Federal law enforcement authorities arrested an Ohio resident on charges of defrauding investors using digital asset investments. According to the Department of Justice (DOJ), the principal suspect, Rathnakishore Giri, is accused of organizing a fraudulent scheme worth over $10 million.
The court document indicated that the 27-year-old paraded himself as a professional virtual currency trader with a keen interest in BTC derivatives. Giri allegedly lured investors with the promise that his operations would guarantee impressive returns without any risk to the trading capital.
Buoyed by his assurances, hundreds of investors sunk in funds in his illegal operations, but instead of trading, Giri allegedly used the funds to repay old investors in what prosecutors called the “hallmark” of the Ponzi scheme. The court filings indicate a string of trading failures by Giri and multiple instances of losing investors’ funds in previous projects.
Giri is charged with five counts of wire fraud and is staring at the possibility of 100 years in federal prison, 20 years on each count if convicted.
In August, the Commodities Futures and Trading Commission (CFTC) filed a cease-and-desist order against Giri and his entities for defrauding investigators. The CFTC Commissioner Kristin Johnson added that Giri misappropriated the funds to live an opulent lifestyle “characterized by the use of private jets, yacht rentals, an extravagant vacation home, a luxury car, and expensive clothing.”
“This case illustrates these dangers, underscores the ever-present threats, and demonstrates that – no matter the asset class—effective enforcement and customer protections must be among our highest priorities,” said Johnson.
No hiding place for digital asset scammers
Bad actors in the digital asset space are feeling the walls closing around them as security outfits ramp up efforts to monitor the industry. The DOJ, in particular, has created a new division focusing on policing the digital assets industry—Digital Asset Coordinator (DAC) Network.
The new team has its members drawn from designated federal prosecutors from U.S. Attorney offices and will keep a close watch on the “DeFi (decentralized finance), smart contracts, and token-based platforms, and their use in criminal activity.”
Meanwhile, the Securities and Exchange Commission (SEC) beefed up its digital asset arm, and the increased staff strength is evident in the spate of legal cases that the commission has instituted against bad actors in the ecosystem.
“By doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and control issues with respect to cybersecurity,” according to the securities regulator.
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