Perrianne Boling, founder and CEO of the Chamber of Digital Commerce, told Claman Countdown that the lawmaker's “false and misleading statements” should be investigated.
As cryptocurrencies become more widely used, cryptocurrency scams are becoming more frequent and sophisticated every year.
One such scam, perpetrated by a fraudulent cryptocurrency company called Centra Tech, is the subject of a new Netflix movie, “Bitconned,” due for release on January 1st.
“Ray Trapani wanted to be a criminal ever since he was a child,” the film's description reads. “In 2017, amid the economic frenzy of the Bitcoin boom, there was no better place for a conman than cryptocurrency. So when Ray's friend approached him with the idea of creating a crypto debit card, Trapani jumped at the chance. There was just one problem: he had no idea how to make it happen.”
Centra Tech is one of many recent high-profile crypto scams that have caused millions and even billions of dollars in losses to customers around the world.
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Here are some of the most notorious cryptocurrency scam schemes in history.
Centra Tech
Co-founder Saurabh Sharma, along with Robert Farkas and Trapani, founded Centra Tech in 2017. The company marketed cryptocurrency financial products, including a so-called cryptocurrency debit card they dubbed the “Centra Card.”
The company misled customers into believing the cards could be used to make payments at stores that accepted Visa and MasterCard, and also convinced investors to buy unregistered securities in the form of digital coins, so-called “Centra Tokens,” according to the Department of Justice.
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The founders founded Centra Tech by spreading lies that fictitious founder “Michael Edwards” had over 20 years of banking experience and a master's degree from Harvard University, and further lies, including that “Centra Tech partnered with The Bancorp, Visa and MasterCard to issue Visa- or MasterCard-licensed Centra Cards” and that “Centra Tech held money transmitter and other licenses in 38 states,” the DOJ said in a press release.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| coin | Coinbase Global Inc. | 211.19 | -14.67 | -6.50% |
| Riots | Riot Platform | 9.55 | -0.87 | -8.35% |
| Byun | Beyond Inc. | 13.40 | -0.51 | -3.67% |
| Mara | Marathon Digital | 19.21 | -1.45 | -7.02% |
All three co-founders were convicted and sentenced to prison, according to the Securities and Exchange Commission.
“Sourav Sharma led a scheme to deceive investors by falsely claiming that the startup companies he co-founded had developed fully functioning, cutting-edge cryptocurrency-related financial products,” U.S. Attorney Ilan T. Graf said in a statement in 2021. “In reality, Sharma's most notable inventions were the fake executives, fake business partnerships and bogus licenses that he and his co-conspirators touted to trick victims into handing over tens of millions of dollars.”
FTX
Bankrupt and fraudulent cryptocurrency company FTX made national headlines this year after its founder, Sam Bankman Freed, was indicted in February and put on trial in Manhattan federal court.
FTX founder Sam Bankman Freed appeared in federal court on October 26, 2023, for fraud trial in Manhattan, New York. (Jane Rosenberg/Fox News)
A court found Bankman-Fried guilty in November in one of two criminal cases he faced of defrauding investors, customers and lenders involved in his collapsed cryptocurrency empire.
Photos of the trial and sentencing of Sam Bankman Freed
FTX's collapse resulted in the loss of approximately $1 billion in customer funds.
“Sam Bankman Freed committed one of the largest financial frauds in American history.”
Bankman Freed was indicted on two counts of wire fraud and five counts of conspiracy. Prosecutors allege that the 31-year-old founder of FTX and sister hedge fund Alameda Research hatched a scheme to misappropriate and embezzle billions of dollars in FTX client deposits and defraud investors, and directed other executives at his firm to do the same.
Sam Bankman Freed, co-founder of the FTX cryptocurrency derivatives exchange, appeared in court in New York on January 3, 2023. (Stephanie Keith/Bloomberg via Getty Images/Getty Images)
“The cryptocurrency industry may be new, and actors like Sam Bankman Freed may be newcomers, but this type of corruption is as old as time,” U.S. Attorney for the Southern District of New York Damien Williams said after the sentence was announced.
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The FTX founder, who built an estimated net worth of $26 billion before the company declared bankruptcy last year, also testified at his own trial, admitting he made mistakes but pleading innocent and saying he didn't deceive anyone.
BitConnect Ponzi Scheme
The FTX scam is often compared to the BitConnect Ponzi scheme.
According to the Department of Justice, BitConnect, which has since collapsed, was a fraudulent cryptocurrency investment firm that at one point had a market capitalization of $3.4 billion.
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A federal grand jury in San Diego last year indicted the company's founder, Indian national Satish Kumbani, for allegedly misleading investors about the company's “lending program,” which was actually run as a Ponzi scheme by using new investors' funds to repay early BitConnect investors.
Prosecutors say Kumbani and his co-conspirators received a total of $2.4 billion from BitConnect investors.
“This indictment alleges a massive cryptocurrency fraud that defrauded investors out of more than $2 billion.”
“As cryptocurrencies grow in popularity and attract investors from around the world, suspected fraudsters like Kumbani are using increasingly sophisticated schemes to defraud investors and often steal millions of dollars,” Special Agent in Charge Ryan L. Corner of the IRS-Criminal Investigation Los Angeles Division said in a 2022 statement announcing the charges against Kumbani.
OneCoin and “Cryptoqueen”
Ruja Ignatova, a Bulgarian woman known as the “Crypto Queen,” is accused of defrauding millions of investors out of an estimated $4 billion since 2014 through the fraudulent cryptocurrency company OneCoin.
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Ignatova is on the FBI's Most Wanted list, and authorities believe she may have had armed guards or support from associates and may have changed her appearance after a trip to Athens, Greece, in 2017. Her co-founder, Carl Sebastian Greenwood, was sentenced to 20 years in prison in September.
Ruja Ignatova, a Bulgarian woman known as the “Crypto Queen,” is accused of defrauding millions of investors out of an estimated $4 billion since 2014 through the fraudulent cryptocurrency company OneCoin. (FBI/Fox News)
OneCoin sold fraudulent cryptocurrency to unsuspecting investors around the world.
“OneCoin founder and leader Carl Sebastian Greenwood perpetrated one of the largest fraud schemes in history. Greenwood and his co-conspirators, including the fugitive Ruja Ignatova, scammed billions of dollars from unsuspecting victims by promising a 'financial revolution' and claiming OneCoin would be the 'Bitcoin killer,'” Damien Williams said in a September statement.
“In fact, OneCoin was completely worthless and investors were left with nothing, while Greenwood enriched himself with over $300 million.”
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According to the Department of Justice, Ignatova, who faces charges of wire fraud conspiracy, money laundering conspiracy, securities fraud conspiracy and securities fraud, is accused of directing investors to transfer funds into OneCoin accounts to purchase OneCoin packages.
Bitclub Network
Similarly, according to the Department of Justice, BitClub Network was a fraudulent cryptocurrency scheme worth $722 million that between 2014 and 2019 “solicited money from investors in exchange for shares in cryptocurrency mining pools and rewarded investors who recruited new investors into the scheme.”
Several individuals were indicted in connection with the scheme, including BitClub Network founders Matthew Brent Goettsche, Silviu Catalin Barasi, Russ Albert Medlin, Jobadia Sinclair Weeks, Joseph Frank Abel, and Gordon Brad Beckstead.
Representation of Bitcoin on June 23, 2017. (Benoît Tessier/File Photo/Reuters Photo)
Goettsche, Barasi, Abel and Weeks were released on bail in 2020 and are awaiting sentencing.
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“The indictment alleges that the defendants exploited the complex world of cryptocurrency to defraud unsuspecting investors,” U.S. Attorney Craig Carpenito said in a statement in 2019. “The defendants' alleged actions were nothing more than a modern-day, high-tech Ponzi scheme that defrauded victims out of hundreds of millions of dollars. We will work with law enforcement agencies here and across the country to ensure that these fraudsters are held accountable for their crimes.”
The suspects “lavished” money on investors while defrauding them, but Goettsche described them as “fools” and “idiots.” He also said, “This whole business model is built on the expense of fools,” according to the Justice Department.
Fox News' Breck Dumas contributed to this report.
