Jeremy Spence, the founder of numerous crypto funds, has pleaded guilty to crypto fraud. According to the US Department of Justice (DoJ), Spence founded various funds that he used to steal funds from investors. The DoJ stated that investors lost over $5 million.
Coin Signals Fund Fraud
On January 26, 2021, the DoJ announced that it had charged Spence with fraud. Spence was accused of stealing over $5 million worth of funds from investors. The scheme involved numerous funds and over 170 investors. Spence was arrested in Rhode Island.
He lured investors into his scheme by promising returns of up to 148%. However, his schemes failed and consistently lost huge amounts of cash. The DoJ warned others to educate themselves on crypto before they fell prey to similar scams that promise huge returns for a small investment.
While Spence operated numerous funds between November 2017 and April 2019, his biggest and most active funds were Coin Signals Bitmex Fund, Coin Signals Alternative fund, and Coin Signals Long-Term Fund.
Investors would be requested to transfer funds in crypto such as BTC and ETH to Spence, who was supposed to invest it on their behalf. To cover up his losses, Spence would use funds from new investors to repay others, similarly to a Ponzi scheme. He also forestalled redemptions by investors by presenting them with doctored account balances, which he sent to the investors. Spence, 24 at the time of his arrest, was charged with one count of commodities fraud, and one count of wire fraud.
Spence Pleads Guilty
On Tuesday, November 30, 2021, the DoJ announced that Spence admitted to his crimes. He admitted that he had enticed investors with promises of returns of as high as 148%. Spence had pled guilty to commodities fraud and could serve up to 10 years in prison.
Crypto Scams with Promises of High Return
While the crypto sector has had a lot of success in recent years, it has also been fraught with scams. In the past, these scams took the form of ICOs. However, law enforcement agencies managed to clamp down on many fraudulent ICOs. Another popular scam is a pump and dump scheme. Through this scheme, scammers exploit Fear of Missing Out (FOMO). They hype a coin and trick people into investing in it, despite there being no utility to the project. Once the price grows high enough, they usually dump the coins and leave investors holding worth coins. A good example is the recent Squid Game coin whose value rose and fell within 24 hours.
Besides that, crypto investments promising returns of double and triple-digit percentages have become common. These schemes can take the form of a long con where investors are given some of their returns early on. However, as they increase the size of their investment, the scammers eventually disappear with their savings.
To avoid scammers, it is important to conduct a careful, and in-depth survey of the crypto sector. No matter how enticing a project might seem, one should never invest more than one can afford to lose. The crypto sector is still young and volatile. Thus, a lot of caution is needed when investing.