollars in illicit proceeds, of which Shalon concealed at least $100 million in Swiss and other bank accounts.”
The defense of Anthony Murgio has tried to raise into question Bitcoin’s status as currency in a failed attempt to dismiss charges of illegally transferring money. Sustaining that it’s not a “currency” but a “property” didn’t convince the judge who refuted the argument calling “irrelevant to the inquiry here.”
The short life of Coin.mx from 2013 to 2015 had a mostly negative reputation among its users for having bad user friendliness, buggy coding, and customer service operators who constantly threaten clients with fraud lawsuits. Quite ironic. This seems to validate that the platform was not intended in the first place for regular customers but for illegal activities, unlike many fully legal and trustworthy casino websites. Coin.mx had a huge success among early bitcoin users because the company allowed clients to swiftly buy large amounts of Bitcoin, and they even provided customer service directly on the darknet market forums. Subsequent to a brief legal activity, the platform got involved in massive bribery plots and other aforementioned illegal activities. It is estimated that Murgio and alleged co-conspirator Yuri Lebedev, paid over $150,000 in bribes to gain control over Helping Other People Excel Federal Credit Union (“HOPE FCU”) which prosecutors describe as a “captive bank” and as a vector for illegal activities after 2014. Both Yuri Lebedev and Trevon Gross, the chairman of the board of a federal credit union, who took bribes in order to obscure the illegal nature of Coin.mx by the National Credit Union Administration (“NCUA”), are set for trial next month.
U.S. Attorney Bharara declared in a statement on Monday that “Anthony Murgio took a new age approach to an age-old crime of fraud as he admitted in his guilty plea today, Murgio used Coin.mx, an internet-based Bitcoin exchange, to process over $10 million in Bitcoin transactions in violation of federal anti-money laundering laws, and then obstructed a regulatory examination to hide his scheme.”
Florida-based Coin.mx had a business address in the state of Texas and moved money internationally but the activities ended under Preetinder Singh “Preet” Bharara’s nose, the United States Attorney for the Southern District of New York, whose office obtained the conviction.
Because the cyber crimes involving cryptocurrency are connected, thanks to the informational nature of the internet, Bharara’s office racked up a tremendous headcount for Bitcoin-related crimes both domestic and foreign. The success is in part attributed to the office’s de facto worldwide jurisdiction.
The superseding indictment against Anthony Murgio is available.