DOJ Says Bitcoin Escrow Company Swindled Investors for $7 Million

U.S. prosecutors have charged the leader of a bitcoin escrow firm with swindling investors for $7 million.

The U.S. Attorney’s Office of the Southern District of New York, part of the Office of Justice (DOJ), brought two counts each of commodity and wire fraud against Jon Barry Thompson, principal of Volatnis Escrow Platform LLC. In a complaint unlocked Thursday, he is denounced of making deluding articulations about investment risks and wrong representations of his custody and control of cryptocurrencies. 

U.S. Lawyer Geoffrey S. Berman stated:

“As his clients soon realized, however, Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies.”

According to prosecutors, Thompson “preyed” on his clients’ lack of information with respect to the developing asset class. In special materials and communication with clients, he purportedly displayed himself as a competent financial specialist, custodian, or financier. 

The two companies Thompson reportedly sent him multi-million-dollar wires trusting to get bitcoin in exchange. Prosecutors affirmed that Thompson told one client, “cash is with me, coin is with me,” in spite of the fact that he had sent their $3 million to a third-party exchange, skimming thousands off the top for personal purpose, without first getting any bitcoin. 

The DOJ did not name either of the purported victims. Forbes reported in January that Volantis arranged a bargain to transfer 6,600 bitcoin to Symphony, a crypto investment company, but “the transaction never closed.” 

Thompson, who was captured Thursday in Pennsylvania, faces a maximum conviction of 40 years.