March 27, 2024
Cryptocurrency Ponzi Scheme: DOJ Charges Pair for $25M Fraud
Latest Cryptocurrency News

DOJ Charges Two for $25M AI Crypto-Trading Ponzi Scheme

The Department of Justice (DOJ) in the United States has officially charged two individuals for allegedly running an artificial intelligence (AI) crypto-trading Ponzi scheme that amounted to $25 million. As per the announcement made on December 12, David Gilbert Saffron, an Australian national, and Vincent Anthony Mazzotta Jr., residing in Los Angeles, stand accused of managing trading programs that deceitfully assured the use of an AI-automated trading bot. This bot purportedly aimed to trade the investments of victims in cryptocurrency markets, ensuring substantial profits.

Upon receiving deposits from users, the pair allegedly diverted the funds towards personal extravagances like private chartered jet flights, luxury hotels, mansion rentals, personal chef services, and private security guards instead of investing as promised.

The indictment also alleges that the defendants concealed the victims’ cryptocurrency investments by using interchain swaps and cryptocurrency mixers to avoid detection. The scheme was executed under different guises, such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, the Federal Crypto Reserve, and Cloud9Capital.

Saffron and Mazzotta face charges including conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering. Additionally, Saffron is accused of committing felonies while on pre-trial release.

Since the sanction imposed on the cryptocurrency mixer Tornado Cash last year, the DOJ has been notably focused on enhancing the compliance of blockchain entities. On December 9, the DOJ disclosed its strategies for supervising the compliance of the cryptocurrency exchange Binance after its $4.3 billion settlement for money laundering and breaches of U.S. sanctions.

Multiple divisions of the DOJ’s criminal division will actively oversee the exchange’s operations. These include sections dedicated to money laundering and asset recovery, national security, counterintelligence, and export control, as well as the office of the United States Attorney for the Western District of Washington.

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