Centra Tech Co-Founder Sentenced One-Year in Prison Over $25 Million ICO Scam

Robert Farkas, 34, the co-founder of the cryptocurrency firm Centra Tech was sentenced to a year in prison on Tuesday by US District Judge Lorna G. Schofield in Manhattan.

Farkas pleaded guilty to tricking investors of over $25 million in an investment scam that was promoted by the likes of Floyd Mayweather and musician DJ Khaled, who settled their own charges with the SEC for failing to disclose that they had been paid to promote the project.

The other two co-founders have also pleaded guilty to their roles in the scam.

The guilty parties solicited investors in 2018 to commit frauds to an initial coin offering (ICO) for its “Centra Tokens” by falsely claiming that they have developed a debit card that will allow the users to make purchases with digital currency at businesses accepting Mastercard and Visa, said prosecutors.

In other news, the Public Prosecutor’s Office of the Argentine city of Córdoba indicted 12 people in connection with the Onecoin Ponzi scheme last week.

One of the biggest scams in crypto history, this Bulgaria-based project netted about $4 billion.

The local police carried out multiple raids and arrested eight people over the years in different countries. Onecoin founder Ruja Ignatova, who was also indicated, is still at large.

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Author: AnTy

IRS Successfully Prosecute First Bitcoin Tax Case, Ordered to Pay Over $8 Million in Restitution

Volodymyr Kvashuk, a former Microsoft engineer, has been sentenced to nine years in prison for defrauding the tech giant for over $10 million, using a bitcoin mixer to hide taxable income, and filing fraudulent crypto tax returns.

In what is described as the “nation’s first Bitcoin case” by the IRS, Kvashuk was ordered to pay $8,344,586 in restitution. He may be deported to Ukraine following his prison term. IRS-CI Special Agent in Charge Ryan L. Korner said on Monday,

“Today’s sentencing proves you cannot steal money via the Internet and think that Bitcoin is going to hide your criminal behaviors.

Our complex team of cybercrimes experts with the assistance of IRS-CI’s Cyber Crimes Unit will hunt you down and hold you accountable for your wrongdoings.”

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A Skiller developer, Kvashuk, 26, worked at Microsoft from August 2016 to June 2018, during which he used his testing access to Microsoft’s online retail sales platform to steal “currency stored value” (CSV) such as digital gift cards.

He made millions of dollars by reselling them on the internet and used the proceeds to purchase a $1.6 million lakefront home and a $160,000 Tesla vehicle.

To hide the source of the funds that he ultimately sent to his bank account, he used a bitcoin “mixing service.” During the seven months of illegal activity, he transferred about $2.8 million in Bitcoin then filed fake tax return forms, claiming the bitcoin had been a gift from a relative.

While gifts are not taxable to the recipient under the current US tax code, one is required to check “yes” on the infamous crypto tax question “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” even if it is a crypto gift. CoinTracker noted,

“Before the 2019 tax year, if you received a crypto gift, you wouldn’t have to disclose it any tax forms encouraging tax cheats to hide crypto income.”

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Author: AnTy

BitFunder CEO Will Go to Jail for Over 1 Year Due to Securities Fraud for WeExchange Involvement

BitFunder-CEO-Goes-To-Prison-For-Securities-Fraud

Jon Montroll, the former CEO of WeExchange and BitFunder, is going to prison for 14 months now that he has been judged as guilty by the New York justice. He was condemned for obstruction of justice and securities fraud.

After his release, he will also be supervised by the authorities for more three years before he is finally free. On top of that, he will also have to pay a fine of $167,000 USD to the U. S. government.

His sentence is related to some problems that he had in 2012, back when Bitcoin was still only a child. At the time, he was the CEO of both WeExchange and BitFunder. WeExchange was a crypto exchange while the other company was used to buy digital shares from several companies.

Back in 2013, BitFunder was hacked and it lost 6,000 BTC, which were only worth $775,000 USD at the time. The real problem obviously started when Montroll decided that he simply did not need to warn the investors about the theft.

Instead of telling them that the money was stolen, he simply decided to cover the tracks. He returned the money to the clients using his own money. If he was able to simply spend $775,000 USD from his own money, he would have pulled it off. The amount was huge, though, so he obviously didn’t.

After some months, some of the users started to have difficulties in order to withdraw the funds and then there was simply no way to keep up with the lies anymore. The site was shut down as the CEO simply didn’t know how to proceed.

Obviously, this led investigators from the U. S. Securities and Exchange Commission (SEC) to investigate what was going on there. Montroll lied to them and affirmed that he identified the hack early on and was able to stop it.

The investigators did not believe him completely, so they pushed on and discovered what happened, which is why he is also being charged for obstruction of justice as well.

Montroll is currently free after the trial. He is to be arrested at the end of October and to get out of jail only at the end of 2020. Prosecutors pushed for a harder sentence, but he was able to get only 14 months in jail, but he pleaded guilty and this was the only time he got.

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Author: Gabriel Machado