On May 11, Jeremy Spence a crypto trader was sentenced to 42 months in prison for operating a series of crypto funds that scammed around $5M from 170 investors who were unaware their crypto was used to fund a Ponzi scheme.
The DOJ claimed that Jeremy Spence, 25, had defrauded investors out of millions of dollars by making false claims, including that “Spence’s crypto trading had been a tremendously profitable while, in fact, Spence’s trading had been persistently unprofitable.”
United States District Judge Lewis Kaplan of the United States District Court for the Southern District of New York handed down the judgment to Spence, who ran the social media channels for a crypto investment fraud dubbed “Coin Signals.” Spence was also given a three-year supervised release sentence and was forced to repay his victims $2.8 million.
The Federal Bureau of Investigation (FBI) detained Spence in January 2021, and the Commodity Futures Trading Commission filed separate civil charges against him (CFTC).
Spence pleaded guilty to commodities fraud in November 2021 for defrauding over $5 million from unknowing crypto investors by fraudulently claiming that several cryptocurrency funds he created between November 2017 and April 2019 were profitable when they were really losing money.
one example offered by the DOJ, Spence claimed in an online chat forum that one of the funds had made a 148 percent return that month.
According to Law360, the case was presided over by U.S. District Judge Lewis Kaplan, who said:
“The thing I was struck by was the stupidity of the people you gulled into investing with you, there are real-life consequences to these shenanigans and they are serious.”
Investors looking to profit would send bitcoin to Spence to invest, but because his trades were losing money, he generated phony account balances to disguise the losses.
Spence began operating a Ponzi scheme in which monies from new investors were used to compensate earlier investors, with estimates of roughly $2 million in cryptocurrencies dispersed in this manner.
Spence informed Judge Kaplan in a statement that he is “mortified” by his own actions, apologized to his investors, and claimed he was unqualified to trade the amount he was paid, adding that he “entered a world that [he] was utterly unprepared for.”
