Federal prosecutors said this week that six people have been charged in four separate cryptocurrency fraud cases resulting in more than $130 million in losses, including the largest NFT scheme to date.
The scheme, prosecutors said, involved a group called the Baller Ape Club, which claimed to be selling NFTs, or non-fungible tokens in the form of cartoon monkeys.
A similarly themed group, Bored Ape Yacht Club, is one of the world’s most popular NFT distributors backed by Snoop Dogg, Tom Brady and other celebrities. His NFTs have been sold for hundreds of thousands of dollars, though prices have plummeted in recent weeks.
Le Anh Thuan, 26, from Vietnam, was charged in California with one count of conspiracy to commit wire fraud and conspiracy to launder international money in connection with the Baller Ape Club scheme.
Shortly after the public sale of the Baller Ape Club began, Tuan and unnamed co-conspirators “pulled” investors by removing the group’s website and receiving a $2.6 million investment, according to the U.S. Attorney’s Office for the Central District of California.
According to prosecutors, Tuan and others laundered money by moving it through cryptocurrencies and crypto-currency services.
If found guilty, Tuan faces up to 40 years in prison.
In another case, the founder and former CEO of Titanium Blockchain Infrastructure Services was charged with securities fraud in connection with the company’s initial coin offering.
New cryptocurrency projects use ICOs to raise funds, similar to an initial public offering of company shares.
Federal prosecutors in California said Reseda CEO Michael Alan Stollery, 54, falsified documents sent to potential investors showing the purpose of the project and falsely claimed his business was linked to the U.S. Federal Reserve Board and companies like Apple. Disney and Pfizer.
The ICO raised about $21 million from investors.
Stolleri faces up to 20 years in prison if found guilty.
In the third case, a Las Vegas man was charged in California with four counts of wire fraud and one count of obstruction of justice, conspiracy to commit wire fraud and conspiracy to commit fraud in goods.
David Saffron, 49, used his crypto investment platform Circle Society to raise about $12 million from investors in a fraudulent crypto fund that allegedly traded in the futures and commodities markets, prosecutors said.
Saffron allegedly told investors that he used a “trading bot” to make profits up to 600%. He held meetings with investors at houses in the Hollywood Hills and traveled with armed guards to “create a false appearance of wealth and success,” prosecutors said.
“In reality, Mr. Saffron used an illegal Ponzi scheme to defraud victim investors and used the funds for his own personal gain,” said Ryan L. Korner, special agent in charge of the Los Angeles-based IRS Criminal Investigation Office.
Shafran faces up to 115 years in prison if found guilty.
The fourth case, announced by prosecutors this week, was filed in the Southern District of Florida.
Emerson Pires and Flavio Goncalves, both of Brazil, and Joshua David Nicholas of Stuart, Florida, were charged with one count of conspiracy to commit securities fraud and conspiracy to commit wire fraud in connection with a cryptocurrency scheme A ponzi that prosecutors called a hoax. about $100 million from investors. Pires and Goncalves, both 33, were also charged with conspiracy to launder money abroad.
Pires and Gonçalves, founders of cryptocurrency investment platform EmpiresX, worked with “chief trader” Nicholas, 28, to promote the platform using false guarantees of profit for investors, prosecutors said.
“Blockchain analytics show that Pires and Gonçalves then laundered investors’ funds through a foreign cryptocurrency exchange and used a Ponzi scheme to pay earlier investors money received from later EmpiresX investors,” U.S. Attorney’s Office said.
If found guilty, Nicholas faces up to 25 years in prison; Pires and Gonçalves face up to 45 years.