US authorities seize $6.5M in Banana Fund Ponzi scam

Law enforcement authorities in the United States have seized $6.5 million in BTC and Tether, as part of an investigation into an alleged Ponzi scheme dubbed the ‘Banana Fund’.

The U.S. Department of Justice (DOJ) seized the funds after filing for the forfeiture last week. It comes after investigators found the fund had been siphoning off investor funds to finance the administrator’s own personal digital currency speculation.

The fund is headed up by an unnamed foreign national, who had used investor money to speculate on their own digital currency transactions. After trading successfully, the unnamed individual bought a house with the money, with fund documents registered to an address in Toledo, Spain.

While the fund was known to have raised 557 BTC and 1.73 million USDT, law enforcement agents were only able to recover 482 BTC and 1,721,868 USDT.

In a statement, the DOJ said it would now begin an action to restore the funds to the victims of the Ponzi scheme.

“As a result, USSS executed a seizure warrant on those funds and commenced this action to begin returning these funds to the administrator’s victims.”

The Banana Fund originally solicited investments to finance projects as a form of crowdfunding, which would ultimately reward investors accordingly. First investments were accepted in 2016, but by 2018, the fund website was redirecting to a Google Docs form telling investors the fund had failed.

The website asked investors to input their details to receive a refund. Meanwhile, exchange records show the fund was still using client money to trade digital currencies via the administrator in his personal name.

Despite claiming there was only $1.73 million available to refund investors, account balances at the time show in excess of $11 million. 

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.