Bulgarian money launderer accused of siphoning $290,000 in seized crypto from behind bars

Key points

• Rossen G. Iossifov, 53, was charged this week in the Eastern District of Kentucky with stealing $290,000 in cryptocurrency that US authorities had already seized from him.
• Prosecutors say the theft happened in January 2024, while Iossifov was serving a 121-month sentence for laundering money for an online auction fraud ring.
• The earlier scheme, run by the Alexandria Online Auction Fraud Network, cheated at least 900 Americans through fake vehicle listings on Craigslist and eBay.
• Iossifov was ordered to pay more than $2.6 million in restitution to victims of the original fraud and now faces up to 25 years on the new charges.

A Bulgarian man already in federal prison for helping launder millions stolen from American fraud victims has been charged with pulling off another crime from his cell: stealing back cryptocurrency the US government had seized from him.

Rossen G. Iossifov, 53, appeared in federal court in Kentucky on Wednesday. He faces charges of removing property to prevent seizure and conspiracy to commit money laundering, first reported by BleepingComputer.

Prosecutors allege that in January 2024, while serving a 121-month sentence, Iossifov worked with people on the outside to move $290,000 in cryptocurrency out of an account the government had locked down. Those funds were then routed through several exchanges and mixing services, tools that blend one person's crypto with others' to obscure its origin.

Who is Rossen Iossifov and how did he end up in prison?

Iossifov ran RG Coins, a cryptocurrency exchange based in Sofia, Bulgaria. On paper it was a normal business. In practice, according to court records, he built it around criminal clients.

His biggest customers were Romanian members of the Alexandria Online Auction Fraud Network. That ring posted fake ads on Craigslist and eBay for expensive items, usually vehicles, that didn't exist. Once a victim wired payment, the money was quickly turned into cryptocurrency.

That's where Iossifov came in. He converted the stolen cash into crypto, then forwarded it to money launderers overseas. Evidence showed he offered the fraudsters better rates than regular customers and let them swap cash for crypto without showing ID or explaining where the money came from.

In under three years he laundered close to $5 million for just four members of the ring, pocketing more than $184,000 in fees. At least 900 Americans were victims of the wider scheme.

He was convicted in 2021 and ordered to pay more than $2.6 million in restitution.

How do you steal crypto while you are locked up?

You don't do it alone. Prosecutors say Iossifov conspired with others outside the prison to carry out the transfers. Seized cryptocurrency was routed through a chain of exchanges and mixers to break the trail.

The US Secret Service ran the case. "Iossifov's deliberate attempt to remove and launder lawfully seized funds is a direct challenge to our justice system and a blatant disregard to his victims' rights," Special Agent Robert Holman said in a statement.

The court has ordered forfeiture of the cryptocurrency at the centre of the new case. If convicted, he could face another 25 years. Threat Vectr covered a structurally similar cash-out operation on 12 June 2026, when Europol pulled the AudiA6 mixer offline after it processed €336 million for ransomware crews: the layering techniques prosecutors describe here overlap closely with what that network offered.

Should you worry?

For the Americans who lost money in the original auction scam, the case is a reminder that recovery is slow and messy even when the culprit is caught. Restitution orders exist, but collecting on them is another matter when defendants keep trying to move assets.

If you buy on Craigslist or eBay, be wary of listings that push you off-platform or insist on wire transfers and crypto. Those were the exact hooks the Alexandria network used, and they still work.