Thomas John Sfraga, a well-known figure in the cryptocurrency world, has pleaded guilty to wire fraud charges. He allegedly tricked more than a dozen victims into investing in fake ventures, including fraudulent cryptocurrency schemes.
According to the United States Department of Justice (DOJ), Sfraga convinced one victim to invest in a nonexistent cryptocurrency called “virtual wallet.” The DOJ revealed that Sfraga has experience in podcasting and the crypto industry, and he has even hosted crypto events in New York.
The DOJ stated that Sfraga promised his victims returns on their investments of up to 60% in just three months. However, it turns out that he was running a Ponzi scheme. This means that the returns paid to earlier investors were not from legitimate profits, but rather from the investments of new participants.
“In reality, Sfraga used the money for his own benefit, to cover expenses, and to pay off previous victims and business associates,” the DOJ explained. Shockingly, some of these victims were Sfraga’s friends and neighbors, whom he betrayed and swindled out of over $1.3 million of their hard-earned savings.
While these gains may seem extraordinary, they are not unheard of in the crypto market. For example, Bitcoin (BTC) rose by 65% in just three months this year, from January 24th to April 24th, according to CoinMarketCap data. As of now, Bitcoin is trading at $66,860.
In the past 30 days alone, Bitcoin has seen an 8.92% increase in value, currently trading at $66,860. Other altcoins have experienced even higher returns during this period. Pepe (PEPE) and Dogwifhat (WIF) rose by 722% and 656%, respectively, over the same three months.
This incident comes in the wake of a crackdown on cryptocurrency fraud. Just recently, on May 15th, the DOJ charged brothers Anton Peraire-Bueno and James Pepaire-Bueno with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. They allegedly obtained $25 million in cryptocurrency within a matter of seconds by exploiting vulnerabilities in the blockchain.
In another case, the former head of legal and compliance for the multibillion-dollar OneCoin fraud scheme was sentenced to four years in jail on April 4th. She admitted to helping launder millions of dollars.
In other news, a UK cannabis millionaire has been making “deals on wheels” using cryptocurrency.