A California man who relied on celebrity endorsements to raise over $7 million for a scam digital asset company has been sentenced to five years in prison. John DeMarr was also ordered to forfeit over $3.5 million.
DeMarr is the founder of Bitcoiin2Gen (B2G), a purported ecosystem that would allow users to trade tokens and stake their assets “on a secure, comprehensive platform.” He was also the founder of StartOptions, an online investment platform that allowed users to invest in BTC mining and trading.
As with almost every other scam, DeMarr lured investors with promises of lucrative returns. However, he had more than one arrow in his quiver: he also tapped celebrity endorsements to give his scam project a modicum of credibility.
DeMarr tapped Hollywood actor Steven Seagal to promote his scam. Seagal later admitted to his wrongdoing, and in a civil settlement with the Securities and Exchange Commission (SEC), he agreed to a $300,000 fine. It later emerged that he had been paid $250,000 in cash and promised $750,000 worth of B2G tokens.
The U.S. Justice Department (DoJ) alleges that DeMarr misappropriated the $7.2 million he raised from the B2G token sale, channeling it to a lavish lifestyle. In July 2021, he pleaded guilty to one count of conspiracy to commit securities fraud.
“DeMarr took advantage of those who trusted him, persuading them to double down on their investments when he knew that his cryptocurrency companies and their dubious celebrity endorsements were scams being used to fund his lavish lifestyle. The victims ultimately lost everything, so it is appropriate that DeMarr lose his freedom for concocting this fraud,” commented Breon Peace, the United States Attorney for the Eastern District of New York.
United States District Judge LaShann DeArcy Hall sentenced DeMarr to 60 months in prison. He was also ordered to forfeit $3,513,305.41.
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