January 27, 2021 | AtoZ Markets – The US Federal Attorney's Office has opened a criminal case against a cryptocurrency trader from Rhode Island. He is accused of creating a pyramid scheme disguised as cryptocurrency trading.
Jeremy Spence in Coin Signals Accused of $5 Million Crypto Fraud
The US Department of Justice said that 24-year-old Jeremy Spence was running fraudulent investment promotion campaigns. In addition, he created and ran a cryptocurrency trading company, although he has no professional experience.
The young trader raised $5 million from 170 private investors on Telegram and Discord. From this money, he spent $2 million on payments to investors in the period from November 2017 to April 2019.
In addition, to cover up the fraud, he used the principle of the Ponzi scheme, that is, he paid early investors with money received from new investors. He spent the rest of the money on personal needs and paying off debts.
The defendant advertised investments in a number of hedge funds. The largest and most famous of them are: Coin Signals Bitmex Fund, Coin Signals Alternative Fund, known as "CS Alt Fund" and the Coin Signals Long Term Fund.
He asked victims to transfer him cryptocurrencies such as Bitcoin and Ethereum and promised to invest them in the digital asset market. The fraudster also fabricated fake reports to convince investors that their investments were generating colossal returns.
A Ponzi-Style Scheme
In January 2018, Spence submitted fake account statements that reflected profits in excess of 148% per month while he was effectively sitting on a net loss.
He promised new members a guaranteed annual return, but in fact, they became part of a financial pyramid. Spence lost almost all of the pool's money, the indictment says.
The FBI Assistant Director further explained: “Jeremy Spence allegedly misrepresented his investment performance in order to attract new investors. Since his trading was unprofitable and significantly less successful than he promised, he used money from new investors to pay off debts to others. this is a typical Ponzi scheme.
“Regardless of the nature of the investment, our advice always remains the same - to exercise due diligence, and when something seems suspicious, report it to the authorities,” the FBI said.
Think we missed something? Let us know in the comment section below.