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A federal judge has sentenced Timothy Wadsworth, 35, of Rochester, New York, to 51 months in prison for running fraudulent credit card payments through Stripe, moving the money through HSBC and Evolve Federal Credit Union accounts, and using some of it to buy Bitcoin on Coinbase.
The US Department of Justice announced the sentence on October 23, 2026. Wadsworth had pleaded guilty to conspiracy to commit wire fraud and money laundering.
According to the Justice Department, Wadsworth used credit card account information supplied by co-conspirators to initiate payments through Stripe, a payment processing company used by businesses to accept payments.
Between March 10 and May 15, 2020, he attempted 310 transactions worth a combined $1,673,578. Of those attempts, 116 initially succeeded, generating $730,728.22 in unauthorized payments.
The government stated that the affected account holders had not approved the transactions and that their financial information had been used without permission.
The funds then moved through a sequence of financial accounts before being converted into cryptocurrency. Prosecutors described the process as follows:
Stripe: Unauthorized credit card payments were processed through the payment platform.
Bank accounts: The proceeds were transferred into accounts Wadsworth controlled at HSBC and Evolve Federal Credit Union.
Coinbase: Some of the money was transferred to his Coinbase account and used to purchase Bitcoin.
External wallet addresses: The acquired Bitcoin was subsequently sent to addresses associated with his co-conspirators.
The government documented several substantial transfers during April 2020. Between April 22 and April 28, three transfers from the Stripe account to an HSBC account amounted to $49,419.99, $45,501.85 and $53,496.75, respectively.
The Card Fraud Case also demonstrates that converting illicit proceeds into Bitcoin does not necessarily erase evidence of their origin.
Bank records, payment processor information, exchange account activity and blockchain transactions can collectively help investigators reconstruct how money moved between different systems.
The sentence extends beyond the cryptocurrency-related activity. Wadsworth was ordered by U.S. District Judge Frank P. Geraci Jr. to serve 51 months in federal prison and pay $810,965.19 in restitution. The court also ordered him to forfeit $810,956.19 in proceeds connected to wire fraud.
The Justice Department estimated that the various schemes associated with Wadsworth and his co-conspirators resulted in approximately $2.06 million in actual and intended losses between March 2020 and September 2021.
Other activities outlined in the case included fraudulent applications for pandemic-era government assistance.
Wadsworth and others submitted nine applications for Economic Injury Disaster Loans, which were designed to help eligible businesses manage financial difficulties. Three applications were approved, resulting in $161,200 being paid into his bank accounts, according to federal prosecutors.
He also applied for six Paycheck Protection Program loans worth a combined $91,219. Two loans were funded, providing payments of $20,833 and $20,416.
The government further reported that Wadsworth fraudulently collected approximately $65,896 in unemployment benefits from New York State, Washington State and the Department of Labor.
In a separate romance fraud scheme, a recently widowed woman was persuaded to send $42,000 to an account controlled by Wadsworth after communicating with someone on Facebook who claimed to work on an oil rig and needed money for travel. Six additional victims reportedly lost $26,000 through the wider schemes.
The multiple sources of alleged fraud proceeds are significant because they show that the Bitcoin purchases formed part of a broader pattern of financial crime, rather than an isolated cryptocurrency transaction.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service’s Criminal Investigation division, the New York State Department of Financial Services and the New York State Department of Labor.
The Card Fraud Case is relevant to investors because cryptocurrency markets rely on connections with traditional financial infrastructure. Users routinely move money between bank accounts, payment processors, exchanges and personal wallets.
Those connections make digital assets accessible, but they can also create opportunities for criminals to exploit weaknesses in payment authorization and financial controls.
The case does not establish that Bitcoin itself was responsible for the fraud. Instead, the documented scheme began with unauthorized card payments before funds were transferred through bank accounts and used to acquire Bitcoin.
Digital assets can be used for legitimate investment, payments and transfers, but they can also serve as a destination for proceeds generated through conventional financial crimes.
However, such cases reinforce the importance of evaluating custody arrangements, exchange safeguards and counterparty risks.
The Justice Department’s announcement provides the primary record of the conviction and sentence. Investors seeking further details can consult the official U.S. Department of Justice press release
The Card Fraud Case shows how unauthorized credit card payments can pass through conventional financial institutions before being converted into Bitcoin and transferred to other addresses.
Wadsworth’s 51-month prison sentence, restitution order and forfeiture requirement demonstrate the potential legal consequences of using cryptocurrency as part of a money-laundering scheme.
The central takeaway is that the integrity of digital asset markets depends partly on effective financial controls outside the blockchain itself. Payment processors, banks, exchanges and investigators all have roles in identifying suspicious activity and tracing illicit proceeds.
The case is not evidence that cryptocurrency transactions are inherently criminal. Rather, it illustrates why investors should pay attention to the origin of funds, the reliability of service providers and the compliance standards surrounding the platforms they use.
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