FTX Co-Founder Sam Bankman-Fried Seeks Removal of Bail Restrictions on Crypto Asset Transfers

January 28, 2023 Bitcoin.com

Former FTX CEO Sam Bankman-Fried Pleads Not Guilty to Criminal Charges, Bond Signees’ Names Remain Sealed

January 4, 2023 Bitcoin.com

Hours before his arrest, SBF denied being part of ‘Wirefraud’ chat group

December 13, 2022 Coin Telegraph

Alameda

SBF’s last tweet before his arrest for reportedly committing wire fraud was dispelling his involvement in a group chat purportedly called “Wirefraud.”

Merely hours before news of his arrest by Bahamian police, Sam Bankman-Fried took to Twitter denying his involvement or knowledge of a secret group chat named “Wirefraud” — which allegedly involved former FTX and Alameda ranking executives.

In a Dec. 12 response to a report from the Australian Financial Review (AFR), Bankman-Fried used Twitter to deny involvement in or knowledge of a “Wirefraud” group chat on messaging app Signal, which reportedly included members of Bankman-Fried’s inner circle, including FTX co-founder Zixiao “Gary” Wang, FTX engineer Nishad Singh and former Alameda CEO Caroline Ellison.

The AFR report said the chat was used to send secret information about FTX and Alameda's operations in the lead-up to its failure.

Bankman-Fried however said on Twitter that if the group chat was “true” he “wasn't a member” and was “quite sure it's just false” as he had “never heard of such a group.”

If this is true then I wasn't a member of that inner circle

(I'm quite sure it's just false; I have never heard of such a group)
— SBF (@SBF_FTX) December 12, 2022

Sam Bankman-Fried was, until very recently, expected to appear remotely before a United States House Committee hearing on Dec. 13 to explain the collapse of the FTX exchange, but was taken into custody by Bahamian authorities on Dec. 12 with extradition to the U.S. likely to follow.

Committee Chair Maxine Waters on Dec. 12 later confirmed that it “will not be able to hear” his testimony at the House Committees hearing due to the arrest.

Bankman-Fried was also requested to attend a separate hearing on Dec. 14 with the Senate Committee on Banking but had never confirmed his attendance, while his lawyers had reportedly refused to accept a subpoena compelling his testimony, according to a Dec. 12 joint statement from Senators Sherrod Brown and Pat Toomey.

Chief restructuring officer and FTX CEO John Ray in written testimony before his appearance at the House Committee hearing said FTX customer assets were “commingled” with Alameda’s.

Ray asserted Alameda “used client funds to engage in margin trading which exposed customer funds to massive losses” and the trading firm's business model required it to deploy those funds to “various [...] exchanges which were inherently unsafe.”

Crypto Twitter explodes over the news of Sam Bankman-Fried’s arrest

December 13, 2022 Coin Telegraph

Alexandria Ocasio-Cortez

US politicians, crypto execs and influencers fired up their Twitter apps upon learning that Sam Bankman-Fried was in custody in the Bahamas.

Crypto Twitter has blown up over the shocking news of Sam Bankman-Fried’s arrest in the Bahamas, with many surprised it had occurred so quickly.

On Dec. 12, the disgraced FTX founder was arrested by the Royal Bahamas Police after they received notification that the United States government had filed criminal charges against him.

Within hours, politicians, crypto executives and influencers had all booted up their Twitter apps to comment on the arrest of the former CEO.

New York Democratic Representative Alexandria Ocasio-Cortez, who’s held a fairly neutral view on the crypto industry to date, told her 13.4 million Twitter followers that Bankman-Fried’s was a step toward “justice being served,” but noted that the arrest would postpone Bankman-Fried’s testimony before the House Financial Services Committee, which was scheduled for Dec. 13.

Bankman-Fried was set to testify before the House tomorrow. Tonight he was arrested.

While I am disappointed we will not have the opportunity to present our line of questioning, we look forward to more information coming to light and justice being served in this case. https://t.co/HS9u1n5Kur
— Alexandria Ocasio-Cortez (@AOC) December 13, 2022

U.S. Senator Cynthia Lummis was also pleased, tweeting that prosecutors made the right decision to hold Bankman-Fried accountable for the “good, old-fashioned fraud” he allegedly committed.

What happened at FTX appears to be good, old-fashioned fraud, and I'm glad prosecutors have been investigating what happened to ensure everyone who committed crimes is held accountable for what they did.
— Senator Cynthia Lummis (@SenLummis) December 13, 2022

Fellow U.S. senator and crypto skeptic Elizabeth Warren agreed, stating in a Dec. 13 tweet to her 7 million followers that the U.S. Department of Justice needs to hold more lawbreaking corporate executives accountable.

Others took the opportunity to make light of it all. Benjamin Cowen, the chief executive and founder of the crypto-analysis channel called Into The Cryptoverse, used ChatGPT to create poetry about Bankman-Fried’s latest predicament.

“Write a poem about SBF, the CEO of FTX, who was arrested in the Bahamas for wire fraud.” pic.twitter.com/OWMXlhcqPt
— Benjamin Cowen (@intocryptoverse) December 13, 2022

Meanwhile, memes are already making the rounds on Twitter:

Sam Bankman-Fried goes to jail finally. pic.twitter.com/i2JqL7JiD6
— DRE THE NOID (@THEGOONEEZ) December 13, 2022

Much is also being said about Bankman-Fried’s Twitter posts and media appearances since FTX’s stunning collapse in November.

The co-host of Not Investment Advice, Trung Phan, told his 538,000 Twitter followers on Dec. 13 that Bankman-Fried’s erratic public behavior will make life harder for his defense attorney, while others believe that Bankman-Fried’s arrest will likely see him pointing the finger at colleagues and people linked to the FTX debacle, including those that received his sizeable political donations.

In what is likely his last Twitter Spaces interview, with Unusual Whales on Dec. 12, Bankman-Fried stated “I don’t think I’ll be arrested” when pressed about the possibility.

The Royal Bahamas Police Force made the arrest following the formal notification from the U.S. that it has filed criminal charges against Bankman-Fried, according to a Dec. 12 announcement by the Bahamas’ Office of the Attorney General.

HashFlare founders arrested in ‘astounding’ $575M crypto fraud scheme

November 22, 2022 Coin Telegraph

<div>HashFlare founders arrested in 'astounding' 5M crypto fraud scheme</div>

Cloud Mining

The HashFlare founders have been charged for their alleged involvement in a crypto fraud and money laundering conspiracy.

The two founders of the now-defunct Bitcoin cloud miner HashFlare have been arrested in Estonia over their alleged involvement in a $575 million crypto fraud conspiracy.

HashFlare was a cloud mining company created in 2015, which purported to allow customers to lease the company's hashing power in order to mine cryptocurrencies and gain an equivalent share of its profits.

The company was seen as one of the leading names in the business at the time, but shut down a large portion of its mining operations in Jul. 2018.

However, according to a statement from the United States Department of Justice citing court documents, the entire mining operation, run by founders Sergei Potapenko and Ivan Turõgin, was part of a "multi-faceted scheme" that "defrauded hundreds of thousands of victims."

This included convincing victims to enter into “fraudulent equipment rental contracts” through HashFlare and persuading other victims to invest in a fake virtual currency bank called Polybius Bank.

The pair is also accused of conspiring to launder their “criminal proceeds” through 75 properties, six luxury vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining machines.

U.S. Attorney Nick Brown for the Western District of Washington called the size and scope of the alleged scheme "truly astounding."

"These defendants capitalized on both the allure of cryptocurrency and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme,” he said.

The HashFlare founders have been charged with conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering using shell companies and fraudulent invoices and contracts, and could face up to 20 years in prison if convicted.

Two Estonian Citizens Arrested in $575 Million Cryptocurrency Fraud and Money Laundering Schemehttps://t.co/PLdyf6JSEC
— Criminal Division (@DOJCrimDiv) November 21, 2022

HashFlares' parent company HashCoins OU was founded by Potapenko and Turõgin in 2013, while HashFlare launched mining services in 2015. It initially offered contracts for SHA-256 (Bitcoin) and scrypt. ETHASH (ETH), DASH, and ZCASH options followed.

According to the indictment, the pair claimed HashFlare was a “massive cryptomining operation,” however, it's alleged the company was mining at a rate of less than 1% of what it claimed, and was paying out withdrawals by purchasing Bitcoin (BTC) from third parties, rather than gains from mining operations.

By Jul. 2018, HashFlare announced a halt to BTC mining services, citing difficulty generating revenue amid market fluctuations.

Customers were not reimbursed for the remainder of the annual contract fees, which they had paid upfront. Other crypto assets available in the platform's portfolio continued to operate as normal.

Allegations of the company being fraudulent were made but never proven in an official capacity.

The last public communication from HashFlare came through in 2019 through an Aug. 9 post where they announced they were suspending the sale of ETH contracts because the "current capacity has been sold out."

The company promised to resume activities in the "very near future" and teased further announcements, but nothing was ever publically disclosed about what had happened and HashFlare quietly disappeared.

The FBI is now investigating the case and is seeking information from customers who opted into the alleged fraudulent schemes of HashFlare, HashCoins OU and Polybius.

The 18-count indictment for Potapenkos and Turõgins alleged involvement was returned by a grand jury in the Western District of Washington on Oct. 27 and unsealed on Nov. 21.

SEC Fines John McAfee’s Associate $375K in Penalties for ICO Promotions

July 16, 2022 Bitcoin.com

US Arrests Former Employee of Opensea NFT Marketplace in ‘First-Ever Digital Asset Insider Trading Scheme’

June 2, 2022 Bitcoin.com

Instagram influencer charged over duping followers out of $2.5M BTC

March 25, 2021 Coin Telegraph

Instagram influencer charged over duping followers out of .5M BTC

Bitcoin Scam

A social media influencer known for “cash giveaways” has failed to show the money in alleged Bitcoin wire fraud scheme.

An Instagram influencer has been charged with wire fraud, after he allegedly scammed followers out of $2.5 million worth of Bitcoin.

Social media influencer Jay Mazini, who boasted of a net worth of $33 million and is known for “cash giveaways”, is accused by the Department of Justice of operating a wire fraud scheme in which he duped some of his 1 million followers to send him Bitcoin in exchange for inflated cash offers, which he failed to pay properly.

The DoJ announced the charges on March 24, following a complaint filed in Brooklyn Federal Court the day before. The FBI investigation into the case is still ongoing, with FBI Assistant Director-in-Charge William F. Sweeney noting:

“Igbara’s social media persona served as a backdrop for enticing victims to sell him their Bitcoin at attractive, but inflated, values. A behind-the-scenes look, however, revealed things aren’t always as they seem. There was nothing philanthropic about the Bitcoin transactions Igbara engaged in with his victims.”

Sweeney added: “A quick search of the Interwebs today will reveal an entirely different image of this multimillion-dollar scammer.”

According to DoJ documents, the influencer offered to pay followers between 3.5% to 5% over market value for Bitcoin, claiming traditional crypto exchanges had capped how much Bitcoin he could purchase.

The alleged wire fraud scam took place between January to late February, with the influencer soliciting followers on Twitter and Instagram. During that time, the price of Bitcoin shot up from around $29,000 to more than $49,000. According to the complaint, when Bitcoin was valued at around $47,000 on Feb. 14, the defendant offered to buy Bitcoin at $52,500.

It is alleged that after Mazini received Bitcoin from his fans, he sent back falsified payment receipts to reflect agreed-upon prices, in which he either failed to send the full amount or never sent the money.

According to the complaint filed on March 23, Mazini negotiated with one of his followers to purchase 50 BTC for $2.56 million, with the seller sending the agreed amount of BTC to only receive $500,000 in return.

Mazini is currently being held on state charges in New Jersey and will face New York courts at an undetermined date. If convicted, he faces up to 20 years’ imprisonment.

In the DoJ release, IRS-CI Special Agent Jonathan D. Larsen, warned fans of social media influencers to “beware” of falling prey to social media crypto scams, noting the “defendant allegedly used his online popularity to defraud those seeking to exchange Bitcoin for cash above the market value. Always be on your guard and don’t fall prey to these cryptocurrency schemes.”

Wire fraud