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Secret Service charges 21 people in crypto money laundering bust

A member of the U.S. Secret Service speaks on a cell phone as U.S. President-elect Donald Trump attends meetings at the U.S. Capitol in Washington, DC, November 10, 2016.

Saul Loeb | AFP | Getty Images

The U.S. Attorney’s Office for the Eastern District of Texas announced Wednesday that it has charged 21 people in a transnational crypto-money laundering network that laundered millions in funds defrauded from thousands of American victims.

The indictments were unsealed as part of “Operation Crypto Runner,” which was established by U.S. Attorney Brit Featherston of the Eastern District of Texas, the Secret Service and the U.S. Postal Inspection Service.

“These arrests are just the beginning. We are committed to bringing each of the remaining perpetrators to justice,” said Secret Service Special Agent William Smarr.

Law enforcement officials said an annual flow of more than $300 million in laundered transactions was disrupted, along with the seizure and forfeiture of millions in cash and cryptocurrency.

The scheme particularly targeted elderly individuals, Featherston said.

“This case proves that we can track these people down and charge them,” Secret Service resident agent Bill Mack told CNBC’s Eamon Javers.

The U.S. Attorney for the Eastern District of Texas also shared further details about some of the individuals named in indictments or who pleaded guilty.

27-year-old John Khuu was charged in federal court with conspiracy to commit money laundering. Khuu allegedly laundered more than $5 million in illegal proceeds from counterfeit pharmaceuticals and controlled substances across the United States.

Randall Rule, 71, and Gregory Nysewander, 64, were indicted in federal court for allegedly laundering more than $2.4 million in proceeds from wire fraud and mail fraud schemes, using cryptocurrency.

This isn’t the first major action federal law enforcement has taken in the crypto space.

In August, the US Treasury approved currency mixer Tornado Cash, which the federal government says has been used to launder more than $7 billion worth of cryptocurrency since its creation. Shortly after the sanctions, Tornado developer Alexey Pertsev was arrested in Amsterdam for alleged involvement in the “concealment of criminal financial flows and the facilitation of money laundering,” according to Dutch law enforcement.

— CNBC’s Eamon Javers contributed to this report.

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