San Diego lawsuit aims to safeguard $154M in embezzled funds that were converted to cryptocurrency – The San Diego Union-Tribune

Federal prosecutors in San Diego have filed a lawsuit to seize $154 million that was allegedly embezzled from Sony Life Insurance Co. in Japan, funneled through a La Jolla bank and converted into cryptocurrency.

The civil forfeiture action comes after the FBI confiscated 3,879 Bitcoins related to the alleged scheme. The Bitcoins are being held in the San Diego FBIs Bitcoin wallet for safekeeping with the intention of returning the money to Sony.

According to the lawsuit filed by the U.S. Attorneys Office, Rei Ishii, a former employee of Tokyo-based Sony Life Insurance, engaged in a scheme to transfer funds from the Sony Lifes Citibank account to a Coinbase credit account held at San Diegos Silvergate Bank, where the funds were converted to Bitcoin.

Coinbase is a well-known cryptocurrency exchange where people invest in, buy and sell Bitcoin. Each transaction is recorded in a digital public ledger known as a blockchain. Coinbase is considered a financial institution that must comply with anti-money laundering and other laws.

Bitcoin is one of several virtual currencies available on the Internet. Beyond trading, virtual money can be exchanged for goods and services or real money, such as U.S. dollars, on exchanges.

Silvergate Bank has been an early provider of services targeting the crypto market. It supplies financial infrastructure such as fund transfers, customer account controls and security, as well as a payments system to help the digital currency market grow.

Phone calls and emails to Silvergate were not returned.

The lawsuit alleges Ishii illegally transferred the funds in May 2021 to the Silvergate-Coinbase account in an apparent ransom scheme.

Sony Life supervisors received anonymous emails from Ishii a few days after then transfer stating If you accept the settlement, we will return the funds back, and if you are going to file criminal charges, it will be impossible to recover the funds, according to the lawsuit.

Law enforcement was able to trace the Bitcoin transfers and identify the funds allegedly stolen from Sony Life, which had been transferred to an offline cryptocurrency cold wallet.

Investigators then obtained a private key the equivalent to a password needed to access the Bitcoin address. All the Bitcoins traceable to the alleged theft have been recovered and protected, according to court records. Ishii has been criminally charged in Japan.

This case is an example of amazing work by FBI agents and Japanese law enforcement, who team up to track this virtual cash, said Randy Grossman, acting U.S. Attorney for the Southern District of California. Criminals should take note. You cant rely on cryptocurrency to hide your ill-gotten gains from law enforcement.

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San Diego lawsuit aims to safeguard $154M in embezzled funds that were converted to cryptocurrency - The San Diego Union-Tribune