Forfeited on paper, still sitting in a Kraken account
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 after allegedly moving about $290,000 in cryptocurrency while serving a 111-month prison sentence tied to a 2021 conviction.
According to the DOJ, the crypto had already been forfeited to the U.S. government by the U.S. District Court for the Eastern District of Kentucky. Even so, the assets remained in a Kraken account in Iossifov’s name and were not transferred into a wallet under government control.
The department said Iossifov appeared in federal court in the Eastern District of Kentucky on Wednesday and 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, when he was already in prison.
Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division said in the announcement that Iossifov had already been convicted for his role in a large-scale online auction fraud scheme and is now accused of moving proceeds from that crime in violation of the court’s forfeiture order.
The government had legal title, but not actual possession
The DOJ said the 2021 judgment did more than set a forfeiture amount. It also specifically ordered the forfeiture of cryptocurrency worth about $290,000 held in Iossifov’s Kraken account. That account had already been restrained, but the crypto was still there as of January 2024.
Prosecutors said Iossifov and others conspired to withdraw the forfeited crypto, move it through multiple cryptocurrency exchanges and illegal mixing services, and then convert it into fiat through an overseas bank account. The result, according to the DOJ, was that the U.S. government could not obtain possession of the funds.
The announcement did not identify the exchanges or mixers involved. It also did not say whether the $290,000 was ever recovered.
Original case tied to online auction fraud
Iossifov previously operated the RG Coins cryptocurrency exchange in Sofia, Bulgaria. The DOJ’s earlier public description of the case said the broader scheme began in Romania, where conspirators posted fake listings for expensive goods on Craigslist, eBay, and similar sites, often for cars that did not exist.
After victims sent money, U.S.-based co-conspirators collected the funds, converted them into cryptocurrency, and sent them to overseas money launderers, including Iossifov, who then converted the crypto into cash at the end of the chain. At least 900 people in the United States were defrauded.
Evidence presented at trial and sentencing showed that Iossifov laundered nearly $5 million in cryptocurrency in less than three years. He was convicted of RICO conspiracy and money laundering conspiracy, sentenced to 111 months in prison, ordered to pay $2,642,297.43 in restitution to victims, and ordered to forfeit the cryptocurrency at issue.
The case was investigated by the U.S. Secret Service, with support from the DOJ’s Office of International Affairs. If convicted on the new charges, Iossifov could face up to 25 additional years in prison. The current filing is an accusation, not a final judgment.
DOJ policy calls for immediate transfer after access is obtained
The report cited the DOJ’s Asset Forfeiture Policy Manual, which lays out a procedure for handling digital assets. Once access is obtained, the seizing agency is supposed to move the assets at once into a self-custody wallet controlled by the agency, in part because someone else may still hold a copy of the private keys. The assets should then be placed into cold storage and transferred to the U.S. Marshals Service, or a designated custodian.
The U.S. Marshals Service selected Coinbase Prime in 2024 as its digital asset custodian. Officials did not say where the process broke down in this case.
Three unanswered questions remain
The DOJ announcement and indictment leave several points unresolved. They do not explain how Iossifov, while in federal prison, allegedly directed the transactions. They do not name the exchanges or mixing services that handled the funds. They also do not say whether the money has since been recovered.
What is clear from the timeline is that the crypto stayed in the Kraken account for nearly three years, from the 2021 forfeiture order to January 2024.
Another enforcement action the same week showed the same challenge
The same week, Interpol said on July 9 that Operation First Light 2026 ran from Jan. 15 to April 30 across 97 countries and regions, leading to 5,811 arrests, the interception of $293 million in illicit assets, and the identification of more than 142,000 victims.
In one Thailand case, a wallet linked to a 20-year-old suspect handled $122.5 million over 10 months. Interpol said those romance scam proceeds were laundered through cross-chain swaps, which made tracing harder, but it did not disclose wallet addresses, the blockchains involved, the tokens used, or how much had been recovered.
Taken together, the two enforcement stories point to the same operational problem in digital asset cases: a forfeiture order can settle ownership in court, but that does not by itself give authorities control of the assets.