Charges laid over alleged ‘crypto mining’ Ponzis that netted $8.4M

December 16, 2022 Coin Telegraph

Charges laid over alleged ‘crypto mining’ Ponzis that netted .4M

Various creators and promotors of two allegedly fraudulent crypto companies are facing a litany of charges that could land them 20 years in jail.

United States prosecutors have laid charges in two separate cases against nine people who founded or promoted a pair of cryptocurrency companies alleged to be Ponzi schemes that netted $8.4 million from investors.

On Dec. 14 the U.S. Attorney’s Office for the Southern District of New York unsealed the indictment, alleging the purported crypto mining and trading companies IcomTech and Forcount promised investors “guaranteed daily returns” that could double their investment in six months.

In reality, prosecutors say both firms were using the money from later investors to pay earlier investors, while other funds were spent on promoting the companies and buying luxury items and real estate.

“Lavish expos” were held in the U.S. and abroad, along with presentations in small communities, that lured investors in with promises of financial freedom and wealth.

Promotors would allegedly show up at events in expensive cars, wearing luxury clothing and would boast about the money they were making from investing in the company they were promoting. Investors were given access to a “portal” to monitor their returns

IcomTech and Forcount started to fall apart when users were unable to withdraw their purported returns.

Charges brought against Forcount’s creators and promotors by the Securities and Exchange Commission (SEC) allege the outfit targeted primarily Spanish speakers and gathered over $8.4 million from “hundreds” of investors selling “memberships” offering a cut of its crypto trading and mining activities.

In an attempt to spin up liquidity both companies created tokens so they could try repay investors with IcomTech and Forcount launching “Icoms” and “Mindexcoin” respectively.

Seemingly the token sales failed as by 2021 both had stopped making payments to investors.

“With these two indictments, this Office is sending a message to all cryptocurrency scammers: We are coming for you,” said U.S. Attorney Damian Williams. "Stealing is stealing, even when dressed up in the jargon of cryptocurrency.”

David Carmona of Queens, New York was named in the indictment as the founder of IcomTech, and was charged with conspiracy to commit wire fraud that carries a maximum penalty of 20 years prison.

Forcount’s founder was named as Francisley da Silva, from Curitiba, Brazil and faces charges of wire fraud, wire fraud conspiracy and money laundering conspiracy which carries a maximum of 60 years in prison if convicted of all charges.

The promotors for the firms face various charges relating to wire fraud, wire fraud and money laundering conspiracy and making false statements.

FTX’s Bankman-Fried to face market manipulation probe, Do Kwon chimes in

December 8, 2022 Coin Telegraph

Alameda Research

As part of a broader inquiry into FTX's collapse, federal prosecutors are looking at the role that FTX and Alameda may have played in the fall of Terra LUNA.

United States federal prosecutors have reportedly begun investigating whether the collapse of the Terra ecosystem was in fact triggered by market manipulation tactics by former FTX CEO Sam Bankman-Fried.

According to a Dec. 7 report from The New York Times (NYT), the prosecutors — as part of a broader inquiry into FTX’s own collapse — are investigating whether Bankman-Fried’s empire intentionally caused a flood of “sell” orders on Terra’s algorithmic stablecoin TerraClassicUSD, USTC (formerly UST).

The sudden increase in UST sell orders were said to make it difficult to match them with corresponding “buy” orders, which in turn forced more downward price pressure on UST, causing it to depeg from its intended 1:1 ratio with the U.S. Dollar.

The events also led to the fall of Terra’s native token, Terra Classic, LUNC (formerly LUNA) as the two cryptocurrencies were designed to be linked.

But while no one has been able to precisely determine the root cause behind the collapse of LUNC and USTC in May, it is known that the majority of the USTC sell orders came from Bankman-Fried’s trading firm Alameda research, according to the NYT.

A person with knowledge on the matter also told NYT that Alameda Researched also placed a big bet on the price of LUNC falling.

Like with most comments Bankman-Fried has shared since FTX’s collapse, the former CEO claimed that he was “not aware of any market manipulation and certainly never intended to engage in market manipulation,” according to NYT.

“To the best of my knowledge, all transactions were for investment or for hedging,” he added.

Responding to the recent report, Terraform Labs CEO Do Kwon shared his thoughts on the matter to his 1 million Twitter followers in a Nov. 8 tweet, who suggested it was time for Genesis Trading come clean about an alleged $1 billion loan in UST to “SBF or Alameda” shortly before Kwon’s Terra ecosystem crashed.

I think the time has come for @GenesisTrading to reveal if they provided the $1B UST shortly before the crash to SBF or Alameda - the purchase from LFG was represented as stemming from “interest to participate in the Terra Defi ecosystem” - not to provide ammo for a peg attack
— Do Kwon (@stablekwon) December 8, 2022

Kwon also stated that a large currency contraction that UST underwent in Feb. 2021 was started by Alameda “when they sold 500mm UST in minutes to drain its curve pools during the MIM crisis.”

“What’s done in darkness will come to light,” Kwon added on the matter.

Onecoin Cryptoqueen Associates Appear in German Court

October 20, 2022 Bitcoin.com

Prosecutors argue ‘insider trading’ claim in the OpenSea case is accurate

October 19, 2022 Coin Telegraph

Charges

Federal prosecutors have argued against a claim made by the former OpenSea product manager that the term “insider trading” is “inflammatory.”

United States prosecutors have opposed a motion by a former employee of nonfungible token (NFT) marketplace OpenSea to remove “insider trading” references from his charges.

Prosecutors said the phrase accurately describes the crimes the former OpenSea product manager Nathaniel Chastain is accused of in a memo filed on Oct. 14. It was responding to a motion by Chastain to stop referring to the phrase on Oct. 3, according to Law360.

Chastain was charged in June for allegedly buying 45 NFTs from June to September 2021 through anonymous wallets and selling them for a profit. He allegedly used his position at OpenSea to either choose or know which collections were featured on the homepage, which often saw their values increase.

Chastain argued the use of “insider trading” to describe his alleged actions is “inflammatory” and doesn’t have anything to do with the accusations he faces, adding a jury may be influenced by the term if his case is brought to trial.

He also added that “insider trading” only applies to securities and not to NFTs, a claim similarly made in August by his legal team, and the phrase was used to spark attention in the media to skew the jury's view of him.

Prosecutors fired back, stating the phrase “accurately captures” the accusations made against him and the term isn’t “so inherently inflammatory” to warrant the “extreme measure” of having the term removed from his charges.

They also rebuked his claim of insider trading only applying to securities calling it a “legal error” and an “unduly cramped understanding of the phrase" claiming it can be used to reference multiple types of fraud in which someone with non-public knowledge uses it to trade assets.

The term “insider trading” had previously not been used in reference to cryptocurrencies or NFTs before Chastain’s charges.

In June, shortly after Chastain was charged, former U.S. Securities and Exchange Commission (SEC) lawyer Alma Angotti said the case might see NFTs labeled as securities as they could be considered one under the Howey Test.

The Howey Test is used to determine if a transaction is an “investment contract” which exists when there is the “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others,” according to the SEC.

Prosecutor’s