A crypto trader who defrauded more than 170 people was sentenced to 42 months in prison on May 11 for operating a series of cryptocurrency funds claiming to make big returns but in reality were losing money and operating more like a Ponzi scheme.

The DOJ said Jeremy Spence, 25, solicited millions through false claims, “including that Spence’s crypto trading had been extremely profitable when in fact, Spence’s trading had always been unrealistic.” profitable”.

Spence, who operated social media channels for a crypto investment program called “Coin Signals,” received the decision by U.S. District Judge Lewis Kaplan for the U.S. District Court for the Southern District of New York. Spence was also sentenced to three years of probation and ordered to repay his victims more than $2.8 million.

Spence was arrested in January 2021 by the Federal Bureau of Investigation (FBI) and separate civil charges were filed by the Commodity Futures Trading Commission (CFTC).

Spence pleaded guilty to commodity fraud in November 2021 for soliciting over $5 million from unwitting crypto investors by creating various cryptocurrency funds from November 2017 to April 2019 which he claimed were making returns but actually were making losses.

An example provided by the DOJ said Spence posted a message on an online discussion group claiming that one of the funds returned 148% that month.

According to Law360 U.S. District Judge Lewis Kaplan, who presided over the case, said:

“What struck me was the stupidity of the people you got to invest with you, there are real consequences to these shenanigans and they are serious.”

Seeking to make a profit, investors would transfer crypto to Spence to invest, but since his trades were not making any gains, he created fake account balances to hide the losses. Spence began operating a Ponzi scheme using funds from new investors to pay previous investors, with estimates that around $2 million worth of cryptocurrency was distributed in this manner.

Related:Making Crypto Conventional by Improving Investigations of Crypto Crimes Worldwide

In a statement to the court, Spence told Judge Kaplan he was ‘mortified’ by his own behavior, apologizing to his investors and claiming he was not qualified to trade the amount he was given. sent, adding that he “had entered a world that [he] was completely caught off guard”.

Cointelegraph requested comment from Spence’s legal representatives but did not receive a response within the time limit.



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