The Justice Department has arrested and charged two men in an "underground" Bitcoin exchange that allegedly helped tens of thousands of clients convert nearly $2 million worth of the anonymous digital currency — illegally.
From 2013 to 2015, Murgio and Lebedev facilitated transactions for hackers who would prevent innocent computer users from accessing their devices unless they paid a ransom, the complaints said. When the hackers received the ransoms and tried to convert the bitcoins into dollars, the two suspects allegedly allowed those suspicious-looking currency conversions to happen but didn't notify the authorities, as required by federal regulations.
This isn't the first time law enforcement has gotten involved in a Bitcoin case. In March, federal officials went after two of their own for allegedly embezzling Bitcoins from an undercover FBI investigation against the online drug marketplace Silk Road. In July, Carl Force, one of the accused in that case, pleaded guilty.
Like Force, Murgio and Lebedev allegedly went to great lengths to hide their activity, setting up a Web site and shell company called the "Collectables Club," which posed as an organization dedicated to collectible items "such as sports memorabilia," according to a DOJ release.
All the while, Murgio and Lebedev were diverting hundreds of thousands of dollars to banks in Europe and Asia, according to the federal complaints, which were filed by the U.S. Attorney for the Southern District of New York.