DOJ Indicts Two in $25M AI Crypto Ponzi Scheme
In a significant crackdown on cryptocurrency fraud, the U.S. Department of Justice (DOJ) has indicted David Gilbert Saffron, an Australian national, and Vincent Anthony Mazzotta Jr., a resident of Los Angeles, for their alleged roles in a sophisticated $25 million Ponzi scheme. The announcement made on December 12 reveals the duo’s operation of a purported AI crypto-trading program, promising substantial returns through an automated trading bot in the cryptocurrency markets.
Deceptive Crypto Operation Unveiled by DOJ
Saffron and Mazzotta are accused of luring investors with the promise of high-yield profits via an artificial intelligence trading bot. However, instead of deploying these funds in crypto trading, the accused allegedly misused the money for extravagant personal expenses. These indulgences included private chartered jet flights, luxury hotel stays, rental of private mansions, services of a personal chef, and private security guards.
The operation, which functioned under multiple guises such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, Federal Crypto Reserve, and Cloud9Capital, reportedly used deceptive tactics to hide the true nature of the investments. The indictment highlights the use of interchain swaps and cryptocurrency mixers to obscure the trail of the funds, a technique often employed to evade detection by authorities.
Crypto Scheme Leads to Major Indictments
This indictment comes amid the DOJ’s increased scrutiny of cryptocurrency operations following last year’s sanction of the cryptocurrency mixer Tornado Cash. The U.S. DOJ is intensifying efforts to ensure compliance within the blockchain and cryptocurrency sectors. Notably, on December 9, the DOJ detailed its approach to monitor the activities of the cryptocurrency exchange Binance. This follows Binance’s $4.3 billion settlement over allegations of money laundering and breaches of U.S. sanctions.
The DOJ’s criminal division, including sections dedicated to money laundering and asset recovery, national security, counterintelligence, and export control, and the office for the Western District of Washington’s United States Attorney, will be actively involved in overseeing Binance’s compliance measures.
The charges against Saffron and Mazzotta include conspiracy to commit wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering. Additionally, Saffron faces allegations of committing felonies while on pre-trial release.
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