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Former Ethereum Foundation member Virgil Griffith has been taken into custody after violating the terms of his bail by signing into his Coinbase account.

 

Griffith, a well-known Ethereum developer, violated the terms of his bail conditions by attempting to access his frozen Coinbase account. The account contained assets worth close to $1 million, according to court documents.

According to the Federal Bureau of Investigation, Griffith attempted to provide people in the Democratic People’s Republic of Korea (DPRK) with information on evading economic sanctions and money laundering. He provided this information at the Pyongyang Blockchain and Cryptocurrency Conference in April 2019. At the conference, Griffith discussed how blockchain and cryptocurrency could be used by the DPRK to “achieve independence from the global banking,” which the U.S. government explicitly opposes.

coinbase1Griffith admitted to the above to the FBI during an interview. He also showed FBI agents photographs of himself in the DPRK and provided to the FBI newspapers and other literature from the DPRK.

After his arrest, a judge eventually granted his bail. The strict bail conditions included a provision that forbid Griffith from accessing his accounts on cryptocurrency exchanges, including Coinbase. Prosecutors stated that Griffith’s posed a flight risk due to Ethereum’s increasing value.

Government’s Letter

The government, in a letter to the court, wrote:

[O]n or about May 3, 2021, the defendant sent an electronic message through an online platform to a U.S.-based cryptocurrency exchange (“the Exchange”), stating in relevant part: I presume my account was restricted due to the pending litigation against me. My lawyers now tell me that it is permitted for me to access my cryptocurrency on [the Exchange] . . . . Related: I’m going to need the 2FA [two-factor authentication] removed as the FBI took my devices away. On June 2, 2021, the Court issued an order setting a trial date for September 21, 2021.

Coinbase3Approximately two weeks later, on or about June 19, 2021, the defendant pressed the Exchange for access to his frozen cryptocurrency account, writing to the Exchange that he “still require[d] assistance” in order to access the account.

The Government understands that the assets contained in this cryptocurrency account are worth nearly $1 million.

The Exchange

Upon discovery of these attempts to access the frozen assets, which the Government learned about from the Exchange [1] and continues to investigate, the Government contacted defense counsel. Defense counsel acknowledged that they were aware of the above messages, and expressed that they believe the defendant acted in accordance with their legal advice. Without waiving any applicable privilege, defense counsel attempted to explain their position to the Government and to justify the defendant’s actions despite the clear prohibition on access to any of the defendant’s cryptocurrency accounts. Most recently, on July 2, 2021, Mr. Klein and Ms. Axel asserted to the Government that the messages to the Exchange were not sent by the defendant, but rather by the defendant’s parent and that this activity was authorized by the defendant’s pretrial services officer in Alabama (the “Pretrial Services Officer”).

coinbase4The Government spoke with the Pretrial Services Officer, who stated that he had not granted any such authorization for the defendant’s parents to access the defendant’s cryptocurrency accounts and that accessing a cryptocurrency account was prohibited by court order. The defense’s purported justifications provide no valid explanation for the defendant’s conduct. The defendant’s significant cryptocurrency assets and his total lack of transparency regarding his financial holdings to Pretrial Services are primary components of the serious risk of flight he has presented since the inception of this case.

The government objected to the expansion of Griffith’s request for expanded travel rights. The Government specifically objected because:

  1. the defendant holds substantial cryptocurrency assets on unspecified exchanges accessible via the Internet;
  2. the Government and Pretrial Services have never received a full report of the defendant’s financial holdings, making it impossible to assess whether the value of the bond is sufficiently meaningful to the defendant, and
  3. due to the skyrocketing price of the cryptocurrency, including ether, the defendant likely possesses millions of dollars in undocumented wealth that dwarf the size and meaning of his bond.

1. Coinbase notified the government that Griffith had attempted to access his account. back

Griffith is once again in custody.

Complaint (pdf)
Letter requesting bail revocation (pdf)