Bitcoin Daily: California Man Jailed For Defrauding Crypto Investors Of Over $20 Million; Bitcoin Falls Below $30,000

Jerry Ji Guo was sentenced to six months in jail for defrauding investors of over $20 million in a fraudulent initial coin offering scheme, according to a press release from the U.S. Department of Justice.

Guo presented himself to potential investors as an initial coin offering consultant and promised to perform marketing and publicity services. Instead, he embezzled their cash and cryptocurrency, the release stated.

The 33-year-old was also ordered to pay $4,392,636.14 in restitution and sentenced to a three-year supervised release, according to the release.

“Some criminals believe mistakenly that cryptocurrency is beyond the reach of law enforcement,” said U.S. Attorney David Anderson in the release. “This case shows we can use criminal forfeiture to compensate fraud victims even when cryptocurrency is used in the fraud.”

In other news, bitcoin fell below $30,000 Wednesday (Jan. 27) as the cryptocurrency struggles volatility after months of hitting record highs, Bloomberg reported.

It fell as low as $29,241 on Wednesday, noted Bloomberg, the second time in the last seven days to fall so low. As of 7:34 p.m. Eastern time, bitcoin had risen to $30,261.793.

Antoni Trenchev, co-founder and managing partner of Nexo, told Bloomberg that the pullback is natural after an “overextended” rally.

“The long-term prospects remain very bright,” he said, per the report. “Short term, we might continue to see fluctuations, and that’s to be expected. It’ll be interesting to see whether we establish ourselves below $30,000. If that’s the case, we are going to revisit $25,000 and then $20,000. As long as we are above $20,000, we are still in a bullish market.”

Meanwhile, the Financial Sector Conduct Authority (FSCA) of South Africa is seeking greater regulatory power over cryptocurrency after the collapse of bitcoin trading company Mirror Trading International (MTI), Bloomberg reported.

“At the point something becomes a Ponzi scheme, we have lost our jurisdiction,” Brandon Topham, head of enforcement at FSCA, told Bloomberg. “We need the police and the prosecuting authority to work fast and put people in jail.”

MTI was put in provisional liquidation in December after some clients were unable to withdraw funds and the CEO, Johann Steynberg, allegedly fled to Brazil. MTI’s management claimed to have been “misled,” Bloomberg reported.

The FSCA found that MTI kept no accounting records or a thorough register of participants, although it claimed to have 260,000 members and 23,000 bitcoin — about $740 million. The FSCA has turned its investigation into alleged fraud over to a top police unit, Bloomberg reported.

The scheme has been called “the country’s largest Ponzi scheme,” according to Bloomberg, although the news site noted that FSCA’s investigation has not formally concluded that the MTI failure was a Ponzi scheme, just that MTI was trading without a license, citing Clynton and Cheri Marks, MTI’s head of the referral program and head of communications, respectively.