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Crypto trader sentenced to 3.5 years in prison for $5 million fraud

Crypto trader sentenced to 3.5 years in prison for $5 million fraud, Crypto Trading News
The United States Department of Justice (DOJ) has sentenced a 25-year-old Rhode Island cryptocurrency trader, popularly known as Coin Signals, to 42 months in prison for defrauding more than $5 million from over 170 people.

Coin Signals Trader Convicted

According to an official press release, convict Jeremy Spence had solicited funds from investors through multiple crypto investment pools he ran from November 2017 to April 2019.

He founded and managed several crypto funds, including the three largest – Coin Signals Bitmex Fund, Coin Signals Alternative Fund and Coin Signals Long Term Fund. Spence claimed that his businesses were doing well and generating huge profits, prompting investors to turn to him cryptocurrencies how BTC and ETH to act on their behalf.

Using false claims to lure investors

At one point, he even posted a message to an online chat group, falsely claiming that his trading of investor funds had returned more than 148% over the past month. As a result, some investors sent him additional funds.

our recommendation Crypto trader sentenced to 3.5 years in prison for $5 million fraud, Crypto Trading News

However, the Justice Department pointed out that Spence’s claims were far from the truth.

“SPENCE has solicited more than $5 million through misrepresentations including that SPENCE’s crypto trades have been extremely profitable, when in reality SPENCE’s trades have been consistently unprofitable…

Indeed, over the same roughly one-month period, SPENCE’s trading resulted in net losses on the accounts where it traded investor funds,” the DOJ noted.

To offset the net losses he suffered trading investor funds, Spence created false account balances to continue raising funds and began running a Ponzi scheme.

He used funds from new investors to pay off old ones and kept the ruse going as long as possible. He was able to distribute over $2 million worth of crypto assets to investors through the program.

“Rather than accurately reporting the trading losses SPENCE suffered, account balances incorrectly indicated to investors that they made money investing with SPENCE,” the DOJ added.

Spence pleads guilty

Spence was arrested by the Federal Bureau of Investigation (FBI) in January 2021 and separate civil charges have been filed against him by the Commodity Futures Trading Commission (CFTC). He pleaded guilty to the charges in November 2021.

In addition to his 42-month sentence, Spence will serve three years of supervised parole and will pay over $2 million in damages upon release.

Source: Crypto News Deutsch

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