Federal prosecutors said this week that six people have been indicted in four separate cryptocurrency fraud cases involving losses of more than $130 million, including the largest NFT scheme indicted to date.
Prosecutors said the scheme involved a group called the Baller Ape Club that claimed to sell NFTs, or non-fungible tokens, in the form of monkey caricatures.
A group with a similar theme, Bored Ape Yacht Club, is one of the most popular NFT distributors in the world, with endorsements from Snoop Dogg, Tom Brady, and other celebrities. Its NFTs have sold for hundreds of thousands of dollars, although prices have fallen sharply in recent weeks.
Lu Anh Tuan, 26, of Vietnam has been charged in California with one count of conspiracy to commit internet fraud and conspiracy to commit international money laundering in connection with the Baller Ape Club scheme.
Shortly after Baller Ape Club went public, Tuan and the unnamed conspirators “pulled the rug,” deleted the group’s website and invested $2.6 million, according to the California Central District Attorney’s Office.
Prosecutors said that Tuan and the others laundered the money by transferring it via crypto and cryptocurrency services.
If convicted, Tuan faces up to 40 years in prison.
In a separate case, the founder and former CEO of Titanium Blockchain Infrastructure Services has been charged with one charge of 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 shares.
California federal prosecutors said Reseda CEO Michael Alan Stoleri falsified papers sent to potential investors testifying to the project’s purpose and falsely claimed that his company had ties to the US Federal Reserve and companies such as Apple and Disney. and Pfizer.
The ICO has raised about $21 million from investors.
Stoller faces up to 20 years in prison if convicted.
In a third case, a Las Vegas, California man is charged with four counts of electronic fraud and one account each for obstruction of justice, conspiracy to commit fraud and conspiracy to commit commodity fraud.
Prosecutors said David Saffron, 49, used his crypto investment platform Circle Society to raise about $12 million from investors into a fraudulent crypto fund that allegedly trades in the futures and commodity markets.
Saffron allegedly told investors he used a “trading bot” to generate returns of up to 600%. Prosecutors said he held meetings with investors in homes in Hollywood Hills and traveled with armed security guards “to create the facade of wealth and success.”
“In reality, Mr. Saffron was running an illegal Ponzi scheme to defraud the victim investors and use the money for his personal benefit,” said Ryan L. Corner, the special agent in charge of the IRS’s Los Angeles Criminal Investigation Department.
Saffron faces up to 115 years in prison if convicted.
The fourth case that prosecutors announced this week was indicted in the Southern District of Florida.
Emerson Pierce and Flavio Goncalves, both of Brazil, and Joshua David Nicholas of Stewart, Florida, are charged with one count each of conspiracy to commit securities fraud and conspiracy to commit wire fraud in connection with a crypto Ponzi scheme that prosecutors said was fraud. About $100 million from investors. Peres and Goncalves, both 33, were also charged with conspiracy to commit international money laundering.
Prosecutors said Pires and Goncalves, founders of crypto investment platform EmpiresX, worked with “key trader” Nicholas, 28, to promote the platform using false guarantees of returns to investors.
“Blockchain analyzes show that Pires and Goncalves then laundered investors’ money through a foreign cryptocurrency exchange and operated a Ponzi scheme by paying former investors with money obtained from EmpiresX investors at a later time,” the US Attorney’s office said.
If convicted, Nicholas faces up to 25 years in prison; The Pires and Goncalves face up to 45 years old.