The head of a bitcoin escrow company has been charged with defrauding investors for $7 million.
The U.S. Attorney’s Office of the Southern District of New York, part of the Department of Justice (DOJ), revealed that it has brought two counts each of commodity and wire fraud against Jon Barry Thompson, principal of Volantis Escrow Platform. Thompson is accused of taking over $7 million from two companies after making false representations in connection with bitcoin transactions.
“Jon Thompson induced investors to engage in cryptocurrency transactions through his company, Volantis Market Making, by touting a transaction structure that would eliminate any risk of loss during the purchase. As his clients soon realized, however, Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies. Whether a transaction involves cryptocurrency, or any other type of currency, commodity or security, this Office is committed to rooting out fraud and protecting the integrity of our markets,” Manhattan U.S. Attorney Geoffrey S. Berman said in a press release.
The two victim companies sent Thompson multi-million-dollar wires and believed they would receive bitcoin in exchange. While Thompson allegedly told one client, “cash is with me, coin is with me,” he actually sent their $3 million to a third-party exchange, and kept thousands for his own personal use.
FBI Assistant Director-in-Charge William Sweeney added: “Thompson allegedly thought no one would ask where their actual money went when they trusted him to invest in Bitcoin. Using phrases and terminology that the victim companies didn’t understand, he allegedly preyed on their ignorance of the emerging cryptocurrency. Our job at the FBI is to investigate fraud and follow the money wherever it leads.”
Thompson, who was arrested Thursday (July 25) in Pennsylvania, has been charged with two counts of commodities fraud, each of which carries a maximum sentence of 10 years in prison, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.