Convenience Theory of Cryptocurrency Crime: A Content Analysis of U.S. Federal Court Decisions

ABSTRACT

This article examines cryptocurrency cases decided in the U.S. District and Circuit Courts to determine the applicability of Gottschalk’s convenience theory of white-collar crime to cryptocurrency crime litigation and to empirically analyze whether the conditions under which cryptocurrency offenses occurred show support for the convenience theory. Analysis of U.S. federal district and circuit court case law involving cryptocurrency crimes and fraud indicates support for the convenience theory of white-collar crime. Defendants in various schemes were motivated by financial gain, either for the company or for personal use. Their roles and positions in the businesses allowed them access to resources that helped them perpetrate fraud through the following mechanisms: (1) operating front companies; (2) relationship building by defendants; (3) over representing profits that investors would obtain from purchases of virtual currencies, representing that cryptocurrencies were safe and reliable investments when they were risky, and overestimating abilities and capacities to provide services promised to investors in securities fraud; (4) breaching fiduciary duties to their clients and corporate stockholders by misappropriating profits for their own personal gain; and (5) engaging in dark web transactions that guaranteed anonymity. Defendants also employed various neutralization techniques to justify their crimes.

Additional information

Funding

This work was supported by the Summer Faculty Fellowship Grant 2019 of the Texas A&M-San Antonio University.

Notes on contributors

Claire Nolasco Braaten

Claire Nolasco Braaten is an Associate Professor in the Department of Criminology and Criminal Justice Department at Texas A&M-San Antonio. She has a Ph.D. in Criminal Justice, a J.D. in law, and and LL.M. in International Economic and Business Law. She is licensed to practice law in both California and the Philippines. Her research interests are in corporate financial crime, cybercrime, immigration rights and integration, empirical legal research, and judicial decision making in the criminal justice and legal processes.

Michael S. Vaughn

Michael S. Vaughn is a Professor at the College of Criminal Justice at Sam Houston State University. He serves as Co-Director of the Institute for Legal Studies in Criminal Justice. Dr Vaughn has served as Book Review Editor of the Journal of Criminal Justice Education (1993–1996), Editor of Police Forum (1997–2001), Editor of the Criminal Justice Review (2001–2005), and Editor of the International Criminal Justice Review(2001–2005).