Jeremy Spence, also known as “Coin Signals,” pleaded guilty to conducting a Ponzi-like operation that lost over 170 bitcoin investors $US5 ($AU7) million.
Spence, 25, made misleading claims about his previous trading prowess to persuade potential investors to give him money to trade. However, as per the US Attorney’s Office for the Southern District of New York, although he boasted of monthly profits of up to 148 percent, he was losing money.
The growing digital currency market can be appealing to investors, US Attorney Damian Williams said of the case. Nevertheless, investors should be conscious of risks, such as fraud.
Spence recruited investors in his numerous cryptocurrency funds, including Coin Signals Alternative Fund and the Coin Signals Long Term Fund, from November 2017 until April 2019. Those interested in participating would send him cryptocurrencies like bitcoin or ether, which he would invest on their behalf.
Spence would seek money from new investors using phony performance statistics to sustain his continuing scam since he continuously lost money trading bitcoins. He neglected to declare his losses appropriately and fabricated account balances to imply they were profitable.
He transferred cryptocurrencies worth $US2 ($AU3) million to investors in total, with the majority of the money coming from funds already put by other investors. Spence was first charged in January, and the Commodity Futures Trading Commission has filed a civil claim against him, seeking millions in fines and reimbursement for the victim’s losses.
He faces a potential penalty of ten years in jail if he pleads guilty to a commodities scam. Judge Lewis Kaplan is slated to sentence him at a later date.