Tag: Asset Forfeiture

DOJ Targets SBF’s Jets for Forfeiture

by Blockchain News

According to a document that was submitted by the United States Department of Justice (DOJ) on October 4, 2023, two luxury aeroplanes worth several millions of dollars that are held by Samuel Bankman-Fried are now potentially vulnerable to forfeiture. The petition states that the foundation for the action to forfeit the property belongs to “offences described in Counts One through Four and Seven of Indictment 22 Cr. 673 (LAK)” committed by Bankman-Fried. Both a Bombardier Global 5000 BD-700-1A11 and an Embraer Legacy EMB-135BJ are named as the aircraft in question here.

Controversy Regarding Ownership It was revealed on September 21 in documents submitted to the United States Bankruptcy Court for the District of Delaware that the planes are at the centre of a controversy regarding ownership. The parties concerned are the federal government of the United States, FTX, and Island Air Capital, which is the aviation business that operates the planes. While the government maintains that the aircraft were acquired via the use of illegitimate finances, FTX is of the opinion that the loans that were used for the acquisition were not properly recorded.

The United States Commodity Futures Trading Commission (CFTC) initiated legal action against Bankman-Fried, FTX, and Alameda Research in the month of December 2022. The complaint claims that the defendants violated the Commodity Exchange Act and that Bankman-Fried exploited customer cash from FTX for personal expenses, including the purchase of private planes. Additionally, the lawsuit claims that the defendants violated the terms of their employment.

At this time, Bankman-Fried is on trial for several offences that are connected to the failure of FTX in November of 2022. The proceedings of the trial, which were presided over by Judge Lewis Kaplan, got underway on October 3, 2023 with the selection of the jury. On October 4th, the court heard opening statements in the case. In its opening statement, the Department of Justice (DOJ) depicted Bankman-Fried as intentionally misrepresenting clients and investors. In contrast, the defence contended that he is a young entrepreneur whose business ideas “didn’t work out.”

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Co-Founder of AirBit Club Sentenced to 12 Years for Cryptocurrency Ponzi Scheme

by Blockchain News

Key Takeaways

  1. Pablo Renato Rodriguez, co-founder of AirBit Club, sentenced to 12 years in prison.

  2. Rodriguez and co-defendants ordered to forfeit approximately $100 million in assets.

  3. Co-defendants await sentencing; previous involvement in pyramid schemes revealed.

Background and Conviction

Pablo Renato Rodriguez, co-founder of AirBit Club, was sentenced to 12 years in prison on September 26, 2023, by U.S. District Judge George B. Daniels. The sentencing was announced by Damian Williams, the United States Attorney for the Southern District of New York. Rodriguez was convicted for his role in orchestrating a global pyramid scheme through AirBit Club, a purported cryptocurrency mining and trading company. The co-defendants, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have pled guilty and are awaiting sentencing.

Deceptive Practices

AirBit Club was founded in 2015 by Rodriguez and Dos Santos. They falsely promised investors guaranteed profits in exchange for cash investments in club memberships. The company was marketed as a multilevel marketing club in the cryptocurrency industry. However, no actual Bitcoin mining or trading took place on behalf of the investors. Instead, Rodriguez and his co-conspirators used the money for personal expenses and to finance more recruitment events.

Asset Forfeiture

Rodriguez and his co-defendants have been ordered to forfeit their fraudulent proceeds, which include assets consisting of U.S. currency, Bitcoin, and real estate currently valued at approximately $100 million.

Previous Legal Troubles

Before AirBit Club, Rodriguez and Dos Santos were sued by the Securities and Exchange Commission (SEC) for another pyramid scheme known as Vizinova, and paid $1.7 million in disgorgement and fines.

Upcoming Sentencings

Dos Santos, Millan, Chairez, and Hughes have pled guilty to charges including wire fraud conspiracy, money laundering conspiracy, and bank fraud conspiracy. They are scheduled to be sentenced in early October 2023.

Cryptocurrency Ponzi schemes are not uncommon in a world where regulatory oversight is still catching up. On September 28, 2022, the U.S. Attorney’s Office announced the eighth distribution of over $4 billion to victims of the Madoff Ponzi scheme, which was not cryptocurrency-related but serves as a reminder of the recurring nature of such fraudulent schemes.

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FBI to reform virtual currency practices following DoJ recommendations

by Cointelegraph

A recently released U.S. Department of Justice audit of the Federal Bureau of Investigation’s (FBI) practices in regards to darknet criminal investigations concluded that the law enforcement agency is in disarray — and an overarching “cryptocurrency support strategy” might be among the solutions. 

According to an unclassified version of the audit released on Thursday, the FBI’s current darknet investigation efforts are — perhaps ironically — hampered by a “decentralized” set of practices, policies, and training programs, as well as compartmentalized intelligence leading to “redundant” efforts.

Notably, the audit found that there are two separate Virtual Currency Teams that assist with darkweb investigations, both of which are funded by the DoJ’s Asset Forfeiture Fund. Additionally, “rising costs and static funding from the Assets Forfeiture Fund resulted in disagreement between these two Virtual Currency Teams on the prioritization of resources”, and many felt that the two Teams conducted overlapping work. 

The Assets Forfeiture Fund receives a portion of its funding through the seizure and sale of property and assets, including cryptocurrency, tied to criminal investigations.

The DoJ made five recommendations to improve darknet investigations and policies, many of which focus on centralizing procedures in order to reduce “ambiguous or overlapping investigative responsibilities”. 

This includes a recommendation to “Develop timelines to obtain feedback from remaining FBI divisions and complete its development of the FBI-wide cryptocurrency support strategy”, and the report indicated that such a timeline is forthcoming.

The DoJ recommendations come at a time when the FBI might soon have more work on its hands due to new regulations. The Treasury’s Financial Crimes Enforcement Network recently proposed new rules that would require exchanges to KYC their customers for transactions over $3,000.