Bitcoin Fraud

Crypto Exchange Owner Sentenced to 10 Years in Prison for Multimillion-Dollar Scheme to Defraud Americans

15/01/2021 by Idelto Editor

The U.S. has sentenced a cryptocurrency exchange owner to 10 years in prison. He “knowingly and intentionally engaged in business practices designed to both assist fraudsters in laundering the proceeds of their fraud and to shield himself from criminal liability,” the Department of Justice alleges.

Crypto Exchange Owner Sentenced to 10 Years in Prison

The U.S. Department of Justice (DOJ) announced Tuesday that a bitcoin exchange owner has been sentenced to 121 months in prison “for his role in a transnational and multimillion-dollar scheme to defraud American victims.”

Following his conviction in September last year, Rossen G. Iossifov was sentenced “for conspiracy to commit a Racketeer Influenced and Corrupt Organizations Act (RICO) offense and conspiracy to commit money laundering.”

The DOJ explained that the 53-year-old Bulgarian national owned and managed a cryptocurrency exchange headquartered in Sofia, Bulgaria, called RG Coins. Allegedly, he “knowingly and intentionally engaged in business practices designed to both assist fraudsters in laundering the proceeds of their fraud and to shield himself from criminal liability.” The Department of Justice claimed that at least five of his principal clients “were Romanian scammers, who belonged to a criminal enterprise known in court records as the Alexandria (Romania) Online Auction Fraud (AOAF) Network.”

Iossifov and his co-conspirators “engaged in a large-scale scheme of online auction fraud that victimized at least 900 Americans,” the DOJ detailed, adding that once victims sent payment:

The conspiracy engaged in a complicated money laundering scheme wherein domestic associates would accept victim funds, convert these funds to cryptocurrency, and transfer proceeds in the form of cryptocurrency to foreign-based money launderers.

“Iossifov was one such foreign-based money launderer who facilitated this final step in the scheme,” the DOJ noted.

The Department of Justice further alleged that “Iossifov designed his business to cater to criminal enterprises by, for instance, providing more favorable exchange rates to members of the AOAF Network,” elaborating:

Iossifov also allowed his criminal clients to conduct cryptocurrency exchanges for cash without requiring any identification or documentation to show the source of funds, despite his representations to the contrary to the major bitcoin exchanges that supported his business.

According to the DOJ, Iossifov laundered nearly $5 million in cryptocurrency for four scammers in less than three years. He also defrauded over $7 million from American victims and made over $184,000 in proceeds from these transactions.

What do you think about this case? Let us know in the comments section below.

Spanish Police Detain Four People Allegedly Involved in a $15M Crypto Ponzi Scheme

09/01/2021 by Idelto Editor

The Spanish police detained four people of different nationalities this week for allegedly running a $15 million crypto Ponzi scheme. According to the police, “many victims” filed a complaint against them.

Victims Believed Their Bitcoins Went to a Legit Company

According to Policia Nacional, the four accused are Argentine, Spanish, and Italian nationals aged between 23 and 36. They persuaded the victims to transfer their bitcoin (BTC) to them by promising high returns.

The authorities say that around 380 BTC were scammed by the alleged fraudsters, which amount to approximately $15 million at the current BTC price. The victims began to suspect that the four were running a pyramid scheme when they did not deliver on their promises.

The scammers did not have a website or a massive platform to attract people, relying mostly on verbal promotion. The fraudsters told their victims that their bitcoin was going to a company, which in fact did not exist. However, the police did not reveal the name of the fake company.

Police: There Could Be ‘Many More Victims’

The police report reveals that one of the fraudsters hid in Cuenca due to pressure from several victims who threatened to report him to the police. The report states:

Once detained, he was placed at the disposal of the investigating court acting as a guard in that city. The rest of the detainees were released after being heard in a statement at the Alicante police station.

Without disclosing the number of victims, the authorities confirmed that the investigation is ongoing because there could be “many other victims.”

In another Spanish crypto Ponzi scheme, the Arbistar case victims’ defense lawyer said in December 2020 that the scam had duped 32,000 families with at least 93.4 million euros ($113.55 million) in losses. Carlos Aránguez, a Spanish lawyer who represents 130 victims, pointed out that the magnitude of the disaster provoked by the Arbistar Ponzi scheme qualifies as the “biggest computer scam” in Spain.

What do you think about this massive crypto scam in Spain? Let us know in the comments section below.

Localbitcoins Trader Facing up to 40 Years in Prison Over Bitcoin Fraud Schemes

24/12/2020 by Idelto Editor

A trader on Localbitcoins and Paxful has pleaded guilty to charges in connection with a couple of bitcoin scams. The U.S. Department of Justice alleges that the trader knowingly sold bitcoin to victims of fraudulent schemes.

Bitcoin Trader Facing Jail Time

The U.S. Department of Justice (DOJ) announced last week that a Boston man has pleaded guilty in federal court to his role in two bitcoin fraud schemes. Austin Nedved “pleaded guilty to aiding and abetting wire fraud and money laundering conspiracy,” the DOJ detailed, adding that the 29-year-old is currently “in custody serving a sentence for a separate fraud conviction.” The announcement states:

Nedved admitted that he ran a business in which he bought and sold digital currencies, including bitcoin, for cash. Nedved advertised his services under the screen name ‘usmc1991’ over Localbitcoins.com and Paxful.com.

The Justice Department described that he “aided and abetted romance and lottery schemes targeting vulnerable victims.” In romance schemes, victims believe they are in love with the scammers and send money abroard in the form of bitcoin. In lottery schemes, victims believe that “they can obtain lottery winnings or sizeable government grants by forwarding cash for administrative fees or expenses to the fraudsters,” the DOJ described.

In late 2017, a scammer posed as an American owner of an oil company and succeeded in making a 78-year-old fall in love with him. Without ever meeting in person, she agreed to marry him. The scammer then told her that his oil company “had experienced an accident abroad in which people had died, and that he needed money to settle obligations arising from the accident with a foreign government.” He convinced her that unless she sent him some bitcoins to pay the settlement, he would not be able to return to the U.S. and marry her.

The victim, who never purchased bitcoin before, contacted Nedved in June 2018. They met in a parking lot in Maine and she purchased about $100,000 worth of BTC with cash. Nedved then transferred the coins to a wallet controlled by the scammer.

The DOJ alleged that when Nedved accepted $100,000 from the 78-year-old, he knew that she was a romance scam victim. Nonetheless, he and his co-conspirator took another $40,000 from her. According to the DOJ:

Despite knowing or being willfully blind to the fact that his customers were fraud victims, Nedved sold bitcoin to them so that they could send money overseas to the fraudsters.

In total, Nedved and his co-conspirators sold more than $630,000 worth of BTC to bitcoin scam victims, the DOJ claimed, alleging that they knew “that the cash constituted proceeds of romance and lottery scams and other unlawful activities.”

The Department of Justice explained that “The charges of aiding and abetting wire fraud provide for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater.” In addition, “The charge of money laundering conspiracy provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $500,000 or twice the value of the funds involved in the financial transactions that were the object of conspiracy.”

What do you think about the charges against this bitcoin trader? Let us know in the comments section below.

The post Localbitcoins Trader Facing up to 40 Years in Prison Over Bitcoin Fraud Schemes appeared first on Bitcoin News.

Mastermind of Alleged Billion Dollar Spanish Pyramid Scheme Arrested, Faces 16 Year Prison Sentence

23/10/2020 by Idelto Editor

The CEO of Arbistar the Spanish investment company, Santiago Fuentes, has been arrested and arraigned on charges of fraud, belonging to a criminal organization and money laundering. Fuentes, who has been in hiding since September, was arrested at one of his properties in the south of Tenerife.

The Arbistar Pyramid Scheme

Fuentes’ arrest stems from lawsuits filed by Arbistar clients who allege pyramid fraud after the bitcoin trading company abruptly froze accounts leaving 32,000 families affected.

During a hearing, the Investigating Court Number 3 of Arona (Tenerife) described operations of Fuentes’ Arbistar as a “potential pyramid scheme.” The court released the CEO “on provisional liberty without bail” but ordered the withdrawal of his passport. In addition, Fuentes must report to the Arona Courts every 15 days.

Meanwhile, despite the widespread Spanish media speculation that $1 billion is missing, Judge Javier García Ramila cautions that “at this moment it is premature to estimate the amount of possible fraud, given that the exact number of customers who contracted the product offered is unknown.”

The Spanish court clarifies that it is only proceeding with the case against Fuentes based on 21 complaints that have been filed at “Police stations and Civil Guard barracks in Tenerife, La Palma, Málaga, Huelva, Granada Mallorca, and Lugo.” The total value of missing funds from the 21 reported cases is approximately $367,000.

In the meantime, describing the operations of Fuentes’ organization, court documents say:

Arbistar offered its clients computer tools (“bots”) that automatically executed buy and sell orders in the cryptocurrency brokerage markets thus guaranteeing them a revaluation of their savings of between 8% and 15%.

However, the documents say that the bitcoin investment company’s offer is on the condition that “during a reasonable grace period of two months customers would not be able to cash out their money.”

Consequently, in conclusions based on their findings, investigators say “it has been possible to attest that the aforementioned product could really be a pyramid scam.” Investigators add that “instead of executing the investment committed in the various virtual markets and rewarding the old clients with profits obtained” Arbistar appears to have been funding profit payouts with deposits brought in by new customers.

Possible Money Laundering Uncovered

Investigators also say they unearthed possible money laundering activity involving Venus Capital Trade SL, a shell company that reportedly received $1.32 million from Arbistar.

Meanwhile, Judge Ramila, who refuses to impose more punitive restrictions on Fuentes, says he now “needs to scrutinize countless documents and electronic devices and work with banks to trace diverted customers funds.” Nevertheless, the judge says he is open to “more burdensome measures” being imposed against Fuentes.

Fuentes faces up to 16 years in prison if found guilty.

What are thoughts about Fuentes’ release on provisional liberty without bail? Share your thoughts in the comments section below.

The post Mastermind of Alleged Billion Dollar Spanish Pyramid Scheme Arrested, Faces 16 Year Prison Sentence appeared first on Bitcoin News.

Judge Dismisses $200M Damages Claim in SIM-Swap Crypto Lawsuit Against AT&T

11/09/2020 by Idelto Editor

A California judge has dismissed the $200 million in damages claim against the telecom giant AT&T for alleged negligence and fraud. The judge still ruled the telecom company had to answer the lawsuit by Michael Terpin for enabling the theft of $24 million worth of his cryptocurrency after a company agent gave his sim card to hackers. Terpin filed the lawsuit in 2019.

According to a report, Terpin accused the telecoms giant of “allowing hackers to swap his SIM card, in what appears to be an elaborate scheme by fraudsters.” Terpin, a crypto entrepreneur, also claims that AT&T’s lax security “allowed hackers to enter his wireless account and steal crypto coins worth roughly $24 million.”

For its part, AT&T argues “that it is not responsible for a series of recent SIM-swapping complaints.” Still, the telecom giant details the security thresholds it applied specifically to Terpin’s account and they include placing the “account on a higher security level with special protection.”

According to AT&T, this security threshold “included requiring a six-digit passcode (known only to Terpin and his wife) of anyone attempting to access or change his account settings or transfer his telephone number to another phone.”

In his lawsuit, however, Terpin “attributes the incident to AT&T’s willingness to cooperate with the hacker, gross negligence, violation of its statutory duties, and failure to adhere to its commitments in its privacy policy.”

In its findings, however, the U.S. court “recognized that AT&T disclosed the limits of its security protections and that its privacy policy explicitly states it cannot guarantee that customers’ personal info will never be disclosed as the result of unauthorized acts by third parties.”

Although it is unclear exactly how the thieves replaced Terpin’s mobile SIM, the “lawsuit suggests they impersonated him to AT&T’s customer service agents and requested that the phone number be transferred to their own device.”

After gaining access to his phone number, the criminals were able “to request a password change and reset the security on many of his accounts.” The hackers then “changed the password on his cryptocurrency account and initiated the transfer of digital assets to their own wallets.”

What do you think of the court’s ruling? Tell us your thoughts in the comments section below.

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