A court in Russia’s Tatarstan region has denied the appeal of the founder involved in the alleged $1.5 billion Bitcoin Ponzi scheme.
According to Russian publication Inkazan, the Supreme Court of Tatarstan upheld the arrest in absentia of Marat Sabirov, the co-founder of Finiko, a company which the Bank of Russia put on its list as having signs of a pyramid scheme. The ruling proceeded without the physical presence of Sabirov in court.
According to blockchain analytics firm Chainalysis, deposits of more than $1.5 billion were allegedly made into Finiko between December 2019 and August 2021. Finiko operated mostly in Eastern Europe and predominantly in Russia and Ukraine.
A report indicates that deposits to the Ponzi scheme ranged between a minimum of 100,000 rubles ($1,360) and a maximum of 81 million rubles ($1.1 million). Participants were required to deposit either Bitcoin (BTC) or Tether (USDT) into the alleged Ponzi scheme that promised returns of up to 30% per month.
The Supreme Court of Tatarstan also upheld the arrest in absentia of other Finiko founders: Edward Sabirov and Zygmunt Zygmuntovich.
The three, who are currently placed on an international wanted list, are alleged to be close associates of another Fininko co-founder, Kirill Doronin. Doronin, who is currently in custody ahead of his trial, sought to be released on house arrest on grounds that he could pay Finiko investors.
Doronin’s personal assistant and the vice-president of Finiko, Ilgiz Shakirov, was also arrested earlier this month while waiting for the conclusion of the investigation period.
Don’t Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
After a couple of years of studying Bitcoin and the U.S. dollar that I was raised to trust like it was some faceless god, I eventually started valuing everything in Bitcoin’s satoshis instead of the U.S. dollar.
The biggest reason wasn’t because of Bitcoin either. It was the U.S. dollar’s system that did it to me. Once I learned what the system was and how it functioned, I could no longer value anything in dollars after realizing how fast they were exponentially losing value.
The U.S. dollar is a system that is burning up its own value with every new dollar that is digitally issued and shoved into the bank accounts of the top 1% of the world. It is shoved into their accounts whenever they need to get a new bank bailout loan or corporate bond loan. They then take that new money and freeze it into their own portfolio’s asset holdings. Jumping ship from the dollar while the loan/money printing process that got them those dollars melts away the buying power of everyone else’s U.S. dollar savings.
This process leaves almost none of that newly printed money liquidity to trickle down to those at the bottom that are relying on the dollar. Dollars that are perpetually being devalued thanks to the digital printing of trillions of new dollars; trillions of new dollars that are issued through loans acquired by the top 1% for their asset-hoarding greed. And we wonder why the wealth inequality is getting so bad with all this loan welfare. Loan welfare for the top 1% where they get a majority of the newly printed cash to then play musical chairs within their asset market of choice.
They possess most of the now 35% of all U.S. dollars in existence that were digitally printed out of thin air last year, as stated by Jack Choros in a blog post going over the increases in M1 money supply during the pandemic. They always get a majority of the new digitally printed cash every year through loans to hoard in their assets, all while giving employees the bare minimum. Not even the bare minimum to survive anymore, but the bare minimum they can get away with since minimum wage isn’t even enough to afford the new rising costs of rent. NPR covers this in their article: “Rents Are Out Of Reach For Most Americans Earning Minimum Wage.”
That happens because our cash is created with every new loan that gets issued in our current monetary system, as stated by Forbes in “How Bank Lending Really Creates Money, And Why The Magic Money Tree Is Not Cost Free.”
The top 1% can afford to get the largest loans out of all of us. Some of them can even force the government to give them large loans or even buy up their stock, which in turn forces new money to be digitally printed. Devaluing the rest of the dollars in circulation in the process. We saw this during the pandemic. It was covered by The New York Times in their article titled: “1 Percent of P.P.P. Borrowers Got Over One-Quarter of the Loan Money.” According to the article, the 1% of businesses that got the lion’s share of the P.P.P loan money consisted of “powerful law firms like Boies Schiller Flexner, restaurants like the steakhouse chain started by Ted Turner, as well as the operator of New York’s biggest horse tracks.”
The government is often forced to give out these massive corporate loans that cause the printing of new money which devalues everyone’s U.S. dollar savings. There are situations like this that we see every couple of years where banks need to get bailed out because their corrupt systems go bust and start falling apart, further increasing the debt imbalance on the U.S. dollar’s balance sheet.
To see examples of these forced loans and forced stock buying programs for the largest banks and corporations of the world, all we have to do is look back to the same 2008 bailouts that caused Satoshi to invent Bitcoin in the first place. Wikipedia has a page detailing the events well, listing all the beneficiaries of the bailout in their page named the “Troubled Asset Relief Program.” A program that was created because banks and corporations marketed themselves as “Too Big To Fail.” In other words, using unproven theories about how their own failures caused by their own mistakes would somehow cause the whole financial system to crash, all to scare the general public and their lobbied politicians into bailing them out with programs that print new dollars just for them. These bailouts charge anyone saving in dollars an invisible tax via the inflation those bailouts cause. Wikipedia also has a page covering this that explains it in the following words: “Inflation tax It is a hidden regressive tax. Financial repression A range of measures which governments can employ to reduce their debt, which are often accompanied by inflation.”
Another part of this money printing picture for the top 1% is “Corporate welfare programs.” Programs in which governments hand out money grants, tax breaks and other special favorable treatment to corporations in the top 1% of the financial world.
The U.S. dollar’s system in which new dollars are generated through loans is basically a loan-based, asset-hoarding pyramid scheme with extra steps. One that is falling apart at increasingly faster rates with every uptick in inflation, and no uptick in wages thanks to the wage stagnation caused by corporate greed. Corporate greed likes to test how little they can get away with paying people while avoiding an uprising.
It falls apart further with every new digitally printed dollar that forces them to print even more dollars to pay off old debts, which in turn creates larger debts in the process. Repeating this bleeding debt, money creation cycle that is causing the inflationary purchasing power loss of the U.S. dollar to grow exponentially faster over time.
All this so 1% of the population can hoard enough assets to live like financial gods. With enough money to fly their rockets to the heavens and still have more money left over than they can ever possibly spend in their lifetimes. But sure, some of them are promising to give it all away when they die, so they tell us that it’s okay for them to do it.
Their corrupt schemes get more fun, too, on the other end of this debt/money creation equation: the investor’s end.
On the investor’s end, the government pays off debts to old national bond investors with the money they receive from new national bond investors that are investing into the government’s bond market system.
That means that the U.S. pays off old investors of the nation with the money they receive from new investors into the nation’s bond system. Sound familiar? In the dictionary, this is called a Ponzi scheme. I call it “a Ponzi scheme with extra steps.”
These government bond investors are supposed to be the ones funding the new government bond loans. But there are not enough investors to do that, since most people today are wage slaves. So, the investors that are able to invest can only afford to fund a small percentage of the massive corporate-government loans that get approved every year. Meaning the rest is new money printed out of thin air with each loan that exceeds the national bond investment cash inflow.
They print the new money that devalues the purchasing power of everyone else’s U.S. dollar savings, while at the same time freezing the new money supply in corporate assets that prevents it from trickling down and circulating throughout the economy: This system is how a wage slave working class is created.
A working class with wages so low that they can never save any substantial amount of money before the dollars in their savings are devalued beyond any meaningful utility. Usually forcing them to have no other option but to take on unpayable debts just to get by and get anything they need in life like a house, a car, food, or rent, or even to pay emergency medical bills.
The national bond investor end of this equation is what allows the government the front they need to be able to print the massive amounts of money that they do. Money that they then loan to Wall Street every year who then freezes it into their asset bags.
You know, like how a money-laundering operation works. Except, instead of the money coming in from cartels or nefarious businesses with offshore bank accounts to then be washed through their fake businesses and stored in legal assets, it’s just being printed out of thin air by the Federal Reserve. Adding more dollars to the overall circulating dollar supply, while reducing the value of everyone else’s savings who save in U.S. dollars and/or fiat currencies like it that rely on the dollar.
Have you felt that something was off with our financial system in this country? That might be because you subconsciously noticed that the system unfairly flows the stream of new money to the top 1%. While at the same time leaving those at the bottom with less money and only higher debts every year that perpetually grows and forces them to work all their lives.
In layman’s terms, the system is a debt-based pyramid scheme with extra steps, fronted on the other end by an investing-based Ponzi scheme with extra steps.
George Carlin said it best: “It’s a big club, and you ain’t invited.”
Everyone else might as well be a WestWorld robot-like wage slave whose time can be rented and traded with a paycheck like a deck of trading cards.
It’s two sides of the same rotten apple, and it is starting to rot down to the core. Two corrupt practices that the government takes other companies and individuals down for when they’re caught doing it. Maybe they just don’t like the competition.Maybe it’s Maybelline.(Sorry, I couldn’t help myself!)
When Bernie Madoff gave his first interview from jail after being caught running a Ponzi scheme, he told the press: “Why are you even talking to me; the federal government is running the biggest Ponzi scheme in the world!”(Paraphrased from NBS News: “Madoff: ‘Whole government is a Ponzi scheme’”)
If there was one thing Maddoff was an expert in, it was Ponzi schemes. Game recognizes game.
All this is inching the U.S. dollar closer to a cliff of hyperinflation. A financial cliff drop in the dollar’s purchasing power that most of us now have a high probability of seeing in our lifetimes.
When we compare where our debt-to-balance ratio is today to other countries in history who have been where we are now. Each of those countries historically fell into hyperinflation within 30 years from when they were at the point we’re at now. Unsustainable increases in inflation rates, which caused a loaf of bread to cost their citizens upward of a million dollars in their currencies.
Where Venezuela is today. Where Argentina, Zimbabwe, and so many more countries are today. All countries who are already experiencing this ahead of us 30 years ago were, 30 years ago, where we are today in our rates of inflation and national debt balance sheets.
It happened to Germany before they got desperate and fell into wars from the pains of those economic collapses. Wars that were started as last-ditch efforts to save their country. Well, more so to save the wallets of the country’s political leaders and its war profiteering military industrial complex.
The fall of these countries’ currencies always started off with a slow ramp-up in speed like what the U.S. had in 2008, when Satoshi first noticed it during the second bank bailouts. That’s right, the first bank bailouts were done in the late 1990s, and almost nobody paid attention. Next follows a moderate-to-fast increase in speed like we are in now. All finally resulting in one giant uncontrollable drop in the values of their currencies within 30 years. A value-loss rate of inflation that never ended once they fell into hyperinflation.
And with the U.S. dollar being the reserve currency of most countries today, then its collapse will drag the whole world down with it if they all don’t hedge themselves properly to protect themselves against the dollar’s approaching collapse.
El Salvador is a great example of that kind of hedging against the dollar that other countries appear to be taking notes on. If you don’t know, El Salvador made bitcoin a legal currency and treasury reserve asset in their country to protect themselves against the dollar’s increasing rate of inflation.
The signs of the dollar’s collapse and that it’s exponentially picking up speed is obvious when you look at all countries that are experiencing hyperinflation today. Countries that relied on the dollar until its increasing rates of inflation failed them and their currencies. This is further explained in Robert Kiyosaki’s video, “Shocking Prediction: The Price of Bitcoin by 2031.”
Because of all that, I’m more afraid to save dollars long term than I am afraid to save bitcoin. Especially after reading the charts on https://wtfhappenedin1971.com/.
It really paints a good picture of how we started heading down this increasing rate of inflation rabbit hole after Nixon ended the gold standard. Something that even Nixon said was supposed to be temporary. Well, it’s been 50 years since then and the dollar has only lost what? Over 99% or more of its value when compared to things like houses, cars, food or rent. But sure, it’s temporary.
If you want to know why I’m bullish on bitcoin, and why I started using it as my primary savings ever since learning about its system instead of the U.S. dollar then check out my article, “My Best Attempt To Simplify The Math Of A $50 Million Dollar Bitcoin.”
This is a guest post by Fausto Liro. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Former director and promoter of the notorious Bitconnect Ponzi scheme, Glenn Arcaro, has pled guilty to fraud charges related to his role in the now-defunct crypto exchange and lending platform
He has been ordered to pay back $24 million to investors.
In a parallel action in the long-running saga the United States Securities and Exchange Commission (SEC) has charged Bitconnect, its founder Satish Kumbhani, former director Arcaro, and Future Money Ltd. over the scheme. The defendants are accused of running a fraudulent, unregistered securities offering that netted $2 billion.
The latest developments come three years after BitConnect shut down its lending platform and crypto exchange in light of warnings from Texas and North Carolina regulators.
Bitconnect has been widely accused of being a Ponzi scheme, and the scheme lives on in countless memes.
According to a Sept.1 release from the Department of Justice (DoJ), Arcaro pled guilty to charges alleging conspiracy to commit wire fraud.
The Los Angeles resident admitted to conspiring with “others” to exploit investors by “fraudulently marketing” BitConnect’s coin offering and crypto trading platform as a highly profitable investment.
The 44-year-old also admitted to misleading investors about the “BitConnect Trading Bot” and “Volatility Software” as being able to generate large profits and guaranteed returns by using investor funds to trade on the volatility of crypto markets.
“In truth, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors,” the DoJ release read.
Arcaro is said to have operated a large network of promoters in North America that formed a pyramid scheme dubbed the “Bitconnect Referral Program.” He earned around 15% per investment into BitConnect’s lending program, while he also received a cut from all investments via a hidden “slush” fund.
The former promoter admitted to earning around $24 million from his fraudulent activities and has been ordered to pay back the full amount to investors.
“Arcaro capitalized on the emergence of cryptocurrency markets, enticing innocent investors worldwide to get in early by promising them guaranteed returns, and exploiting the internet and social media to reach a larger pool of victims with greater ease and speed,” said Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office.
Related:Crypto is too big to exist outside of public policies, warns SEC chair
New SEC charges
The SEC charges announced today are aimed at BitConnect, founder Satish Kumbhani, former director Arcaro and Future Money Ltd — a firm incorporated by Arcaro in Hong Kong.
According to Sept. 1 complaint, the SEC alleges that the defendants conducted a fraudulent and unregistered securities offering via BitConnect’s lending platform between 2017 and 2018, that generated approximately 325,000 Bitcoin (BTC) worth $2 billion at the time.
Today, we announced that we have filed an action against an online crypto lending platform, its founder, and its top U.S. promoter and his affiliated company.
They allegedly defrauded retail investors out of $2 billion!
The complaint asserts that users were duped into investing in the lending platform via claims that BitConnect’s trading bot would produce guaranteed returns of 40% a month, and accused BitConnect of posting “fictitious returns” on the website equating to an average of 1% per day, or 3,700% annually.
“These claims were a sham. As Defendants knew or recklessly disregarded, BitConnect did not deploy investor funds for trading with its purported Trading Bot. Rather, BitConnect and Kumbhani siphoned investors’ funds off for their own benefit and their associates’ benefit.”
The SEC notes that the whereabouts of BitConnect’s founder Kumbhani is currently unknown.
The SEC is seeking a full disgorgement of funds, the enjoinment of the defendants from violating securities laws in the future, and civil monetary penalties.
In May the SEC charged six other BitConnect promoters for their role in the alleged insecurities offering, and Cointelegraph reported on July 8 that the SEC had closed in on settlements with four of the six individuals.
Investigations into the South African company Mirror Trading International (MTI) – widely seen as last year’s most ruinous Bitcoin (BTC) Ponzi scheme – are now engaging the United States Federal Bureau of Investigation (FBI).
MTI, which went into provisional liquidation in December 2020, claimed to have over 260,000 members across 170 countries at the height. It had first caught regulators’ attention in Texas back in July of last year, where its operations were quickly shut down. South Africa’s Financial Services Conduct Authority (FSCA) issued its own statement in August 2020, warning that the company lacked a mandatory license and was offering investors implausible, fantastical returns on their investment. The FSCA had advised MTI’s existing clients to request immediate refunds.
Since the scheme’s collapse, the liquidation team in South Africa has been attempting to trace MTI’s assets, with the company believed to have held around 23,000 BTC worth around $874 million at today’s price. The team has been seeking to expand powers to aid their efforts since January.
In an email to Bloomberg, five MTI trustees said they had now “had meetings with international law enforcement agencies like the Federal Bureau of Investigation, after being approached by them,” revealing that “the FBI is joining forces with the liquidators of Mirror Trading International in the interest of several U.S. and local investors.”
As previously reported, South African media outlets have leaked alleged internal MTI communication that suggests that the company’s senior executives were in the dark about the scheme’s operations, with MTI CEO Johann Steynberg the sole person to have had full control.
Related: South Africa learns a hard crypto lesson amid fast growing demand
In their correspondence with Bloomberg, the liquidators said that “although there is a paper trail (airplane ticket) regarding [Steynberg’s] possible flight attempt to Brazil, no video or photo confirmation could be obtained that he did leave the country.” Steynberg has remained AWOL since December 2020.
An executive at the South African crypto exchange Luno has this week revealed to reporters that some of the victims of a major alleged crypto theft in the country this spring, tied to the Africrypt investment scheme, had also previously sent their funds to MTI.
Raees Cajee, the co-founder of South African crypto investment platform AfriCrypt, has denied claims that he and his brother ran off with billions in investor funds, asserting the platform lost $5 million in a hack.
Last week, Cointelegraph reported that AfriCrypt — an asset manager purporting to offer daily returns of up to 10% that launched in 2019 — had been accused of disappearing with 69,000 BTC of investor funds in a mysterious exploit.
While AfriCrypt had notified users of the hack on April 13, suspicions were immediately raised as the message urged investors to avoid taking legal action as it would slow down the recovery of the funds. Shortly thereafter, the brothers reportedly halted AfriCrypt’s operations and went missing.
Speaking with The Wall Street Journal on June 28, Raees sought to counter the accusations laid against AfriCrypt and its co-founders, asserting the pair went into hiding after receiving death threats from some “very, very dangerous people.”
Raees also rejected claims that $3.6 billion in funds is missing, asserting the firm only managed $200 million during its peak in April, and that only $5 million in investor funds are unaccounted for after the hack.
“At the height of the market, we were managing just over $200 million.”
Hanekom Attorneys, the law firm representing AfriCrypt’s customers, alleges the brothers transferred $3.6 worth of BTC from AfriCrypt’s accounts and client wallets, before moving the funds through “various dark web tumblers and mixers” to prevent the funds from being traced further.
If the allegations against AfriCrypt are true, the incident would surpass the losses from South African-based Ponzi-scheme Mirror Trading International, which pulled in 23,000 BTC from unsuspecting investors in the country’s largest confirmed crypto fraud to date. At today’s prices, the stolen BTC would fetch $800 million.
Related:Minneapolis Fed President Neel Kashkari calls DOGE a Ponzi scheme
Lawyer John Oosthuizen, who is representing the Cajee brothers, told the BBC on June 26 that the pair has “categorically denied” the allegations they stole their investors’ funds.
“They maintain that it was a hack, and they were fleeced of these assets,” he added.
South Africa’s Financial Sector Conduct Authority (FSCA) released a statement regarding the case on June 24, noting the project appeared to have Ponzi-like characteristics:
“This entity was offering exceptionally high and unrealistic returns akin to those offered by unlawful investment schemes commonly known as Ponzi’s.”
However, the FSCA asserted it cannot take any action against AfriCrypt as crypto assets are currently unregulated in South Africa.
According to WSJ, a separate group of investors is seeking AfriCrypt’s liquidation. The brothers plan to surface for a July 19 court hearing regarding their claims.
Around 69,000 Bitcoin has vanished from a South African investment platform along with two brothers who owned the crypto firm.
Although the facts are yet to be proven in court, if it turns to be an exit scam rather than a hack, it would be the biggest in history according to Bloomberg. There were warning signs for investors either way, with users reportedly promised returns of up to 10% a day.
AfriCrypt was founded in 2019 and operated by brothers Ameer and Raees Cajee. It had reportedly amassed around 54 billion rands worth of BTC, or $3.6 billion USD at the time, when it sent a message to investors on April 13 claiming the platform had been hacked.
The firm said it would halt operations while it began the process of “attempting to retrieve stolen funds and compromised information.”
South African law firm Hanekom Attorneys, which has taken the case on behalf of affected users, said suspicions were aroused as the message included the warning that: “clients may proceed the legal route, but we ask clients to please acknowledge that this will only delay the recovery process.”
“We were immediately suspicious as the announcement implored investors not to take legal action,” Hanekom Attorneys said. The law firm also claimed that “Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”
Hanekom Attorneys alleges that the brothers transferred the 69,000 BTC — which is now worth $2.2 billion after the recent price tumble — from AfriCrypt’s accounts and client wallets, and subjected the funds “to various dark web tumblers and mixers, resulting in severe fragmentation” to make the funds untraceable.
The brothers have been unreachable, with calls going directly to voicemail, while the AfriCrypt website is also down. The law firm has reported the case to an elite unit of the national police dubbed the “Hawks.”
South Africa’s Gauteng South High Court has granted a provisional liquidation order against the Cajee brothers, and they have been given until July 19 2021 to respond to the order.
Related:Scams are driving South African authorities to regulate crypto trading
According to African online crypto news outlet BitcoinKe, AfriCrypt drew in clients by targeting high net worth investors and urging them to refer their friends, while also offering returns of up to 10% daily.
The eye watering daily return puts the 10% monthly return promised to users of South African crypto Ponzi scheme Mirror Trading International (MTI) into the shade.
MTI has been described as the biggest Ponzi-scheme the country had ever seen, pulling in 23,000 BTC from investors ($774 million at today’s prices) with MTI’s CEO, Johann Steynberg reportedly fleeing to Brazil to escape punishment when the firm was placed under provisional liquidation in 2020.
According to a report from blockchain analytics firm Elliptic, unregistered securities offerings represent more than half of all crypto fines handed out by U.S. regulators.
In Elliptic’s June 21 Sanctions Compliance in Cryptocurrencies report, the firm’s co-founder and Chief Scientist, Dr. Tom Robinson writes that U.S. regulators have handed out $2.5 billion in fines for crypto-related violations since 2014.
Out of the total $2.5 billion, unregistered securities offerings accounted for $1.38 billion worth of penalties, or 55.19% of all fines dished out. Fraud was the second biggest crypto violation found in the report, accounting for 37.12% or $928 worth of penalties.
The largest crypto violation on record was the SEC’s 2020 verdict on Telegram’s initial coin offering (ICO), with the encrypted messaging app being charged for violating securities laws through its 2018 unregistered ICO that raised $1.7 billion in 2018. Telegram was ordered to pay $1.2 billion in disgorgement and $18.5 million in civil penalties.
The largest fraud penalized by the CFTC was Control Finance Ltd. Ponzi scheme, with the scam’s operator, Benjamin Reynolds, having gone AWOL last year before being found and charged in March 2021. The fraud resulted in a civil penalty of $429 million, along with restitution of $143 million.
With numerous successful enforcement actions having been executed over the years, Dr. Robinson asserts the crypto sector is not the “wild west” of finance it is often characterized as in mainstream circles:
“Our analysis of crypto asset-related enforcement actions in the U.S., demonstrates that crypto is far from being the ‘wild west’ of finance. Regulators have successfully used existing laws to halt and penalize illicit activity that has exploited cryptoassets.”
Elliptic’s analysis of US regulatory enforcement actions since the birth of Bitcoin in 2009 shows that $2.5 billion in penalties have been imposed against firms and individuals dealing in crypto ➡️ https://t.co/i3hoWhrcLI
— elliptic (@elliptic) June 21, 2021
The United States Securities Exchange Commission (SEC) has handed out the most monetary penalties for crypto violations, accounting for $1.69 billion or 67% of all fines.
The SEC is followed by the Commodity Futures Trading Commission (CFTC), which has divvied out 25% off penalties worth $624 million, the Financial Crimes Enforcement Network (FinCEN) with 7% or $183 million, and the Office of Foreign Assets Control (OFAC) at 2.4% or $606,000.
Related:Minneapolis Fed President Neel Kashkari calls DOGE a Ponzi scheme
The report also notes increasing innovative tactics employed by sanctioned entities to evade restrictions and access cryptocurrency.
Elliptic states that sanctioned actors are increasingly using “privacy coins, mixers, and privacy wallets to evade detection” alongside decentralized exchange platforms (DEX) that allow users to trade without having to provide know-your-customer (KYC) information.
Victims of an alleged $3.6 billion crypto Ponzi scheme in South Korea are reportedly hampering the progress of a police investigation and a joint lawsuit — as they still believe in the project and hold out hopes of getting a return on their investments.
On June 4, Korean law firm Daegon reportedly filed a joint complaint against V Global, its CEO, and three executives on behalf of 130 investors and the Gyeonggi Nambu Police Agency.
The Gyeonggi Nambu Police Agency is reportedly investigating V Global for an alleged crypto Ponzi scheme that reportedly defrauded around 69,000 people out of 4 trillion won ($3.6 billion) — while promising investors they would triple their investments.
A notice on the company’s website says that it strongly denies the “false” claims and has filed a complaint with the Seocho Police “for defamation and obstruction of business”.
A June 8 article from local media outlet JoongAng Daily states the police have “hit a snag recently” as some of the “victims” of the alleged Ponzi scheme have refused to report the case.
According to the publication, despite police raiding 22 of V Global’s offices across South Korea last month — and freezing $213 million of assets in the process — employees off the firm have been messaging victims to tell them that the company is not under investigation.
An unnamed man told JoongAng he believed his mother had been scammed by V Global. “A few days ago, on June 2, they sent her a text message alleging that no one in the company is being investigated by the police,” the man said.
“They keep telling the investors to wait and see, to prevent them from reporting them to the police,” he added.
Along with selling its own native token, V Global reportedly promised that anyone who invested a minimum of 6 million won, worth roughly $5381, would triple their investment by being paid out in dividends after six months.
“They tried to imitate a cryptocurrency trading platform, but in actuality, they appear to have been running an illegal Ponzi scheme on the investors,” a police officer told JoongAng.
According to Yonhap news agency, V Global also offered referral bonuses of 1.2 million won, worth around $1000 for bringing new clients to the platform.
The article alleges that V Global used the investments from new members to pay out the dividends to existing members.
If V Global is found guilty, it would potentially be one of the biggest crypto-related Ponzi schemes on record, in a similar fashion to the infamous multi-billion Ponzi scheme from OneCoin in 2015.
In a CNBC’s Squawk Box interview, Nassim Taleb, “Black Swan” author, talked about his views on Bitcoin and how to hedge risk in the current turbulent market.
He was asked about crypto assets, with a particular focus on Bitcoin, given that an increasing number of investors have been restructuring their portfolios with the new asset class.
Taleb criticized Bitcoin, describing it as a gimmick, which is too volatile to be an effective currency and not a safe hedge against inflation.
Taleb said: “Basically, there’s no connection between inflation and bitcoin. None. I mean, you can have hyperinflation and bitcoin going to zero. There’s no link between them.”
He sees Bitcoin as having characteristics of the Ponzi scheme. He said that Bitcoin is “a beautifully set up cryptographic system that is well-made but there is absolutely no reason it should be linked to anything economic.”
Taleb had once favourable views toward the leading cryptocurrency. But he told CNBC that he was fooled by it initially because he thought that Bitcoin could be used as a currency. But when he saw that the price of the cryptocurrency is very volatile and investors are using the crypto as a vehicle for speculation, he began selling off his Bitcoin and started calling it a failed currency.
Taleb advises investors who want to hedge against inflation to buy a piece of land and invest something in it. He said that investors who are worried about inflation would be better off buying property than investing in Bitcoin. He stated: “If you want to hedge against inflation, buy a piece of land. Grow, I don’t know, olives on it. You’ll have olive oil. If the price collapses, you’ll have something.”
Bitcoin Versus Real Estate
Taleb has joined the growing list of Bitcoin critics. In February, the former risk analyst and options trader announced that he was in the process of getting rid of his Bitcoin. He sees Bitcoin as a failure because of what he says that the crypto asset does not store value. He said that Bitcoin has failed as a hedge against central bank policies.
Taleb shares the same sentiment with Barbara Corcoran, the Shark Tank star, who a few days ago shared her views on cryptocurrency. Corcoran recently said that real estate is the best way for investors to get rich, not cryptocurrency.
Corcoran stated that she is into “tried-and-true” methods of making money and claims that investing in real estate is the best way to get riches.
The founder of a multi-million crypto Ponzi scheme has escaped paying a $4.5 million penalty to the U.S. Securities and Exchange Commission.
On March 23, the U.S District Court of Southern Florida initially ordered Jose Angel Aman to pay the SEC more than $4.2 million in disgorgement, and $300,000 in prejudgement interest. However, the court deemed the bill was satisfied that same day due to restitution paid in a parallel case from 2019.
According to an emergency order obtained by the SEC in May 2019, Florida-based Aman operated three consecutive Ponzi-schemes which made up a “complicated web of fraudulent companies in an effort to continually loot retail investors and perpetuate the Ponzi schemes as well as divert money to himself,” pulling in roughly $30 million from an investor base of more than 300 people based in the U.S, Canada, and Venezuela.
His efforts resulted in a seven-year jail sentence, three year’s supervised release, and an order to pay more than $23.8 million to the SEC in restitution.
Aman was the principle behind Argyle Coin, a crypto Ponzi-scheme he operated alongside Canadian radio host Harold Seigel and his son Jonathan Seigel. The scheme falsely promised a “risk-free” investment that was backed by what the SEC described as “fancy colored diamonds,” with investors being promised exposure to the diamond market.
The rarity of #coloreddiamonds has driven prices up 400% per carat in the last decade!#ArgyleCoin aims to bring the ability to own and invest
in colored diamonds to anyone in the world.
Want to know how? Explore our website to learn all the details!
However, it was later found that Aman was distributing the funds received from new investors to previous backers, misrepresenting the funds as being profits derived from their investments. At the same time, the fraudster was also using his clients’ money on personal expenses including designer-label clothing and horse-riding lessons. The SEC’s complaint noted:
“Aman, Natural Diamonds, Eagle, and Argyle Coin, misused or misappropriated more than $10 million of investor funds to pay other investors their purported returns and for Aman’s personal expenses, including rent on his home, purchases of horses, and riding lessons for his son.”
The latest ruling concerned Aman’s “Natural Diamonds Investment Co”, and under regular circumstances, the Floridian would’ve been required to pay the $4.5 million if it were not prior charges.
As part of the final judgment, Aman is prohibited from partaking in a wide array of violations of securities acts, and securities exchange acts, such as “employ any device, scheme, or artifice to defraud” and “obtain money or property by means of any untrue statement of a material fact.“