Thomas John Sfraga, a well-known figure in the world of cryptocurrency, has admitted to committing wire fraud by tricking over a dozen victims into investing in fake ventures, including fraudulent cryptocurrency schemes.
According to a statement released by the United States Department of Justice (DOJ) on May 17, Sfraga managed to convince one of his victims to invest in a non-existent cryptocurrency called “virtual wallet.” The DOJ also revealed that Sfraga has experience in both podcasting and the crypto industry, having served as a host for crypto events in New York.
The DOJ explained that Sfraga promised his victims returns on their investments as high as 60% within three months. However, it turns out that he was running a Ponzi scheme, where the returns paid to earlier investors were not generated from legitimate profits but rather from the investments made by new participants.
“In reality, Sfraga used the money for his own personal expenses, to pay off earlier victims, and to compensate his business associates,” the statement said. Shockingly, some of these victims were Sfraga’s own friends and neighbors, whom he betrayed to the tune of over $1.3 million of their hard-earned savings.
While such gains are not uncommon in the crypto market, with Bitcoin rising 65% in just three months from January 24 to April 24, according to CoinMarketCap data, it is crucial to note that Sfraga’s methods were fraudulent and illegal.
In recent times, there has been a crackdown on cryptocurrency fraud. Just a few days ago, on May 15, the DOJ charged brothers Anton Peraire-Bueno and James Pepaire-Bueno with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. They allegedly obtained $25 million in cryptocurrency in just 12 seconds by exploiting vulnerabilities in the blockchain.
Similarly, on April 4, the former head of legal and compliance for the massive OneCoin fraud scheme was sentenced to four years in prison after confessing to her involvement in money laundering millions of dollars.
It is crucial to remain vigilant and cautious when it comes to investing in the crypto market, as fraudsters like Sfraga continue to exploit unsuspecting victims.