Australian and Los Angeles Residents Charged in $25 Million AI Crypto-Trading Ponzi Scheme
Jessie A Ellis Dec 13, 2023 07:10
The DOJ indicts David Gilbert Saffron and Vincent Anthony Mazzotta Jr. for running a $25M AI crypto Ponzi scheme, involving fictitious entities, false promises, and misuse of investor funds.
The U.S. Department of Justice has indicted David Gilbert Saffron, an Australian national, and Vincent Anthony Mazzotta Jr., a resident of Los Angeles, for orchestrating a $25 million Ponzi scheme exploiting AI crypto-trading. This case highlights the growing concerns over fraudulent activities in the burgeoning field of cryptocurrency and AI technologies.
Scheme Operation Details
The indictment alleges that Saffron and Mazzotta conspired to defraud investors through various trading programs that falsely promised high returns using an AI automated trading bot for cryptocurrency markets. Operating under various names, including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital, the duo duped investors, misappropriating funds for extravagant personal expenses like private jets, luxury hotels, and private security guards.
Creation of Fictitious Entities
To further their fraudulent activities, Saffron and Mazzotta created a fictitious entity named the Federal Crypto Reserve. They induced victims to invest in their schemes and then solicited additional funds under the guise of investigating and recovering the victims' losses. Saffron, using aliases and online personas such as the Blue Wizard and Bitcoin Yoda, masked his identity during these solicitations.
Obstruction and Money Laundering Charges
Both individuals are accused of conspiring to obstruct justice by concealing assets, destroying evidence, and falsifying records. They allegedly employed methods like "blockchain hopping" and "mixers" or "tumblers" to prevent tracing of the misappropriated cryptocurrency. Charges against them include wire fraud, money laundering, and obstruction of justice, with each facing up to 20 years in prison for major counts if convicted.
Notably, Saffron was previously charged by the Commodity Futures Trading Commission, indicating a history of legal challenges related to his financial activities.
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