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James Zhong’s fraud case involving bitcoin and the Silk Road online marketplace is one of the highest-profile examples of how federal authorities have pierced the veil of blockchain transactions, the Wall Street Journal reported. Private and government investigators can now identify wallet addresses associated with terrorists, drug traffickers, money launderers and cybercriminals, all of which were supposed to be anonymous. Law-enforcement agencies, working with cryptocurrency exchanges and blockchain-analytics companies, have compiled data gleaned from earlier investigations, including the Silk Road case, to map the flow of cryptocurrency transactions across criminal networks worldwide. In the past two years, the U.S. has seized more than $10 billion worth of digital currency through successful prosecutions, according to the Internal Revenue Service—in essence, by following the money. Instead of subpoenas to banks or other financial institutions, investigators can look to the blockchain for an instant snapshot of the money trail.

A former Deutsche Bank AG investment banker has been charged in an indictment unsealed on Tuesday with misappropriating funds from investors who he wooed with promises of big returns from cryptocurrency trading, Reuters reported. Rashawn Russell, 27, of Brooklyn, solicited investments from friends and colleagues but used the funds for gambling and other personal expenses, federal prosecutors said. According to the indictment, Russell told prospective investors that he was a licensed broker who worked in investment banking and could help them earn large and sometimes guaranteed returns from R3, a cryptocurrency fund he claimed to run. Prosecutors said Russell transferred some funds into a trading account but siphoned the rest, and sent fake documentation to investors about how their money was doing. Russell, arrested on Monday in Brooklyn after being charged in a sealed indictment last Thursday, faces one count of wire fraud for a scheme that prosecutors said ran from November 2020 through August 2022.

Deutsche Bank AG agreed to settle a lawsuit in which it accused a pair of offshore feeder funds of wrongfully backing out of a deal to sell the German lender $1.6 billion in claims against Bernard Madoff’s bankrupt investment advisory business, Bloomberg News reported. Lawyers for Deutsche Bank and the funds — Kingate Global Fund Ltd. and Kingate Euro Fund Ltd — filed a joint letter Thursday in federal court in Manhattan saying they’d struck a deal but didn’t disclose any terms. The Kingate funds, which funneled client money to Madoff’s firm for years before his Ponzi scheme collapsed in 2008, had agreed to sell the claims to Deutsche Bank Securities Inc. for 66 cents on the dollar in 2011, according to the lawsuit filed in 2019. Deutsche Bank claimed the funds got “sellers’ remorse” because the value of the claims had grown since they struck their purported deal. The suit was heading toward a trial after U.S. District Judge Edgardo Ramos in March 2021 denied the funds’ motion to dismiss the case.

The Justice Department charged South Korean crypto entrepreneur Do Kwon with fraud on Thursday as officials in Montenegro arrested the creator of the failed TerraUSD stablecoin, the Wall Street Journal reported. In an indictment unsealed in a New York federal court, Mr. Kwon was charged with eight criminal counts of fraud and is accused of conspiring with an unnamed U.S.-based investment firm to use trading strategies to alter the price of the stablecoin in May 2021. That month, TerraUSD fell beneath its $1 peg but recovered, a rebound that Kwon later cited as evidence of its stability. Kwon lied in television interviews and on social media about Terra’s blockchain technology and the effectiveness of an algorithm ensuring the stability of TerraUSD, federal prosecutors said. Earlier on Thursday, Montenegro’s interior minister said a person believed to be Kwon was arrested after months in hiding. Montenegro Interior Minister Filip Adzic said on Twitter that the suspect was detained in the airport of the country’s capital of Podgorica with false documents.

A former-Morgan Stanley advisor has been charged with stealing $13 million belonging to six current- and former-NBA players who were his clients, and funneling it into his own pockets and those of a financial advisor, an agent and a convicted fraudster, MarketWatch.com reported. Darryl M. Cohen of Chatsworth, Calif., is accused of running a wide variety of schemes with the three others involving high-priced life insurance policies, misappropriated charitable donations and a ploy to acquire a WNBA team, in which they all pocketed millions. All four have been charged with wire fraud and conspiracy and face up to 40 years in prison. “These defendants believed that defrauding their professional athlete clients of millions of dollars would be a layup. That was a huge mistake, and they now face serious criminal charges for their alleged crimes,” said Damian Williams, the U.S. attorney for the southern district of New York. Cohen, who had his securities license stripped last year by the Financial Industry Regulatory Authority, after refusing to cooperate with a probe into his activities, was also charged with investment advisor fraud. He was also separately hit with a civil suit by the Securities and Exchange Commission alleging he misappropriated at least $1 million from his NBA clients.