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Crypto Fraud – U. S. authorities arrested and charged principal of crypto fraud scheme involver over $7 million

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U. S. prosecutors in New York charge the principal of a purported cryptocurrency-related escrow company with fraud. Allegedly, he received $7 million from corporate clients for bitcoins that he actually never sent them. The now-unsealed Complaint charges Jon Barry Thompson with commodities fraud and wire fraud stemming from alleged promises made to two companies that they could use his business, Volantis Escrow Platform LLC, to purchase bitcoins with less risk of loss. Thompson misled the clients regarding the status of their bitcoins and the funds sent to purchase them.

Thompson ultimately failed to deliver the cryptocurrency and never returned the funds either, according to prosecutors.

“Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies. Whether a transaction involves cryptocurrency, or any other type of currency, commodity or security, this office is committed to rooting out fraud and protecting the integrity of our markets.”

Manhattan U.S. Attorney Geoffrey S. Berman

The Case

According to the complaint, Thompson’s alleged actions date back to June and July 2018, when he used another entity of his, known as Volantis Market Making, to entice two corporate clients to use his escrow services. Purportedly, he falsely informed the clients that he was in possession of bitcoins already.

Based on these assertions, one client sent a total of $3.25 million to a Volantis bank account in order to purchase the bitcoins. The transaction was expected to take place in early July 2018, but Thompson provided a number of reasons why it did not happen.

Meanwhile, Thompson sent more than $3 million of the received funds to a bank account owned by a law firm in Florida. Another $100,000 went to another bank account associated with Thompson. He sent a false statement showing he still held the funds transferred by the client.

A second client, the Ireland-based Symphony FS Limited, transferred $4 million to purchase bitcoins. Thompson wired funds to another escrow agent called KRFB Global Group LLC. He asserts that KRFB has the money and the bitcoins. Thompson transferred the funds despite knowing an individual associated with KRFB “had a history of bankruptcy and was associated with multiple social security numbers,” prosecutors say. Thompson ultimately never provided the bitcoins as promised, and did not return the funds either to Symphony FS Limited.

The Forbes Story

In January 2019, Forbes published an article in which revealed a story about the deal between Volantis and the Irish investment company Symphony FS Limited. According to the Forbed, Volantis negotiated a deal to transfer 6,600 bitcoin to Symphony. On July 24, 2018, Symphony transferred €3,600,000 to Volantis. Three days later, Thompson confirmed that the sale price of the first tranche of 500 bitcoins would be €3,303,500. However, the transaction never closed and Symphony did not receive any bitcoin nor its money back.

Detainment

Thompson was arrested in Pennsylvania this Thursday. According to the U.S. Department of Justice complaint, he was charged with two counts of commodities fraud, each of which carries a maximum sentence of 10 years in prison, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.

The case is USA v. Thompson, case number 1:19-mj-06649 in the U.S. District Court for the Southern District of New York.

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