Last Updated on 3 weeks by Ameer Hamza
Although it is feasible to use blockchain technology and crypto assets securely and legally, money has been stolen. Statista estimates that $950 million worth of cryptocurrencies were stolen globally in 2018. In 2020, $513 million was reported stolen. This may indicate that crypto environment is achieving a level of maturity that lessens threats from theft.
In order to minimize crypto fraud, certain conditions must be met. An example is implementing efficient blockchain analytics practice to stay safe from errant typologies on the blockchain. In that case, cryptocurrency can represent a safer alternative to fiat trading. Also, implementing KYC standards and higher virtual asset oversight can also reduce fraud.
Nevertheless, it is vital to understand how crypto fraud has historically occurred amongst various crypto founders. Here are five crypto founders worldwide who have recently been charged with fraud.
1. Sergei Potapenko & Ivan Turgin
The two creators of the now-defunct Bitcoin cloud miner HashFlare were detained in Estonia for their alleged involvement in a $575 million cryptocurrency conspiracy plot. The 2015-founded cloud mining startup HashFlare allowed its customers to rent the company’s hashing power to mine cryptocurrency in exchange for a share of the profits. Before it shuttered a significant section of its mining activities in 2018, Hashflare was considered one of the industry’s giants when it first began operating. It attributed this to its difficulty in earning income due to market volatility. If found guilty, the pair could receive up to 20 years in jail if proven guilty of these accusations.
2. Sam Bankman-Fried
Sam Bankman-Fried is the infamous founder and former CEO of the cryptocurrency exchange FTX. He was charged by US authorities with engaging in “old-fashioned embezzlement,” or the theft of client cash, in violation of campaign financing rules. At a press conference on 12th December, the US Attorney for the Southern District of New York, Damian Williams, stated that the US government had requested the arrest. Williams said Bankman-Fried participated in one of the “largest financial scams in American history” by making unlawful campaign contributions to Democratic and Republican lawmakers with “stolen client money.”
3. Fatih Ozer
Turkey said that Fatih Ozer, the founder, and CEO of the cryptocurrency trading website Thodex, had been detained by Albanian police after being sought by Turkish officials on suspicion of fraud. According to a statement from the Interior Ministry, the procedure to extradite Ozer to Turkey has commenced.
According to Turkish authorities, the founders and executives of Thodex are facing thousands of years in prison. According to the prosecutors, they are charged with creating a criminal organization, engaging in cyber fraud, and laundering money obtained via illegal activities.
4. Karl Sebastian Greenwood
OneCoin, a multibillion-dollar worldwide cryptocurrency fraud controlled by a self-described “Cryptoqueen” who has been evading law authorities for half a decade, was co-founded by Karl Sebastian Greenwood. In connection with his involvement in the significant fraud scheme, Greenwood admitted guilt to wire fraud and money laundering charges on Friday in federal court in Manhattan.
Greenwood now faces a possible penalty of 20 years in jail for wire fraud and one count of conspiring to launder money, each of which carries a 20-year prison term.
5. Satishkumar Kurjibhai Kumbhani
This creator of a cryptocurrency corporation was indicted in San Diego by a federal grand jury for allegedly defrauding investors worldwide out of more than $2.4 billion. According to the prosecution, this is considered the greatest financial scam ever brought to justice.
In addition to many conspiracy counts for wire fraud, money laundering, and commodities fraud, Satishkumar Kurjibhai Kumbhani, 36, is also charged with one count of running an unregistered money-transmitting company. He is an Indian national and resident of Surat. Friday evening, his whereabouts remained unknown.
The indictment claims that Kumbhani, who used aliases to conceal his identity, ran BitConnect, the business he founded in 2016, like a “classic Ponzi scheme.”