Business

Steve Kaaru

Crypto escrow firm principal faces charges in New York over $7M fraud

Prosecutors in the U.S. state of New York have unsealed fraud charges against a principal of a cryptocurrency escrow firm. According to a press release by the Department of Justice, the U.S. Attorney for the Southern District of New York Geoffrey Berman charged Jon Barry Thompson with commodities fraud and wire fraud offenses.

According to the DOJ, Thompson took over $7 million from his clients after making false representations about SegWitCoin (BTC) transactions.

Thompson was the principal operator of Volantis Market Making LLC as well as Volantis Escrow Platform LLC. He is alleged to have claimed that his companies could minimize settlement default risk in crypto transactions for his clients, saying that since Volantis was the asset custodian for both the buyers and the sellers, there was no risk of default.

In June 2018, Thompson is alleged to have convinced one client company to send him over $3 million so that he could buy the crypto coins for them. He falsely assured the client that he already had the BTC in hand and that once he received the money, he would hand over the coins.

After receiving the money, he didn’t send the crypto as promised. Upon inquiry, he lied to the client for days, including about having the money and the BTC with him. However, records showed that he sent the money to another third party who was to sell him the crypto. The third party had not been disclosed to the clients who were led to believe that Thompson had the BTC all along. In the end, he never returned the $3 million, neither did he send the crypto.

In July 2018, Thompson convinced a second client to send him over $4 million under the same pretense as with the first client. He is alleged to have misappropriated some of the funds he received and in the end, he never returned the money nor sent the crypto.

The 48-year-old Pennsylvania native is charged with two counts of commodities fraud, each carrying a maximum sentence of 10 years in prison. He is also charged with two counts of wire fraud, each carrying a maximum sentence of 20 years in prison.

The Manhattan U.S. Attorney Berman cautioned any fraudster, whether in the crypto industry or not that the state of New York would descend upon them. He stated, “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.”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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