California man sentenced for cryptocurrency money laundering

TYLER – A California man has been sentenced to federal prison for his role in a cryptocurrency money laundering conspiracy in the Eastern District of Texas, announced Acting U.S. Attorney Abe McGlothin, Jr. John Khuu, 29, of San Francisco, California, pleaded guilty to conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business, and was sentenced to 87 months in federal prison by U.S. District Judge J. Campbell Barker on March 12, 2025. According to information presented in court, Khuu conspired with others to launder the proceeds of his drug trafficking organization through cryptocurrency.  Khuu illegally imported counterfeit pharmaceutical and MDMA (“ecstasy”) pills from Germany then distributed them to customers across the United States, primarily on dark web markets (DWMs).  Customers paid for their purchases by transferring cryptocurrency, usually Bitcoin (BTC), from their DWM customer accounts to one of Khuu’s vendor accounts.  Khuu and his co-conspirators traded the BTC for U.S. currency and laundered and transmitted the proceeds through hundreds of transactions and dozens of financial accounts.

Khuu was indicted on May 18, 2022, in the Eastern District of Texas and charged with conspiracy to commit money laundering.  On August 17, 2022, Khuu was indicted in the Northern District of California and charged with unlawful importation of a Schedule I controlled substance.  On August 19, 2022, agents arrested Khuu pursuant to both warrants at a residence in Garden Grove, California.

This effort is part of Operation Crypto Runner, an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

The cases were investigated by the U.S. Secret Service, U.S. Postal Inspection Service, and Homeland Security Investigations, San Francisco, and were prosecuted by Assistant U.S. Attorneys D. Ryan Locker and Nathaniel C. Kummerfeld for the Eastern District of Texas, and Assistant U.S. Attorney Charles Bisesto for the Northern District of California.