Ex-CEO of Crypto Company Sentenced to Prison for Fraud, Fined $9 Million

The former CEO of a cryptocurrency firm has been sentenced to jail time and ordered to pay $9 million in restitution attributable to his firm’s position in a serious Ponzi scheme that value lots of of traders hundreds of thousands of . The listening to comes because the U.S. authorities and regulatory companies step up their crackdown on cryptocurrency-related fraud.A District Court Judge in Connecticut sentenced 33-year-old Josh Garza to a 21-month jail sentence adopted by six months of home arrest for his position in a Ponzi scheme primarily based across the issuance of a cryptocurrency – known as PayCoin – which entitled traders to a portion of one other firm’s mining income.The scheme was performed between May of 2014 and January of 2015 via 4 corporations owned by Garza. These corporations offered the rights and entry to cryptocurrency mining operations and allowed traders to purchase a portion of those operations via “PayCoin “and “Hashlets,” which claimed to provide traders the rights to a portion of the income from the mining operations.John Durham, the U.S. District Attorney for Connecticut, spoke in regards to the scheme, saying that “hashlet customers, or investors, were buying the rights to profit from a slice of the computing power owned by the companies.”Although the operation appears reputable on the floor, Garza made a number of claims that ought to have raised purple flags for traders, together with the assure that the worth of the digital foreign money wouldn’t drop beneath $20 per unit, as a result of the corporate would prop the worth utilizing their $100 million digital foreign money reserve.After pleading responsible for defrauding traders and committing wire fraud, Garza was ordered to pay full restitution to all of the traders that had misplaced their complete investments after the operations had been discovered to be illegitimate. The decide required that Garza pay all of the traders a complete of $9,182,000 in restitution and was sentenced to 21 months in jail.Garza’s Sentencing Comes because the US Government Increases Its Crackdown on Cryptocurrency ScamsThis previous week, a New York federal decide ruled that Initial Coin Offerings (ICOs) fall beneath the umbrella of securities choices, opening up the gates for the Securities and Exchange Commission (SEC) to maneuver to close down fraudulent, or doubtlessly fraudulent, ICO operations.The ruling happened in a case concerning a person who has defrauded ICO traders by claiming, and offering falsified proof, that the digital foreign money was bodily backed by diamonds and actual property.Judge Raymond Dearie, the decide dealing with the case, commented on his ruling, saying that:“Congress’ purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called… Stripped of the 21st-century jargon, including the defendant’s own characterization of the offered investment opportunities, the challenged indictment charges a straightforward scam, replete with the common characteristics of many financial frauds.”Following this ruling, the SEC instantly moved to close down and cost two cryptocurrency scams that had been defrauding traders. The first firm charged was TokenLot, a self-described ICO superstore, that was charged with working as an unregistered broker-dealer. The TokenLot crew cooperated absolutely with the SEC, which led to gentle prices.The second firm that was shut down by the SEC was a cryptocurrency hedge fund, known as Crypto Asset Management LP, that had falsely claimed to traders that it was the primary absolutely regulatory compliant crypto hedge fund. The operator of this fund, Timothy Enneking, had taken over $three million from traders, and greater than 40% of his fund’s investments had been thought-about as securities by the SEC.It is probably going that the SEC and different regulatory authorities within the U.S. will proceed to crackdown on cryptocurrency-related scams within the close to future.Featured picture from Shutterstock.Original article first appeared in https://www.newsbtc.com/2018/09/15/ex-ceo-of-crypto-company-sentenced-to-prison-for-fraud-fined-9-million/

Leave a Reply