Two individuals, a woman and a man, were captured in Argentina on charges of having perpetuated a Ponzi scheme that moved over 0 million in cryptocurrency in Brazil. The operation managed to track the couple’s whereabouts with the help of the Argentine Federal Police and Interpol. Argentina Captures Couple Accused of Orchestrating a 0 Million […]
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Investors in Collapsed Ponzi Scheme Resist Liquidator’s Attempts to Force Repayment at Current BTC Prices
Investors in the bitcoin Ponzi scheme Mirror Trading International are reportedly resisting liquidators’ attempts to have them repay digital assets withdrawn before it collapsed. According to the investors’ lawyer, MTI liquidators are intentionally misinterpreting the Insolvency Act for their benefit. Liquidators Face Accusations of Prolonging the Settlement Process A group of Mirror Trading International (MTI) […]
Bitcoin News
Pastor Accused Of Defrauding Congregation With $3 Million Crypto Ponzi Scheme
Denver-based internet pastor, Eli Regalado, is at the center of a controversy surrounding an alleged crypto Ponzi scheme involving INDX coin.
The self-proclaimed spiritual leader has come under scrutiny as Colorado’s securities regulator investigates his deceptive practices, which reportedly resulted in over million in ill-gotten gains. Fortune magazine report shed light on the matter, exposing Regalado’s questionable actions and shedding light on the plight of the victims involved.
Pastor Regalado’s Deceptive Crypto Venture
According to Colorado’s securities regulator, Regalado, and his wife orchestrated a “small-scale swindle”, targeting hundreds of individuals with promises of extraordinary returns on their investments in INDX coin.
Presenting his appeals with biblical undertones, using terms like “sowing” and “tithing,” Regalado convinced his online church followers that purchasing the cryptocurrency would yield a tenfold increase in their investments.
However, the promised returns never materialized, and investors lost their “hard-earned” money. To compound matters, it is alleged that the Regalados diverted a significant portion of the funds to finance personal expenses, including home renovations and luxury purchases, further exacerbating the victims’ financial losses.
Despite the allegations and mounting legal troubles, Regalado chose to address the accusations head-on by posting a 10-minute video on the crypto project’s website.
In the video, he attempts to deflect responsibility, claiming that misappropriating funds was not solely his decision, but rather a result of divine guidance for a home remodeling project.
Displaying a lack of understanding of financial concepts, Regalado haphazardly employs buzzwords like “leverage” and “liquidity” without demonstrating a clear comprehension of their meaning.
Furthermore, Regalado boasts about the supposed success of the project, mentioning “0 million of coins sown before the exchange went live.” However, the Colorado regulator clarifies that these coins have no value, primarily because they could only be traded on the Kingdom Wealth Exchange, an ill-functioning service operated by the Regalados themselves.
Colorado Authorities Take Action To Recover Funds
According to Fortune, the next steps in this ongoing investigation are expected to involve the state of Colorado seizing any remaining funds and returning them to the defrauded investors.
Meanwhile, Regalado’s video attempts to invoke divine intervention, predicting that the INDX coin debacle will resolve itself miraculously through divine intervention in the financial sector.
According to CoinGecko data, the total crypto market cap has declined over 4.6%, reaching as low as .51 trillion on Monday. However, when compared to one year ago, the cryptocurrency market has witnessed an impressive surge of 55.27%.
At the forefront of the cryptocurrency market stands Bitcoin (BTC), the pioneering digital currency that continues to dominate the landscape. As of today, Bitcoin’s market cap stands at an impressive 5 billion, accounting for a substantial 47.66% of the total cryptocurrency market.
Featured image from Shutterstock, chart from TradingView.com
Mastermind Behind Massive Crypto Ponzi Scheme AirBit Club Receives 12-Year Prison Sentence
In a landmark verdict, Pablo Renato Rodriguez, the co-founder of AirBit Club, has been sentenced to 12 years in prison by US District Judge George B. Daniels.
According to the US Department of Justice (DOJ), Rodriguez, along with his co-conspirators, masterminded a sprawling global pyramid scheme that defrauded investors of millions of dollars through false promises of cryptocurrency trading and mining profits.
AirBit Co-Founder Convicted For 0 Million Crypto Fraud
Per the DOJ’s investigations, the elaborate scheme involved luring unsuspecting and often inexperienced investors into purchasing AirBit Club memberships with the guarantee of substantial returns.
However, instead of engaging in legitimate cryptocurrency activities, Rodriguez and his cohorts allegedly diverted the funds for personal gain while employing an intricate money laundering operation to conceal their ill-gotten profits.
Rodriguez’s co-defendants, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have already pleaded guilty and await sentencing. The court has also ordered the forfeiture of the fraudulent proceeds, which include a staggering 0 million worth of assets, such as US currency, Bitcoin (BTC), and real estate.
Describing Rodriguez’s actions as a flagrant exploitation of cryptocurrency for fraudulent purposes, US Attorney Damian Williams emphasized the importance of this case in deterring potential fraudsters from making false promises of lucrative cryptocurrency investments.
Troubling Pattern Of Fraudulent Ventures
According to court documents, Rodriguez and Dos Santos founded AirBit Club in 2015 and “aggressively” marketed it as a multilevel marketing club operating in the cryptocurrency industry.
The duo reportedly organized extravagant expos and presentations worldwide, enticing victims to invest in cash and providing them access to an online portal showcasing false investment returns.
As early as 2016, victims who attempted to withdraw funds encountered excuses, delays, and exorbitant hidden fees. The scheme’s architects, including Rodriguez, spent the defrauded money on luxury items, financed more expos to attract additional victims, and siphoned funds through a network of domestic and foreign bank accounts.
According to the DOJ, Rodriguez’s attorney trust account, managed by Scott Hughes, played a crucial role in concealing the illicit proceeds of the AirBit Club scheme.
Before AirBit Club, Rodriguez and Dos Santos were involved in another pyramid investment scheme called Vizinova, which led to a legal battle with the US Securities and Exchange Commission (SEC).
Hughes, an attorney representing Rodriguez and Dos Santos in the Vizinova case, later assisted them in perpetrating the AirBit Club fraud by removing negative information about both schemes from the internet.
With Rodriguez’s sentencing, justice has been served to one of the key figures responsible for defrauding countless victims through AirBit Club.
Featured image from Shutterstock, chart from TradingView.com
Report: Brazilian Court Fines Mastermind of South African Bitcoin Ponzi Scheme
A court in Brazil has found Johann Steynberg, the mastermind of the bitcoin ponzi scheme Mirror Trading International (MTI), guilty in a case in which he is accused of using a forged identity document. The court, however, commuted Steynberg’s three-and-a-half-year sentence to a fine of just over ,000. Both Steynberg’s lawyers and the prosecution team have reportedly appealed the court’s decision.
MTI Boss Avoids Jail Time
A Brazilian court has reportedly found Johann Steynberg, the CEO of Mirror Trading International (MTI) — the defunct bitcoin ponzi scheme — guilty in a case in which he is accused of using forged identity documents. However, according to a Mybroadband report, Steynberg, who was sentenced to three and a half years in prison, is unlikely to serve the jail time after the court reportedly ordered him to pay a fine instead.
As previously reported by Bitcoin.com News, Steynberg, who fled South Africa in late 2020, was arrested by Brazilian law enforcement in December 2021. At the time of his arrest, Steynberg was found to be in possession of a forged Brazilian identity document. Following his arrest, South African authorities reportedly kickstarted the process to have the MTI boss extradited.
Steynberg’s subsequent attempt to block the extradition proceedings was rebuffed by a Brazilian judge in 2022. Since then, the MTI mastermind has seemingly remained in “precautionary detention.”
Steynberg Appeals Against ‘Harsh’ Sentence
On why the Brazilian court commuted Steynberg’s jail sentence to a total fine of just over ,100, the report cited the South American country’s penal code which states that jail terms of four years or lower for non-violent crimes can be converted to fines.
Meanwhile, the report said Steynberg’s lawyers have signaled their intention to appeal the court’s decision. The lawyers have said Steynberg’s alleged offense warrants a less harsh sentence than the three and a half years handed down by the court. The prosecution team, which is also appealing the court’s verdict, suggested that the punishment given to Steynberg is not commensurate with the offense.
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Louisiana Senator Compares Modern Banks to ‘Sophisticated Ponzi Schemes’
Louisiana Republican senator John Kennedy recently stated in an interview published on Wednesday that the U.S. Federal Reserve may need to increase the federal funds rate to 8-10% to address the country’s inflationary pressures. Kennedy’s remarks come after he criticized the Biden administration in mid-March for bailing out Silicon Valley Bank and Signature Bank, emphasizing that the decision to make all depositors whole “was a bail out,” regardless of what it was called.
Senator John Kennedy: ‘Powell’s Gonna Have to Raise Rates Much Higher Than He Normally’
During a recent interview with CNBC, Louisiana Republican senator John Kennedy expressed his belief that the U.S. central bank will need to increase the benchmark bank rate from its current level of 5% to around 8-10% to combat inflation. Kennedy went on to state that Federal Reserve chairman Jerome Powell will have to raise rates much higher than usual if Congress does not slow down its stimulus spending.
On the same day that senator John Kennedy made his remarks, the U.S. Federal Reserve increased the benchmark bank rate by 25 basis points (bps), marking the tenth consecutive rate hike and bringing the rate to its highest level in approximately 16 years.
In addition to discussing inflation, Kennedy also addressed the issue of the debt ceiling, calling for president Biden to have a serious conversation with House speaker Kevin McCarthy (R-CA) about how to allocate resources and reduce inflation. According to Kennedy, it’s time for the leaders to have an “adult discussion” about this critical issue.
Kennedy added:
I don’t think you can do it without reducing the spending and debt.
Kennedy Compares Modern Financial Institutions to Pyramid Schemes
Senator John Kennedy also addressed concerns about the U.S. banking industry, warning that modern technology can quickly turn a small disturbance into a full-blown panic. According to Kennedy, banks today rely heavily on trust, and are far less fortified than they used to be. In fact, Kennedy went so far as to compare modern financial institutions to pyramid schemes, stating that they are essentially “sophisticated Ponzi schemes.”
“They’re really just … and don’t take this the wrong way … sophisticated Ponzi schemes,” Kennedy emphasized.
U.S. Treasury secretary Janet Yellen recently warned that the country could face a potential default on its debt limit in June, which could have dire economic and financial consequences. With the United States currently carrying a staggering trillion in debt, the stakes are high.
However, Republicans are refusing to raise the debt ceiling unless certain mandates on green energy and climate change are repealed from the Inflation Reduction Act. Senator John Kennedy’s recent comments on the issue come on the heels of his criticism of president Biden’s handling of the collapse of Silicon Valley Bank and Signature Bank in mid-March.
What do you think about senator Kennedy’s comments? Do you agree or disagree with his assessment? Share your thoughts in the comments section below.
US Court Orders Operator of South African Bitcoin Ponzi Scheme to Pay Over $3.4 Billion
Johann Steynberg, the founder and CEO of Mirror Trading International, has been ordered to pay over .73 billion in restitution to victims of his bitcoin ponzi scheme. The court has also ordered Steynberg to pay a civil monetary penalty of a similar amount. The Commodity Futures Trading Commission (CFTC) conceded that orders requiring payment of funds “may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.”
‘Largest Fraudulent Scheme Involving Bitcoin’ in the History of the CFTC
A United States Federal Court recently handed down a default judgment and permanent injunction against Johann Steynberg, the CEO of the now-defunct bitcoin ponzi Mirror Trading International (MTI). According to a statement released by the U.S. derivatives regulator the Commodity Futures Trading Commission (CFTC) on April 27, Steynberg is required to pay ,733,838,372 in restitution to defrauded victims and a ,733,838,372 civil monetary penalty.
The derivatives regulator’s statement also revealed that the penalty handed down by the court “is [the] highest civil monetary penalty ordered in any CFTC case.” The court action itself is reported to be the “largest fraudulent scheme involving Bitcoin charged in any CFTC case.”
As previously reported by Bitcoin.com News, Steynberg, who was based in South Africa at the time, had repeatedly faced allegations of operating a bitcoin Ponzi scheme before he fled to Brazil in December 2020. Shortly after his disappearance, liquidation proceedings against MTI were instituted by victims based in South Africa.
Almost a year after he disappeared, Steinberg was captured by Brazilian law enforcement and is awaiting his extradition to either the U.S. or his native home of South Africa.
Steynberg and MTI Failed to Comply With CPO Regulations
As per the CFTC statement, the U.S. court order outlines Steynberg’s alleged fraudulent activities as well as his failure to comply with regulations.
“The order finds that Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), a company currently in liquidation in the Republic of South Africa, is liable for fraud in connection with retail foreign currency (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations,” reads the CFTC statement.
Although MTI was primarily operating and targeting victims based in South Africa, the CFTC statement claimed that Steynberg and his company had accepted bitcoin from “some 23,000 individuals in the U.S.” without being “registered as a CPO as required.” The regulator also alleged that Steynberg and MTI had “misappropriated all of the Bitcoin they accepted from pool participants.”
Meanwhile, the CFTC also acknowledged in the statement that the penalty handed down by the court may “not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.”
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Founders of Multimillion-Dollar Global Crypto Ponzi Scheme ‘Airbit Club’ Plead Guilty
The founders and promoters of multimillion-dollar cryptocurrency Ponzi scheme Airbit Club have pleaded guilty to various criminal charges. Airbit Club victims were promised “guaranteed daily returns on any membership purchased,” the U.S. Department of Justice (DOJ) detailed.
Airbit Club’s Operators and Promoters Plead Guilty
The U.S. Department of Justice (DOJ) announced Wednesday that six people behind Airbit Club, a crypto Ponzi scheme that purported to be a cryptocurrency mining and trading company, have pleaded guilty.
The six individuals are Airbit Club co-founders (Pablo Renato Rodriguez and Gutemberg Dos Santos), senior promoters (Karina Chairez, Cecilia Millan, and Jackie Aguilar), and an attorney who laundered Airbit Club’s fraud proceeds (Scott Hughes). According to the DOJ:
As part of their guilty pleas, the defendants collectively have been ordered to forfeit their fraudulent proceeds of Airbit Club, which include seized or restrained assets consisting of U.S. currency, bitcoin, and real estate currently valued at approximately 0 million.
The promoters “falsely promised victims that Airbit Club earned returns on cryptocurrency mining and trading and that victims would earn passive, guaranteed daily returns on any membership purchased,” the DOJ detailed.
The Department of Justice explained that beginning in late 2015, the defendants marketed Airbit Club as “a multilevel marketing club in the cryptocurrency industry.” They traveled worldwide to host “lavish expos and small community presentations” across the U.S., Latin America, Asia, and Eastern Europe to convince victims to buy Airbit Club memberships in cash. After purchasing memberships, victims were given access to an online portal with false representations of profits from bitcoin mining or trading, when in reality there was no such activity.
The Justice Department described:
Instead, Rodriguez, Dos Santos, Millan, and Aguilar enriched themselves and spent victim money on cars, jewelry, and luxury homes, and financed more extravagant expos to recruit more victims.
Many victims encountered obstacles when attempting to withdraw money from the Airbit Club Online Portal as early as 2016, the DOJ stated, adding that complaints made to a promoter “were met with excuses, delays, and hidden fees amounting to more than 50% of the Victim’s requested withdrawal.” Some victims were unable to withdraw any funds at all.
All six individuals have pleaded guilty to various charges, including wire fraud conspiracy, money laundering conspiracy, and bank fraud conspiracy. These charges have a maximum potential sentence of 20 years, 20 years, and 30 years in prison, respectively.
How many years do you think the Airbit Club founders and promoters should go to prison for? Let us know in the comments section below.
Russian Founders of Defi Platform Forsage Indicted in $340 Million Crypto Ponzi Scheme
Four Russians have been charged in the U.S. with operating a crypto pyramid and Ponzi scheme that defrauded investors of millions of dollars. If convicted, they would face a maximum penalty of 20 years in prison for their roles in the purportedly decentralized finance (defi) platform Forsage.
Forsage Founders Charged With Running Cryptocurrency Pyramid
A federal grand jury in the District of Oregon returned an indictment on Wednesday charging the founders of a defi crypto investment platform for what authorities believe to have been a global Ponzi scheme. The entity, Forsage, allegedly raised around 0 million from its victims, according to an announcement by the U.S. Justice Department.
All four indicted — Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov — are citizens of the Russian Federation. Some of them used one or more aliases while aggressively promoting the project through its website and social media as a legitimate, lucrative, and low-risk business opportunity. Sergeev, for example, presented himself as Mike Mooney or Gleb Million.
Forsage was advertised to the public as a decentralized matrix project based on network marketing and smart contracts. In reality, it was set up and run as a Ponzi and pyramid investment scheme that defrauded investors around the world. The defendants are each charged with conspiracy to commit wire fraud. If convicted, they would face up to 20 years in prison.
Court documents suggest that the Russian nationals deployed smart contracts on the Ethereum, Binance Smart Chain, and Tron blockchains. Analysis of the code showed that as soon as someone invested in Forsage by buying a so-called “slot” in a smart contract, the funds were used to pay earlier Forsage investors.
U.S. Attorney Natalie Wight for the District of Oregon emphasized that the indictment is the result of a months-long investigation. “Bringing charges against foreign actors who used new technology to commit fraud in an emerging financial market is a complicated endeavor only possible with the full and complete coordination of multiple law enforcement agencies,” she elaborated.
Blockchain forensics confirmed that over 80% of Forsage investors received fewer ether (ETH) back than they had invested in its Ethereum program. Moreover, at least one smart contract was used to divert investors’ money to cryptocurrency accounts controlled by the founders.
Forsage was launched online in January, 2020. The indictment of the Russians comes after in August, last year, the U.S. Securities and Exchange Commission (SEC) charged 11 people, the four co-founders and seven promoters of the platform, for their participation in creating and promoting the fraudulent crypto pyramid and Ponzi scheme.
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All Hell Breaks Loose, This Avalanche Project Main Dev Was Behind A Ponzi Scheme?
The Avalanche community has seen its fair share of drama in the past days as Wonderland (TIME) hit a new price low. Data from CoinGecko indicates that the token has lost over 90% of its value since November 2021.
Related Reading | Hackers Are Now Using Compromised Cloud Accounts To Mine Crypto
The Avalanche token was priced close to ,000 and has been on a downtrend since that period reaching 6, as of press time. TIME has been one of the worst performers in the DeFi sector and could see further losses in the short term.
TIME on a downtrend since November 2021. Source: Coingecko
According to a pseudonym investigator, Wonderland’s CFO known as OxSifu is the co-founder of QuadrigaCX, a former Canadian-based crypto exchange, Michael Patryn. This platform collapsed in 2019 shortly after its founder Gerald Cotten runaway with over 9 million.
Per a report published by the Ontario Securities Commission, QuadrigaCX was created from “fraud”. The crypto exchange and its founder promised their clients that their assets will be safe. However, the Canadian authorities discovered that “Cotten spent, traded, and used those assets at will”.
The pseudonym investigator decided to reveal the information related to Sifu due to TIME’s recent price action, and its implication for the inventors on the Avalanche project. He said the following via Twitter after sharing screenshots of a conversation with the founder of Wonderland, Daniele Sestagalli:
I never would have expected this but cannot sit on it any longer especially after the events experienced earlier this week with TIME.
In addition to the crypto exchange QuadrigaCX, Patryn was allegedly tied to an “identity theft ring” known as “Shadowcrew”. According to the investigator Patryn “plead guilty” to his ties with this illegal group.
In their report, the Canadian authorities are unable to establish a connection between Patryn and the fraudulent behavior displayed by its founder. The OSC claims Patryn was involved with the QuadrigaCX until 2016, after that:
Patryn ceased to be associated with Quadriga after 2016 and that the majority of client funds were deposited with Quadriga after Patryn’s departure. Based on the evidence we reviewed, Quadriga did not maintain proper accounting records from 2016 onward.
Avalanche Project CFO, An Old Time Fraudster?
Despite this report, Tay Vano CEO at crypto managing service MyCrypto shared the results of an investigation, conducted by independent reporter Amy Castor, that ties Patryn to the failed crypto exchange, and other Ponzi schemes. In 2019, according to images shared via her Twitter account, the Avalanche project CFO made ETH transactions that could directly link him to Quadriga.
Quadriga ties back to Sifu.eth https://t.co/Ugb1I5J6gw
— zachxbt.eth (@zachxbt) January 27, 2022
Patryn’s record of alleged fraudulent activities has been tracked back to Midas Gold, an exchange that operated between 2008 and 2013 until it was shut down, BlackHatWorld and TalkGold. The latter operated in 2003 as a forum to “push high yield investment programs” or Ponzi schemes.
Moreover, the same investigation suggests Michael Patryn changed his name from Omar Dhanani until he met Cotton. Patryn apparently was released from a U.S. federal prison back in 2007 after serving an 18-month sentence related to his involvement with “Shadowcrew”.
Related Reading | Crypto.com Restores Withdrawals After Reportedly Losing m To Hackers
Due to this long history of fraud, and illicit schemes involvement, some believe the founder of Wonderland has put his “reputation on the line”. Sestagalli shared a vote to remove Sifu/Patryn from his position as Wonderland’s treasury manager after sharing a long statement on recent events. Daniele said:
I found out about this 1 month ago, I am of the opinion of giving second chances (…). I have learned to give trust to people and to make my own opinions about them rather than just listen to the noise (…). I hope the community now comes together and decides what the future looks like and who they want managing their money.