A U.S. man faces 10 years behind bars after pleading guilty to defrauding over 170 investors in a digital currency Ponzi scheme. Jeremy Spence posed as a successful trader, lured investors and made off with over $5 million, authorities said.
In a press release, the U.S. Department of Justice (DoJ) announced that Spence, 25, had pleaded guilty to charges of commodities fraud before U.S. Magistrate Judge Debra Freeman.
The DoJ alleged that Spence, who went by the alias ‘Coin Signals,’ orchestrated his Ponzi scheme between November 2017 and April 2019. In that time, he solicited funds from over 170 investors by claiming to be a very successful trader. He allegedly launched several digital currency investment funds, including the Coin Signals BitMEX Fund, the Coin Signals Alternative Fund and the Coin Signals Long Term Fund.
Spence allegedly lured the investors by claiming to be extremely and consistently profitable, authorities said. In one instance in January 2018, he posted in an online chat forum that he had generated more than 148% in returns. This led the investors to put even more money into his funds. However, according to the DoJ, he had made losses during that month.
When investors started getting curious, Spence misdirected them by creating fictitious account balances and posting them on online forums, according to investigators. This gave the illusion that he was making consistent profits while he was losing money.
For those that wanted to cash out, Spence paid them with the funds deposited by the new investors in a Ponzi-like fashion. The DoJ alleged that Spence distributed over $2 million in this manner.
Damian Williams, the U.S. Attorney for the Southern District of New York commented, “Jeremy Spence, a/k/a, ‘Coin Signals,’ admitted today to luring investors to his cryptocurrency investment scam by touting fictitious historical returns of up to 148%. […] The bourgeoning cryptocurrency market can be attractive to investors; however, investors should be aware of the inherent risks, including the risk of fraud.”
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