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Crypto trader Jeremy Spence jailed for 42 months for fraud

A 25-year-old Rhode Island crypto trader, Jeremy Spence, also known as “Coin Signals” on social media channels, has been sentenced to 42 months in prison. He was accused of defrauding 170 people out of more than $5.37 million.

Fake Mutual Funds

The Department of Justice (DoJ) issued a press release stating that Spence ran multiple crypto mutual funds between November 2017 and April 2019. These include the Coin Signals Bitmex Fund, the Coin Signals Alternative Fund and the Coin Signals Alternative Coin Signals Long Term Fund.

Investors interested in the fund would cryptocurrencies how Bitcoin and Ethereum to Spence, who in turn made false promises of high returns. Judge Lewis Kaplan of the United States District Court for the Southern District of New York said:

“Spence has solicited more than $5 million by making false statements, including that Spence’s crypto trades have been extremely profitable, when in fact his trades have been consistently unprofitable.”

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Complaints of 148% per month

On January 28, 2018, Spence posted to an online chat group that his trading skills generated returns of over 148 percent in just one month. This encouraged investors to direct additional funds to Spence. The DoJ further said:

In fact, Spence’s trading resulted in net losses on the accounts where he traded investor funds over the same period of about a month. Spence used new funds to cover up losses and make payouts to old investors. This allowed him to keep bluffing and raising more money. The DoJ added:

“To hide his trading losses, Spence used new investor funds to pay back other investors in a Ponzi-style manner.”

A refund invoice of $2,847,743

Spence used about $2 million worth of cryptocurrency from new investors per court filing to distribute to old investors. Judge Kaplan told the defendant:

“What struck me was the stupidity of the people you helped invest with you. These shenanigans have real impact and they are serious.”

Spence, who pleaded guilty last November, will also be released under custody for three years and must pay the targets $2,847,743 in restitution.

Source: Crypto News Deutsch

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