$12M cryptocurrency fraud leads to indictments of two criminals in the US

$12M cryptocurrency fraud leads to indictments of two criminals in the US

The pair promised investors they could guarantee returns using AI-based trade bots

The US Department of Justice (DOJ) has charged two individuals for operating an alleged $25-million artificial intelligence (AI) cryptocurrency-trading Ponzi scheme.

According to the December 12 court filing, Australian David Gilbert Saffron and Vincent Anthony Mazzotta Jr. from Los Angeles have been accused of utilizing trading programs that “falsely promised to employ an artificial intelligence automated trading bot to trade victims’ investments in cryptocurrency markets and earn high-yield profits.”

After accepting users’ deposits, the men allegedly abused the funds to finance “private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef and private security guards.”

The two are also charged with hiding the victims’ cryptocurrency investments using interchain swaps and cryptocurrency mixers to avoid detection. The illegal undertaking operated under various names, such as Circle Society, Mind Capital, Federal Crypto Reserve, Bitcoin Wealth Management, Omicron Trust and Cloud9Capital.

The announcement states, “Saffron and Mazzotta are charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering and money laundering. Saffron is also alleged to have committed felonies while on pre-trial release.”

Since the DOJ began sanctioning crypto mixer Tornado Cash last year, the agency has concentrated on increasing the compliance of blockchain companies. The DOJ revealed these methods on December 9 to monitor the compliance of crypto exchange Binance after agreeing to a $4.3-billion settlement for money laundering and violation of US sanctions.

The DOJ has appointed several criminal divisions and the office for the Western District of Washington’s United States Attorney to closely observe the Binance’s activities, including the sections for asset recovery and money laundering, national security, export control and counterintelligence.

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