Several individuals have been arrested on charges relating to three separate instances of crypto fraud, one of which may have involved the largest non-fungible token (NFT) scam to date. As much as $130 million in digital funds are likely to have been stolen.
Why Is Crypto Fraud So Common?
One of the individuals charged with crypto fraud includes 26-year-old Le Anh Tuan of Vietnam. She was charged in California with one count of conspiracy to commit wire fraud and conspiracy to commit international money laundering over what’s being called the Baller Ape Club scheme, which may have involved a series of phony NFTs.
The Baller Ape Club tokens appear to be part of a classic rug pull. The scenario is becoming rather common, and it involves a person or group of people developing a new digital currency project or service that others can invest in. The project in question goes from a few cents to several dollars over the course of a few days, and it looks like it’s picking up heavy traction.
However, right as things are getting off the ground, the creators pull the rug out from underneath the project and run off with the funds that early investors have plunked into it. They make off with the money and engage in luxury lifestyles in some foreign country while those who put their hard-earned dollars into the token wind up with crushed egos and empty pockets.
At press time, Tuan is facing 40 years in prison. A separate case involves a firm known as Titanium Blockchain Infrastructure Services. The owner of the firm – 54-year-old Michael Alan Stollery of Reseda, California – is being charged with one count of securities fraud relating to the enterprise’s recent initial coin offering (ICO).
It is believed Stollery lied to investors about where the money would be placed, and about which firms the enterprise was partnering with. Stollery stated his firm had relationships with Apple, Disney, and the U.S. Federal Reserve Board, but it appears this wasn’t true. It is believed that as much as $21 million in funds were taken from traders and Stollery now faces 20 years in jail.
A third case involves a man named David Saffron – 49 years of age and from Las Vegas, Nevada – being charged in California with wire fraud and obstruction of justice after it was alleged that he used his crypto platform Circle Society to garner as much as $12 million from investors to potentially trade their money on futures and commodities markets. Ryan L. Korner – a special agent with the Internal Revenue Service (IRS) – says the money was instead used to engage in a lavish lifestyle.
Using the Money for Personal Reasons
Mr. Saffron was operating an illegal Ponzi scheme to defraud victim investors and used the funds for his own personal benefit.