In a pair of charges, federal prosecutors in New York City break cryptocurrency operations.
A pair of fraudulent cryptocurrency schemes amassed millions of dollars by duping unsuspecting investors, federal prosecutors in Manhattan and Brooklyn said Tuesday.
The disclosures occurred as a result of unrelated busts of five cryptocurrency entrepreneurs.
The United States Attorney's Office in Brooklyn arrested four men in connection with a conspiracy involving three virtual currency companies known as EmpowerCoin, ECoinPlus, and Jet-Coin.
According to prosecutors, Dwayne Golden, 57; Gregory Aggesen, 58; Marquis Egerton, 58; and William White, 54 falsely represented to investors during a four-month period in 2017 that they would conduct cryptocurrency transactions overseas and ensure excellent returns on investments.
However, in classic Ponzi scheme fashion, the guys exploited new investments to pay out returns to previous clients — or, when they felt like it, they simply stole the money, authorities claimed.
According to authorities, the victims invested more than $40 million in the trio of organizations created by the accused fraudsters, which folded without ever engaging in any crypto trading.
Prosecutors also charged the men with obstructing justice for allegedly wiping information from a computer after they became aware they could be investigated for their crimes.
"The defendants perpetrated a sophisticated fraud that preyed on innocent investors around the country with false claims of guaranteed returns and virtual currency trading possibilities," Brooklyn United States Attorney Breon Peace said.
The four defendants face a variety of charges, including wire fraud, money laundering, and obstructing justice.
Meanwhile, federal agents detained John Barksdale, 40, in Manhattan on charges that he misled investors about the worth of a firm named "Ormeus Coin" by falsely claiming it was backed by a $250 million crypto mining operation.
Despite his fabrications about the coin's value, Barksdale traversed the country touting its benefits, including purchasing a Jumbotron Times Square advertisement to entice investors, authorities claimed.
"Ormeus Coin's $250 Million Cryptocurrency Mining Farm Revealed in Legal Audit," the advertisement said.
Prosecutors allege that Barksdale and an alleged co-conspirator used the plan to obtain $70 million for their company, Ormeus Global.
Barksdale faces securities fraud and wire fraud charges.