Crypto trader sentenced to 3 years and 6 months in prison for $5 million fraud

The US Department of Justice (DOJ) sentenced a 25-year-old Rhode Island cryptocurrency trader (Coin Signals) to 42 months in prison for defrauding more than 170 people with more than $5 million.

Coin Signal Trader Conviction

According to the official press releaseConvict Jeremy Spence raised funds from investors through several cryptocurrency investment pools he operated from November 2017 to April 2019.

He has created and managed several cryptocurrency funds, including the three largest funds: Coin Signals Bitmex Fund, Coin Signals Alternative Fund, and Coin Signals Long Term Fund. Spence claimed that his trades were going well, generated huge profits, and that investors could send cryptocurrencies like BTC and ETH to operate on his behalf.

Using false claims to lure investors

At one point, he posted a message on an online chat group falsely claiming that he had earned more than 148% on his investor-funded transactions in the past month. As a result, some investors sent him additional funds.

However, the Justice Department pointed out that Spence’s allegations were far from the truth.

“SPENCE has claimed more than $5 million through misrepresentation, including that SPENCE’s cryptocurrency transactions were extremely profitable and, in fact, SPENCE’s transactions were consistently unprofitable…

In fact, during the same period of about a month, SPENCE’s trading resulted in a net loss on the account where he traded investor funds,” DOJ noted.

Spence continued to raise funds by creating fake account balances to make up for the net losses he incurred while trading with investor funds and started a Ponzi scheme.

He used the new investor’s funds to pay the old one and kept the ruse as long as possible. The plan allowed him to distribute more than $2 million in crypto assets to investors.

The DOJ added, “Instead of accurately reporting the trade losses that SPENCE caused, the account balance falsely indicated to investors that they were making money by investing in SPENCE,” the DOJ added.

Spence Plese Guilty

Spence is arrest In January 2021, the FBI brought a civil indictment against him against the Commodity Futures Trading Commission (CFTC). that opinion He was convicted of the charges in November 2021.

Spence will be released for three years, in addition to 42 months in prison, and will be liable for more than $2 million in damages after his release.

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