DOJ alleges transfer of forfeited crypto during prison term
The U.S. Department of Justice said on July 9 that Rossen Iossifov, a 53-year-old Bulgarian national, has been hit with new charges while serving a 111-month prison sentence tied to a cyber-enabled auction fraud case. Prosecutors say that in January 2024, he moved nearly $290,000 in cryptocurrency.
Those assets had already been forfeited by the U.S. District Court for the Eastern District of Kentucky and legally belonged to the U.S. government. Even so, the crypto was still sitting in a Kraken account under his name and had not been transferred into a wallet controlled by the government.
According to the DOJ announcement, Iossifov appeared in federal court in the Eastern District of Kentucky on Wednesday this week. He now faces three charges: transferring property to avoid seizure, aiding and abetting, and money laundering conspiracy. The allegations focus on a series of transactions in January 2024, while he was already imprisoned over his 2021 conviction.
A. Tysen Duva, Acting Assistant Attorney General of the Justice Department’s Criminal Division, said in the announcement that Iossifov had previously been convicted for his role in a large-scale cyber-enabled auction fraud scheme and is now accused of moving proceeds from that crime in violation of a court forfeiture order.
Forfeited on paper, still held in a Kraken account
The key detail in the DOJ statement is that when the court entered judgment in 2021, it not only imposed a forfeiture money judgment, but also specifically ordered the forfeiture of cryptocurrency worth about $290,000 held in Iossifov’s Kraken account.
The account had previously been restrained. Still, the crypto remained there until January 2024. Prosecutors say Iossifov and others conspired to withdraw the already-forfeited assets, move them through several cryptocurrency exchanges and illicit mixing services, and then convert them into fiat through an overseas bank account, preventing the U.S. government from taking possession of the funds.
The report noted that mixing services pool funds from different users and redistribute them to fresh addresses, making on-chain tracing harder. At the same time, the filing of a money laundering conspiracy charge suggests investigators were able to reconstruct at least part of the transfer path.
Prior conviction tied to cross-border auction fraud ring
Iossifov previously operated the RG Coins cryptocurrency exchange in Sofia, Bulgaria, and sat at the end of a transnational fraud pipeline. Based on facts previously made public by the DOJ, the front end of the scheme was in Romania, where members posted fake listings for expensive goods on Craigslist, eBay, and similar auction and marketplace sites. Many of those listings involved cars that did not exist.
After victims sent money, U.S.-based conspirators received the funds, converted them into cryptocurrency, and passed the assets to overseas money launderers, including Iossifov, who then converted the crypto into cash at the far end of the chain. At least 900 people in the United States were defrauded.
Evidence introduced during trial and sentencing showed that Iossifov laundered nearly $5 million in cryptocurrency in less than three years. He was convicted of Racketeer Influenced and Corrupt Organizations Act, or RICO, conspiracy and money laundering conspiracy. He was sentenced to 111 months in prison, ordered to pay $2,642,297.43 in restitution to victims, and ordered to forfeit the crypto.
The U.S. Secret Service investigated the case, with support from the Justice Department’s Office of International Affairs. If convicted on the new charges, Iossifov could face up to 25 additional years in prison. The report also made clear that these are allegations at this stage, not a final judgment.
DOJ policy calls for immediate transfer into agency-controlled wallets
The report said the DOJ’s Asset Forfeiture Policy Manual lays out a clear process for handling digital assets. Once a seizing agency gains access, it is supposed to move the assets immediately into an agency-controlled self-custody wallet because someone else may still hold a copy of the private key. After that, the assets should be stored in cold wallets and transferred to the U.S. Marshals Service, or USMS, or a designated custodian.
The USMS selected Coinbase Prime in 2024 as its digital asset custodian. Under that logic, a freeze order or forfeiture order can lock an account in legal terms, but control only changes hands when the last usable key or account credential stops working. Until then, anyone who can still pass authentication may be able to move the funds.
Officials have not said where the process broke down in this case.
Three unanswered questions remain
The DOJ announcement and indictment leave several points open. First, the public materials do not explain how Iossifov, while in federal prison, directed the transactions. Second, they do not identify the exchanges or mixing services used in the transfer path. Third, they do not say whether the roughly $290,000 was ultimately recovered. The DOJ said only that his conduct prevented the U.S. government from obtaining possession of the funds.
From the 2021 judgment to January 2024, the crypto remained in that account for nearly three years.
Another July 9 enforcement update showed the same control problem
The report also pointed to an Interpol announcement issued on July 9 about Operation First Light 2026. The operation ran from January 15 to April 30, covered 97 countries and regions, led to 5,811 arrests, intercepted $293 million in illicit assets, and identified more than 142,000 victims.
In one Thailand case, a wallet linked to a 20-year-old suspect processed $122.5 million over 10 months. Interpol said romance scam proceeds were laundered through cross-chain swaps, which made tracing harder, but it did not disclose the wallet address, the chains or tokens involved, or how much was recovered by Thai authorities.
Taken together, the two cases point to the same issue: a court order and actual control over on-chain assets are not the same thing.