U.S. Department of Justice Targets $25 Million Crypto Trading Bot Fraud

Updated: 14 December 2023

Disclosure

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Join Our Telegram channel to stay up to date on breaking news coverage

The U.S. Department of Justice (DOJ) has recently taken action against two individuals involved in a significant cryptocurrency Ponzi scheme, alleging they defrauded victims of over $25 million. David Gilbert Saffron from Australia and Vincent Anthony Mazzotta Jr. from Los Angeles are the accused in this latest crackdown on crypto-related crimes. According to DOJ’s statements, these middle-aged men deceived investors into pouring funds into artificial intelligence-driven trading programs, promising substantial returns on their cryptocurrency investments.

Most people remember seeing ads related to “making easy money with crypto trading bots” on YouTube, a platform that is notorious for allowing scammers to thrive and that is an excellent way for unscrupulous individuals to steal money from innocent people.

Contrary to the claims advanced by their ads, the duo misappropriated the funds for extravagant personal expenditures, including the rental of mansions and private jets, hiring chefs and security guards, and staying in luxury hotels. The DOJ’s press release on Tuesday detailed the charges against Saffron and Mazzotta, which include conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, money laundering, and conspiracy to commit money laundering. The charges carry a combined maximum sentence of 55 years in prison. Notably, Saffron faces an additional 10 years for committing felonies while on pre-trial release.

The Blue Wizard at the Federal Crypto Reserve

The fraudulent program was marketed under various guises, such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital. The fraudsters further lured victims into paying a made-up entity named the “Federal Crypto Reserve” to supposedly recover their lost investments. Saffron, maintaining anonymity, solicited funds under aliases like “Blue Wizard” and “Bitcoin Yoda.” Efforts to hide their illicit activities included falsifying records, destroying documents, and disguising the origins of the stolen crypto through methods like “mixing” and “blockchain hopping.”

According to the official indictment, the scammers used various means to obscure the source and location of the victims’ funds, such as crypto mixers:

The defendants also allegedly conspired to conceal the source and location of victims’ cryptocurrency investments through various means, including using methods known as “blockchain hopping” and through services known as “mixers” or “tumblers” that are designed to prevent cryptocurrency tracing.

Scammers and Getting Caught and Punished

This case mirrors the tactics of Canada’s notorious “crypto king,” who swindled over $40 million from investors under the pretense of crypto and forex trading, only to squander a significant portion on luxuries. In a related incident back in March, he was kidnapped and assaulted, with the kidnappers demanding a $3 million ransom.

We also reported recently on the Karl Greenwood, the 46-year-old co-founder behind OneCoin, who was caught and sentenced to 20 years in prison for a massive crypto pyramid scheme. Last month, the DOJ sentenced Esteban Cabrera Da Corte, a Miami crew leader, to 63 months for identity fraud and bank fraud, leading to a $4 million theft from a cryptocurrency exchange.

It is very encouraging to hear that the authorities are doing something about the proliferation of such scams. It prevents others from attempting them and increases confidence in this industry, which many steer away from because of its risky nature.