Crypto celebrity Thomas John Sfraga has pleaded guilty to wire fraud for allegedly defrauding more than a dozen victims into investing in non-existent ventures, including a cryptocurrency fraud scheme.
“Sfraga persuaded victims to invest in fictitious cryptocurrency “virtual wallets,” the U.S. Department of Justice (DOJ) said in a May 17 statement. The agency also explained that Sfraga has experience in the podcasting and cryptocurrency industries, including serving as a host for cryptocurrency events in New York.
The Ministry of Justice added, “He promised the victims that he would increase the return on their investments by up to 60% within three months.” However, he appears to have been running a Ponzi scheme where the profits paid out to previous investors were not legitimate profits, but rather the investments of new entrants.
“But in reality, Sfraga diverted that money for his own benefit, to pay his own expenses, and to pay former victims and business associates,” he explained. Several of the victims are said to be Sfraga’s friends and neighbors, who betrayed their trust by “embezzling more than $1.3 million of their hard-earned savings.”
Such uptrends are not uncommon in the cryptocurrency market. Bitcoin (BTC) rose 65% in the three months from January 24 to April 24 this year, according to CoinMarketCap data. At the time of publication, Bitcoin is trading at $66,860.
Some altcoins have shown much greater returns over the same period. Pepe (PEPE) and Dogwifhat (WIF) are up 722% and 656%, respectively, over the same three-month period.
Related: Former Cred executive charged with wire fraud and money laundering
This comes after a recent crackdown on cryptocurrency scams.
On May 15, Cointelegraph reported that the Department of Justice charged brothers Anton Peraire-Bueno and James Pepaire-Bueno with wire fraud, wire fraud, and conspiracy to commit money laundering. .
They claimed to have acquired $25 million in cryptocurrency in approximately 12 seconds using a scheme that compromised the integrity of the blockchain.
Just a month ago, on April 4, the former head of legal and compliance for the multibillion-dollar OneCoin fraud scheme was sentenced to four years in prison after admitting that he helped launder millions of dollars.
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