The DOJ charged the founder of two digital-asset companies with fraud and conspiracy for his role in a cryptocurrency investment scheme.
In the indictment, filed in the U.S. District Court for the Eastern District of New York, the DOJ alleged that the founder fraudulently claimed that investor funds would be used for digital-asset mining and on trading platforms that would guarantee a profit. The DOJ alleged that the entity instead laundered investor funds to a Philippines-based account and digital wallet. In addition, another company controlled by the founder transferred $7 million in investor funds to the founder, after which point the founder ceased communications and allegedly absconded with the funds.
The DOJ charged the founder with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.
Commentary Conor Almquist
This situation is a good reminder for investors that are considering investing in lesser-known cryptocurrencies to (i) fact-check easily verifiable claims found in promotional materials (in this instance, the exchange related to the cryptocurrency claimed to be "the largest Bitcoin exchange in euro volume and liquidity," which was not the case) and (ii) be skeptical of any celebrity promotions or "brand ambassadors," particularly those without any relevant credentials (in this instance, Steven Seagal was acting as brand ambassador; while one might rely on his advice about acting or Aikido, it seems that following his recommendations on cryptocurrency investing was a mistake).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.