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DOJ Indicts Two in $25M AI Crypto Ponzi Scheme

DOJ indicts two for a $25M AI crypto-trading Ponzi scheme, intensifying its crackdown on cryptocurrency fraud.
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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.

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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.

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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.

Read Also: Jeremy Allaire Touts Bitcoin as Safe Haven in Economic Turmoil

 

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Maxwell Mutuma

Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. I write extensively on topics such as blockchain, cryptocurrency, tokens, and more for many publications. My goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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