Justice Department Takes Action Against Crypto Escrow CEO for $7 Million Fraud Scheme

In an official accusation by the U.S. Attorney’s Office in New York’s Southern District, the CEO of a bitcoin escrow service has been charged with a $7 million investor scam.

According to the press release According to the U.S. Department of Justice, Jon Barry Thompson, who leads the Volatnis Escrow Platform LLC, has been hit with charges of commodity and wire fraud, bringing significant legal challenges his way.

The accusations facing Thompson include claims that he misled investors about the risks and misrepresented his control over the digital assets they were investing in.

Using Crypto to Defraud

Manhattan-based U.S. Attorney Geoffrey S. Berman stated stated that Thompson falsely portrayed cryptocurrencies as low-risk investments, ultimately deceiving two firms out of millions in mid-2018.

He promised to invest the funds in Bitcoin and provided falsified profit reports to these companies. Not only did they receive nothing in return, bitcoin , but Thompson also failed to repay the money they had entrusted to him.

Through his company, Volantis Market Making, Jon Thompson persuaded investors to venture into cryptocurrency deals by falsely promising a risk-free transaction process.

However, his clients soon found out that his assurances were nothing but hollow promises, leading to substantial financial losses due to his deceit,” noted Geoffrey.

FBI Assistant Director-in-Charge Sweeney remarked that Thompson exploited the companies’ lack of knowledge about cryptocurrency. “Thompson allegedly believed that the victims wouldn't question where their funds ended up after investing through him.

Using technical jargon, which left the companies baffled, he reportedly took advantage of their unfamiliarity with the evolving crypto landscape.”

Thompson is facing two charges of commodities fraud, each potentially leading to 10 years in jail, alongside two counts of wire fraud, which could add up to another 20 years, summing up to a possible 40-year prison term.

More Crypto-Greed

Fraud cases like Thompson’s have become alarmingly common. As cryptocurrencies gain more attention, some individuals resort to extreme measures to illicitly acquire digital coins.

March saw New Yorker Patrick McDonnell, aged 46, indicted for conning around 10 people out of roughly $194,000 in crypto funds.

McDonnell’s methods mirrored Thompson’s– under the guise of a firm called CabbageTech, he promised market expertise and crypto trading on behalf of his clients.

Instead of helping them invest in bitcoin, he used the collective funds for his own benefit.

On July 25, 46-year-old William Green from Wall Township, Monmouth County, New Jersey was similarly charged indicted by a grand jury for running an unlicensed Bitcoin trade exchange.

With his website, Destination Bitcoin, Green turned fiat into crypto for a fee. Although his crime diverges from Thompson’s, his activities weren’t compliant with regulations for crypto platforms.

Crypto frauds are increasingly casting a shadow over the digital coin landscape globally. These scams hinder industry growth by causing regulatory authorities to impose strict measures, complicating broader adoption and legal acceptance of cryptocurrencies.

In a recent finding According to Bitcoin.com, fraudsters managed to pocket $1.36 billion worth of cryptocurrencies during the first two months of 2018. Out of this, 30 percent was due to crypto fraud, with hacking attempts (22 percent), theft, and exit scams (17 percent each), and phishing (13 percent).