The growing prevalence of cryptocurrency has additionally led to extra frequent — and elaborate — cryptocurrency scams over time.
One such rip-off by a fraudulent cryptocurrency firm known as Centra Tech is now the topic of a new Netflix film known as “Bitconned,” set to be launched Jan. 1.
“Ray Trapani had at all times needed to be a felony, at the same time as a younger boy,” an outline for the film states. “In 2017, amidst the financial frenzy of the bitcoin increase, there was no higher place for scammers than cryptocurrency. So, when Ray’s pal approached him with the concept of making a debit card for crypto, Trapani jumped on the probability. There was just one drawback: He had no concept how to do this.”
Centra Tech is one of many latest and high-profile crypto scams which have resulted in million-dollar and billion-dollar losses for purchasers all over the world.
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Listed below are some of essentially the most infamous cryptocurrency fraud schemes in historical past:
Centra Tech
Main co-founder Sohrab Sharma, together with Robert Farkas and Trapani, began Centra Tech in 2017. The corporate touted cryptocurrency financial products, together with a so-called cryptocurrency debit card they dubbed the “Centra Card.”
The corporate led clients to imagine they might use the cardboard to make funds at institutions accepting Visa or Mastercard funds. Additionally they satisfied buyers to buy unregistered securities within the kind of digital cash, or “Centra Tokens,” in accordance with the Justice Division.
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The founders constructed Centra Tech on the lie that its made-up founder, “Michael Edwards,” had greater than 20 years of banking expertise and a grasp’s diploma from Harvard. Additionally they perpetuated extra lies “that Centra Tech had fashioned partnerships with Bancorp, Visa and Mastercard to subject Centra Playing cards licensed by Visa or Mastercard” and “that Centra Tech had cash transmitter and different licenses in 38 states, amongst different claims,” the DOJ stated in a press launch.
Ticker | Safety | Final | Change | Change % |
---|---|---|---|---|
COIN | COINBASE GLOBAL INC. | 173.92 | -12.44 | -6.68% |
RIOT | RIOT PLATFORMS | 15.47 | -2.13 | -12.10% |
BYON | BEYOND INC. | 27.69 | -0.78 | -2.74% |
MARA | MARATHON DIGITAL | 23.49 | -4.62 | -16.44% |
All three co-founders have since been convicted and sentenced to jail, in accordance with the Securities and Change Fee.
“Sohrab Sharma led a scheme to deceive buyers by falsely claiming that the startup he co-founded had developed totally functioning, cutting-edge cryptocurrency-related monetary merchandise,” Ilan T. Graff, a U.S. legal professional, stated in a 2021 assertion. “In actuality, Sharma’s most notable innovations have been the faux executives, faux enterprise partnerships and faux licenses that he and his co-conspirators touted to trick victims into handing over tens of tens of millions of {dollars}.”
FTX
FTX, a bankrupt and fraudulent cryptocurrency firm, made nationwide headlines this yr as its founder Sam Bankman-Fried was charged in February and tried in Manhattan federal court.
The court docket in November discovered Bankman-Fried responsible of defrauding buyers, clients and lenders who took half in his collapsed crypto empire in a single of two criminal trials he confronted.
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FTX’s downfall erased about $1 billion in buyer funds.
“Sam Bankman-Fried perpetrated one of the most important monetary frauds in American historical past.”
Bankman-Fried was charged with two counts of wire fraud and 5 conspiracy counts. Prosecutors argued that the 31-year-old founder of FTX and its sister hedge fund, Alameda Analysis, misappropriated and embezzled billions of {dollars} in FTX buyer deposits, scheming to mislead buyers and instructing different executives at his companies to do the identical.
“The cryptocurrency trade is likely to be new. The gamers, like Sam Bankman-Fried, is likely to be new. However this sort of corruption is as previous as time,” U.S. Legal professional for the Southern District of New York Damian Williams stated after the decision was introduced.
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The FTX founder, who collected an estimated internet value of $26 billion earlier than his firm declared chapter final yr, additionally testified throughout his personal trial. He admitted to creating errors however maintained his innocence, saying he didn’t defraud anybody.
BitConnect Ponzi scheme
The FTX rip-off has typically been in comparison with the BitConnect Ponzi scheme.
BitConnect, which has since collapsed, was a fraudulent cryptocurrency funding agency that at one level reached a peak market cap of $3.4 billion, in accordance with the Justice Division.
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A San Diego federal grand jury indicted the corporate’s founder, Satish Kumbhani of India, final yr. Kumbhani is alleged to have misled buyers in regards to the firm’s “lending program,” which really operated as a Ponzi scheme by paying off early BitConnect buyers with funds from newer buyers.
Prosecutors say Kumbhani and his co-conspirators obtained a complete of $2.4 billion from BitConnect buyers.
“This indictment alleges an enormous cryptocurrency scheme that defrauded buyers of greater than $2 billion.”
“As cryptocurrency good points reputation and attracts buyers worldwide, alleged fraudsters like Kumbhani are using more and more advanced schemes to defraud buyers, oftentimes stealing tens of millions of {dollars},” Particular Agent in Cost Ryan L. Korner of the IRS Felony Investigation’s Los Angeles Discipline Workplace stated in a 2022 assertion saying the indictment towards Kumbhani.
OneCoin and the ‘Cryptoqueen’
Ruja Ignatova, a Bulgarian woman referred to as the “Cryptoqueen,” is accused of defrauding tens of millions of buyers out of an estimated $4 billion by way of her fraudulent cryptocurrency firm, OneCoin, starting in 2014.
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Ignatova is on the FBI’s 10 Most Needed listing. Authorities imagine she might have help from armed guards or associates and should have altered her look after touring to Athens, Greece, in 2017. Her co-founder, Karl Sebastian Greenwood, was sentenced to twenty years in September.
OneCoin marketed a fraudulent cryptocurrency to unsuspecting buyers all over the world.
“As a founder and chief of OneCoin, Karl Sebastian Greenwood operated one of the biggest fraud schemes ever perpetrated. Greenwood and his co-conspirators, together with fugitive Ruja Ignatova, conned unsuspecting victims out of billions of {dollars} with guarantees of a ‘monetary revolution’ and claims that OneCoin could be the ‘Bitcoin killer,'” Damian Williams stated in a September assertion.
“Actually, OneCoins have been fully nugatory, and buyers have been left with nothing, whereas Greenwood lined his personal pockets with over $300 million.”
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Ignatova, who’s dealing with expenses of conspiracy to commit wire fraud, conspiracy to commit cash laundering, conspiracy to commit securities fraud and securities fraud, allegedly instructed buyers to switch funds into their OneCoin accounts to buy OneCoin packages, in accordance with the Justice Division.
Bitclub Community
Equally, BitClub Community was a $722 million fraudulent cryptocurrency scheme “that solicited cash from buyers in trade for shares of purported cryptocurrency mining swimming pools and rewarded buyers for recruiting new buyers into the scheme” between 2014 and 2019, in accordance with the Justice Division.
A number of individuals, together with BitClub Community creator Matthew Brent Goettsche and Silviu Catalin Balaci, Russ Albert Medlin, Jobadiah Sinclair Weeks, Joseph Frank Abel and Gordon Brad Beckstead, have been charged in reference to the scheme.
Goettsche, Balaci, Abel and Weeks have been all launched on bond in 2020 and await their sentencing hearings.
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“The indictment describes the defendants’ use of the advanced world of cryptocurrency to take benefit of unsuspecting buyers,” U.S. Legal professional Craig Carpenito stated in a 2019 assertion. “What they allegedly did quantities to little greater than a contemporary, high-tech Ponzi scheme that defrauded victims of tons of of tens of millions of {dollars}. Working with our law enforcement companions right here and throughout the nation, we’ll be sure that these scammers are held to account for his or her crimes.”
The suspects spent their cash “lavishly” whereas defrauding buyers, whom Goettsche described as “dumb” and “sheep.” He additionally stated he was “constructing this entire mannequin on the backs of idiots,” in accordance with the DOJ.
Fox Information’ Breck Dumas contributed to this report.