US DOJ Charges Two Men for $25M AI Crypto-Trading Ponzi Scheme; Steps up Binance Surveillance
Summary:
The US Department of Justice (DOJ) has charged two men, David Gilbert Saffron and Vincent Anthony Mazzotta Jr., for conducting a fraudulent $25 million artificial intelligence (AI) crypto-trading Ponzi scheme. The duped victims' deposits were allegedly used for personal luxuries like private flights and luxury accommodations, while transactions were hidden using interchain swaps and cryptocurrency mixers. The DOJ is also monitoring the compliance of cryptocurrency exchange Binance after a $4.3 billion settlement over money laundering and US sanctions breaches.
The United States Department of Justice (DOJ) has formally accused two men of running a fraudulent cryptocurrency trading scheme, which purportedly utilized artificial intelligence (AI) and resulted in a hefty loss of $25 million. The announcement, made on December 12, names Australian citizen David Gilbert Saffron and Los Angeles resident Vincent Anthony Mazzotta Jr. as those behind malicious trading programs. These were falsely marketed as using an AI-powered trading bot to invest users' cryptocurrency capital and generate large profits. The duped victims' deposits were then allegedly utilized for personal extravagance like private charter flights, high-end hotel stays, luxury mansion rentals, personal chef services, and private security personnel.
Additionally, it is purported Saffron and Mazzotta covered up the illicit investments by employing interchain swaps and cryptocurrency mixers, to throw off detection. Their illegitimate operation had various facades including names like Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, Federal Crypto Reserve, and Cloud9Capital.
Charges against them cover a range of crimes, including conspiracy to commit wire fraud, wire fraud itself, conspiracy to obstruct justice, money laundering and its conspiracy. Saffron is under additional allegations of felony during his pre-trial release.
In the wake of the sanction on Tornado Cash, a cryptocurrency mixer, the US DOJ has been amplifying its efforts to ensure the compliance of blockchain organizations. For instance, on December 9, the DOJ disclosed its strategy for keeping tabs on the cryptocurrency exchange, Binance, following its $4.3 billion settlement over breaches in money laundering and US sanctions. Key sections of the DOJ's criminal division, namely those for money laundering and asset recovery, national security, counterintelligence and export control, and the United States Attorney's office for the Western District of Washington, will be closely overseeing the exchange's operations. In related news, the DOJ also labeled Changpeng Zhao (aka CZ) a potential flight risk, asserting that he should remain in the US.
Published At
12/12/2023 9:30:00 PM
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