The U.S. Department of Justice has arrested Australian national David Gilbert Saffron and Los Angeles resident Vincent Anthony Mazzotta Jr. on charges of masterminding a $25 million Ponzi scheme using AI cryptocurrency trading. Indicted. The case highlights growing concerns about fraudulent activity in the fast-growing cryptocurrency and AI technology sectors.
Plan Operation Details
The indictment alleges that Saffron and Mazzotta conspired to defraud investors through various trading programs that falsely promised high returns using AI automated trading bots for the cryptocurrency markets. Operating under various names including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital, the duo defrauded investors and diverted their funds for excessive personal expenses such as private jets, luxury hotels, and private security guards.
Create a virtual entity
To further their fraud, Saffron and Mazzotta created a fictitious entity called the Federal Crypto Reserve. They lured victims into investing in their schemes and then demanded additional funds in the name of investigating and recovering victims’ losses. Using aliases and online personas such as Blue Wizard and Bitcoin Yoda, Saffron obscured his identity during these solicitations.
Obstruction and money laundering charges
Both men were charged with conspiring to obstruct justice, including concealing assets, destroying evidence and falsifying records. They reportedly used methods such as ‘blockchain hopping’, ‘mixers’ or ‘tumblers’ to prevent the tracking of embezzled cryptocurrencies. The charges against them include wire fraud, money laundering and obstruction of justice, and if convicted they could face up to 20 years in prison on the main charge.
Notably, Saffron has previously been indicted by the Commodity Futures Trading Commission, indicating a history of legal trouble related to his financial activities.
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