- A 25-year-old cryptocurrency trader pled guilty on Tuesday to running a $5 million Ponzi-like scheme.
- Jeremy Spence, who went by "Coin Signals" online, lied to investors about the returns he was generating by trading cryptocurrencies.
- Spence told prospective investors he was generating monthly returns as high as 148% when he was in fact losing money.
Jeremy Spence, known online by "Coin Signals," pled guilty to running Ponzi-like scheme that cost more than 170 cryptocurrency individual investors $5 million.
Spence, 25, made false representations about his historical trading performance, which he used to lure prospective investors into giving him money to trade. But while he was touting monthly gains as high as 148%, he was in fact losing money, according to the US Attorney's Office for the Southern District of New York.
"The burgeoning cryptocurrency market can be attractive to investors; however, investors should be aware of the inherent risks, including the risk of fraud," US Attorney Damian Williams said of the case.
From November 2017 through April 2019, Spence solicited investors in various crypto funds he had created, including the Coin Signals Alternative Fund and the Coin Signals Long Term Fund. Investors who wished to participate would transfer cryptocurrency, such as bitcoin and ether, to him, and he would invest it on their behalf.
But as Spence consistently lost money trading cryptocurrencies, he would raise money from new investors using fake performance data to fund his ongoing scheme. He failed to accurately report his losses and falsified account balances to show they were supposedly making money.
Overall, he distributed cryptocurrency worth about $2 million to investors, which substantially came from funds previously deposited by other investors. Spence was originally indicted in January and is the subject of a civil suit brought by the Commodity Futures Trading Commission, which is seeking millions in penalties and restitution of the victim's losses.
His guilty plea to commodities fraud carries a maximum sentence of 10 years in prison. He is scheduled to be sentenced at a later date by Judge Lewis Kaplan.