The Department of Justice, along with federal law enforcement partners, today announced criminal charges against six defendants in four separate counts for their alleged involvement in cryptocurrency-related fraud, including the largest known Non-Fungible Token (NFT) scheme to date, which has been charged with being a fraudulent Mutual fund allegedly traded on cryptocurrency exchanges, a global Ponzi scheme involving the sale of unregistered cryptocurrency securities, and a fraudulent initial coin offering.
“The Justice Department and our partners are committed to using all available tools to protect consumers and investors from fraud and manipulation,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These charges reflect our deep commitment to prosecuting those involved in cryptocurrency fraud and market manipulation.”
“Our office is dedicated to protecting investors from sophisticated scammers trying to profit from the relative newness of digital currency,” said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida. “As with any new technology, those investing in cryptocurrency must beware of odds that seem too good to be true.”
“These cases serve as a crucial reminder that some scammers hide behind trendy buzzwords, but ultimately are just trying to rob people of their money,” said US Attorney Tracy L. Wilkison for the Central District of California. “We will continue to work with our law enforcement partners to educate and protect potential investors across traditional and trending investments.”
“As cryptocurrency marketplaces continue to evolve and offer new opportunities for consumers, criminals are also looking for ways to exploit them,” said FBI Criminal Investigation Department Assistant Director Luis Quesada. “The FBI, along with our law enforcement partners, will continue to investigate and bring these criminals to justice and protect the American people.”
“This investigation and prosecution demonstrates the importance of public-private partnerships,” said Executive Associate Director Steve K. Francis of Homeland Security Investigations (HSI). “As a result of our close relationships with industry partners, HSI received information that led to this investigation and final indictment. The HSI will continue to investigate criminal organizations operating in new technologies and is proud to have worked with the Department of Justice Fraud Division to put an end to this criminal activity.”
The following charges are being announced today as part of this national enforcement action.
Crypto NFT Scheme:
United States vs. Le Ahn Tuan:
Le Anh Tuan, 26, a Vietnamese national, has been charged with conspiracy to commit wire fraud and conspiracy to commit international money laundering in the Central District of California in connection with a scheme involving NFT “Baller Ape”. As alleged in the indictment, Tuan was involved with the Baller Ape Club, an NFT investment project that allegedly sold NFTs in the form of various cartoon characters, often including a monkey character. According to the indictment, shortly after the first day Baller Ape Club’s NFTs were publicly sold, Tuan and his co-conspirators engaged in a so-called “rug pull,” shutting down the alleged investment project, deleting its website, and stealing the investors’ money. Based on blockchain analysis, shortly after the rug was pulled, Tuan and his co-conspirators laundered investors’ funds through “chain hopping,” a form of money laundering that involves converting one type of coin into another type and moving funds across multiple cryptocurrencies blockchains and used decentralized cryptocurrency swap services to cover the trail of funds stolen from Baller Ape investors. In total, Tuan and his co-conspirators received approximately $2.6 million from investors. Tuan faces up to 40 years in prison if convicted on all charges. HSI is investigating the case. Fraud Trial Attorneys Kevin Lowell and Tian Huang are prosecuting the case.
Crypto Ponzi and Unregistered Securities Scheme:
United States versus Emerson Pires, Flavio Goncalves and Joshua David Nicholas:
Emerson Pires, 33, and Flavio Goncalves, 33, both of Brazil, and Joshua David Nicholas, 28, of Stuart, Fla., have each been charged in the Southern District of Florida with one charge of conspiracy to commit wire fraud and one charge of conspiracy to related securities fraud with a global cryptocurrency-based Ponzi scheme that raised approximately $100 million from investors. Pires and Goncalves were also charged with conspiracy to commit international money laundering. The indictment alleges that EmpiresX founders Pires and Goncalves, along with EmpiresX’s so-called “head trader” Nicholas, fraudulently promoted EmpiresX, a cryptocurrency investment platform and unregistered securities offering, by, among other things, selling numerous have made false statements, an alleged proprietary trading bot that fraudulently guarantees returns to investors and potential investors in EmpiresX. As alleged in the indictment, blockchain analysis shows that Pires and Goncalves then laundered investors’ funds through a foreign-based cryptocurrency exchange and ran a pyramid scheme by paying previous investors with money received from later EmpiresX investors . If convicted on all charges, Pires and Goncalves face up to 45 years in prison and Nicholas faces up to 25 years in prison. FBI and HSI are investigating the case. Fraud Trial Attorneys Kevin Lowell and Sara Hallmark and Assistant US Attorney Yisel Valdes of the US Attorney for the Southern District of Florida are prosecuting the case.
Crypto Initial Coin Offering Scheme:
United States vs. Michael Alan Stollery:
Michael Alan Stollery, 54, of Reseda, California, was the CEO and founder of Titanium Blockchain Infrastructure Services (TBIS), a purported cryptocurrency investment platform. Stollery was charged with securities fraud in a filing filed in the Central District of California for his involvement in a cryptocurrency fraud scheme involving TBIS’ initial coin offering, which raised approximately $21 million from investors in the United States and brought in overseas. As claimed, in order to lure investors, Stollery has faked TBIS whitepapers (a document for potential investors that typically explains how to explain the underlying technology of the cryptocurrency and the purpose of the cryptocurrency project), placed fake testimonials on the TBIS website, and purported deals fabricate ties to the US Federal Reserve Board and dozens of prominent corporations, including Apple Inc., Pfizer Inc., and The Walt Disney Company, to give the appearance of legitimacy. If convicted on all charges, Stollery faces up to 20 years in prison. The FBI and the Federal Reserve Board’s Western Region San Francisco Office are investigating the case. Fraud Trial Attorneys Kevin Lowell, Tian Huang and Andrew Tyler are prosecuting the case.
“Those who fraudulently misrepresent their relationship with the Federal Reserve to mislead the public about cryptocurrency or other fraud schemes will be held accountable and brought to justice,” said Cory Nootnagel, acting special agent from the Office of the Inspector General for the Board of Governors Federal Reserve Systems and the Bureau of Consumer Financial Protection, Western Region. “I commend our agents, their federal law enforcement partners, and the Fraud Division of the Justice Department’s Criminal Division for their hard work and perseverance.”
Crypto Commodities Scheme:
United States vs David Saffron:
David Saffron, 49, of Las Vegas, Nevada, was the owner of the Circle Society, a cryptocurrency investment platform. Saffron used the Circle Society to encourage investors to participate in an unregistered commodity pool, which is a fund that combines investors’ contributions to trading in the futures and commodities markets. Saffron was charged in the Central District of California with one count of conspiracy to commit wire fraud, four counts of wire fraud, one charge of conspiracy to commit commodity fraud and one charge of obstruction of justice. As alleged in the indictment, Saffron falsely presented to investors that he traded investors’ funds to make a profit using a trading bot that could execute over 17,000 transactions per hour on various cryptocurrency exchanges. Saffron has falsely claimed that its trading bot would generate between 500% and 600% return on the amount invested. To entice investors to invest, Saffron allegedly chaired investor meetings in luxury real estate in the Hollywood Hills and elsewhere, and traveled with a team of armed security guards to give the false appearance of wealth and success. In all, Saffron fraudulently collected approximately $12 million from investors. If convicted on all charges, Saffron faces up to 115 years in prison. The IRS Criminal Investigation (IRS-CI) is investigating the case. Fraud Trial Attorneys Kevin Lowell and Theodore Kneller and Assistant US Attorney James Hughes of the US Attorney for the Central District of California are prosecuting the case.
“Mr. Saffron has exploited investor interest in cryptocurrencies by luring victims with bogus technology and false promises of guaranteed returns,” said Lead Special Agent Ryan L. Korner of the IRS-CI Los Angeles field office In reality, Mr. Saffron ran an illegal Ponzi scheme to scam victim investors and used the funds for his own personal gain.IRS-CI will prosecute and root out these schemes to protect investors, preserve our commodity markets, and protect against financial scammers to judge.”
Crypto Scam Victims:
All investors who are victims of the Baller Ape Club, EmpiresX, TBIS and Circle Society schemes are encouraged to visit https://www.justice.gov/criminal-vns/crypto-enforcement to identify themselves as potential victims identify and receive more information about their rights as a victim, including the ability to submit a victim impact statement.
An indictment is merely an allegation, and all accused are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.