Nistor Vlad Călin is the CEO of 'Coinflux' which is Romania's largest exchange. But after being arrested in Romania 3 weeks ago on a warrant from the US for money laundering, fraud, and organized crime - his business assets are frozen and he's on his way to America to face trial.

The charges stem from an investigation within the US Secret Service, which many associate only with guarding politicians - however they also participate regularly in investigations of financial crimes like counterfeit money and money laundering.

In the meantime, CoinFlux which boasted 18,000+ users has halted all activity leaving their legitimate user's funds in limbo.  Stating on a blog post:

"Due to a recently started, unexpected investigation, we are in the unpleasant situation of temporarily stopping any digital currency exchanges.

Unfortunately, our company’s bank accounts have been frozen, situation which affects the CoinFlux wallets as well. We are doing all possible efforts, along with our legal advisers, to make sure everyone who had money deposited in CoinFlux wallets gets it back."

Following the arrest of CEO Nistor Vlad Călin he stated his innocence, and that he had no way of knowing his exchange was being used for illegal activity.  It's clear the US government believes this to be false but we haven't heard their evidence to back that up, yet.

Lawyers for Călin immediately began working to stop their client from being extradited to the US, but according to Romanian news outlets those efforts failed and "the decision is final".

While the specifics haven't been released on who's money he is being accused of laundering, the rumors floating around Romanian cryptocurrency forums are that the money originates with scams and fraud being committed within the United States which are then converted to Bitcoin, then back into fiat, using Coinflux to do it.

No trial dates are set yet.

Robert Novy, the Deputy Assistant Director of the Office of Investigations for the United States Secret Service gave prepared testimony to the United States House of Representatives Committee on Financial Services Subcommittee on Terrorism and Illicit Finance.

Those prepared statements, just posted to the US House Of Representatives website (link) show they are becoming increasingly concerned about the use of cryptocurrency in illicit acts, stating:

"In recent years, criminals have increasingly used digital currencies to facilitate illicit activities onthe Internet. Digital currencies provide an efficient means of transferring large values globally, for both legitimate and criminal purposes."

Novy then listed the following reasons why 'criminals prefer digital currencies' saying these ‘characteristics’ appeal to them:

1) Widespread adoption as a medium of exchange for intended criminal activities.
2) The greatest degree of anonymity.
3) Protection against theft, fraud, and lawful seizure.
4) Can be readily exchanged to and from their preferred currency.
5) The ability to quickly and confidently transfer value transnationally.

Up to this point there wasn't much we haven't heard before, same things we saw in news stories often back when the mainstream media was just learning about Bitcoin and couldn't write a report on it without mentioning the big 'Silk Road' bust - where the suspected owner of a large illegal online marketplace that used Bitcoin as it's currency was arrested.

The topic then switched to privacy coins specifically - something we haven't heard law enforcement weigh in on much before. That's when Novy took a more hardlined approach, saying:

"We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools."

In my opinion - I've always found this an odd argument to make, because even with all this in mind - the most anonymous method of transferring funds has and always will be paper cash.  Even privacy coins leave behind a larger footprint than a person simply handing someone a suitcase full of cash and disappearing into the night.

Also, not every transaction someone wants to keep private is also illegal. Every day countless numbers people use cash when they're buying something that may simply be embarrassing to them - but legal nonetheless. 

Lastly - these days even credit card companies are providing a method for anonymous usage though pre-paid cards, which can be purchased in cash and readily available at gas stations and grocery stores.

It's important to remember these are simply some suggestions given to lawmakers, but this still presents possible future complications for those investing in coins like Monero or ZCash.

At least it wasn't all bad - to his credit, Assistant Director Novy does see the legitimate use cases and benefits to the public cryptocurrencies offer, adding:

"Digital currencies have the potential to support more efficient and transparent global commerce, and to enhance U.S. economic competitiveness."

Another interesting thing we learned in the testimony - since 2015 the Secret Service has sized $28 million in cryptocurrencies during criminal investigations, primarily Bitcoin.