U.S. Federal prosecutors have charged criminal charges against a Rhode-Island based crypto trader. The charges involve a case of a Ponzi scheme disguised as a crypto trading scheme. The U.S. Department of Justice stated Jeremy Spence, 24, had operated deceitful fund-raising campaigns. It involved setting up and managing a digital asset trading firm despite not possessing any professional experience.
Jeremy Spence, arrested this morning in Rhode Island, supposedly raised $5 million. More than 170 individual investors invested through online discussions on Telegram and Discord. However, only $2 million was allocated to investors from November 2017 through April 2019. Moreover, to shore up the fraud, he employed a Ponzi-style scheme in which he spent some money on early investors that they alleged symbolized profits yet were, in reality, other investors’ funds.
Jeremy Spence persuaded investors to invest in Hedge Funds
Moreover, Spence employed portions of invested capital to repay debts in his scheme, following failing to pay his investors’ cash commissions or other rewards. The defendant asked investors to fund in a series of hedge funds, the most comprehensive and most active of the Coin Signals Bitmex Fund, the Coin Signals Alternative Fund, aka the “C.S. Alt” the Coin Signals Long Term Fund.
The victims had to transfer crypto, like Bitcoin and Ethereum, to Spence to fund it in digital assets markets. The fraudster even reached as far as to outline performance reports, which wrongly alleged their pools had produced remarkable annual returns for investors. Further, the charge shows Spence’s alleged means of covering trading losses. It involves publishing malicious monthly account statements and checks meant to describe trading profits and investment returns.
Further describing the scheme, the DoJ stated that Spence offered fake account statements in January 2018 that designate he produced returns over 148% in a month, while he was lying on net losses. Spence faces ten years in prison for commodities fraud and 20 years for wire fraud. The CFTC investigates restitution, disgorgement, civil monetary penalties, permanent trading and registration bans. It also investigates permanent injunction against additional violations of the Commodity Exchange Act and CFTC regulations, as charged.
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