The United States Department of Justice (DOJ) has indicted two individuals for allegedly operating a $25-million artificial intelligence (AI) crypto-trading Ponzi scheme.
According to the Dec. 12 announcement, Australian national David Gilbert Saffron and Los Angeles resident Vincent Anthony Mazzotta Jr. are accused of operating trading programs that “falsely promised to employ an artificial intelligence automated trading bot to trade victims’ investments in cryptocurrency markets and earn high-yield profits.”
After receiving users’ deposits, however, the two individuals allegedly spent the money on “private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef, and private security guards.”
The defendants are also accused of concealing the victims’ cryptocurrency investments through interchain swaps and using cryptocurrency mixers to evade detection. The scheme operated under various names, such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, Federal Crypto Reserve, and Cloud9Capital.
“Saffron and Mazzotta are charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering. Saffron is also alleged to have committed felonies while on pre-trial release.”
Since last year’s sanction of cryptocurrency mixer Tornado Cash, the U.S. DOJ has focused extensively on boosting the compliance of blockchain entities. On Dec. 9, the DOJ revealed its methods for monitoring the compliance of cryptocurrency exchange Binance since its $4.3-billion settlement for money laundering and U.S. sanction breaches.
Several sections of the DOJ’s criminal division will closely monitor the exchange’s activities, including the section for money laundering and asset recovery, the section for national security, the section for counterintelligence and export control, and the office for the Western District of Washington’s United States Attorney.
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