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Daily fraud update: 1st October

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Crypto escrow firm owner indicted over alleged fraud

A man from the US has been indicted in court over claims that he carried out a $7m cryptocurrency fraud while running an escrow service.

Jon Barry Thompson, who was the principal of a firm named Volantis, has been hit with charges of both wire fraud and commodities fraud.

It is alleged that he solicited more than $7m from firms which worked with his in a business to business capacity.

He is accused of making what the US Attorney’s Office for the Southern District of New York said were “false promises in connection with Bitcoin transactions”.

He will now face trial.

He has also been hit with civil charges by the Commodity Futures Trading Commission (CFTC), the regulator.

A legitimate escrow service is a third party organisation which protects money during a transaction and then distributes it once each party has met specified conditions.

A statement from the Attorney’s office outlined in further detail what Thompson is accused of doing.

He solicited millions of dollars from one unnamed company, and then told them that it was safe.

“Even though Thompson had told Company-1 that before any transaction, ‘cash is with me, coin is with me’, Thompson sent over $3 million of Company-1’s money to a third-party entity purportedly in exchange for Bitcoin without first receiving any of the Bitcoin in hand”, the statement alleged.

“After taking Company-1’s money, Thompson lied for days about the status of the transaction and the location of Company-1’s Bitcoin and money, which was never returned”, it went on to say.

Thompson is 48-years-old and is from the US state of Pennsylvania.

He faces two counts of commodities fraud, and he could face a maximum sentence of a decade in prison per charge.

He also faces two counts of wire fraud, and each one is associated with a maximum prison sentence of 20 years.

In a statement, Geoffrey S. Berman, who is the US attorney for Manhattan, outlined the scale of the fraud.

“As alleged, Jon Barry Thompson repeatedly lied to investors in cryptocurrencies about the safety of their investments made through his companies”, he said.

“As a result of Thompson’s lies, investors lost millions of dollars”, he alleged.

Police auction off crypto assets derived from theft

Police in the UK have taken a distinctive approach to distributing crypto assets found during cases of fraud.

The Eastern Region Special Operations Unit (ERSOU) partnered with a company called Wilsons Auctions to auction off the assets, which were valued at almost $300,000.

The assets ended up in law enforcement’s hands after Elliott Gunton was arrested as part of a probe into the hack which hit telecoms provider TalkTalk several years ago.

Detective Chief Inspector Martin Peters said that it was “really important” that processes like these were followed.

“Asset recovery in a digital world has evolved, so it’s really important that, working alongside commercial partners, we have a clear process for the storage and sale of cryptocurrency”, he argued.