US National Pleads Guilty To a $3M Worth Bitcoin Escrow Fraud
The principal of a cryptocurrency escrow company, Jon Barry Thompson, has pled guilty in Manhattan federal court to commodities fraud. In 2018, he took over $3 million from one company and failed to deliver bitcoins worth that amount.
Crypto Fraudster Pleads Guilty
Thompson served as the director of Volantis Escrow Platform LLC and Volantis Market Marking LLC. According to the statement from the US Department of Justice (DOJ), he issued numerous promotional materials on behalf of the two companies, claiming that they “minimize[d] settlement default risk” in cryptocurrency transactions.
Thompson further asserted that there’s “no risk of default” for either side of the transaction because Volantis acted as a custodian for assets.
In June and July 2018, he fabricated false statements to an undisclosed company to induce it to send over $3 million to fund the purchase of Bitcoin. Thompson guaranteed that Volantis would act as an escrow and that the money “could not be lost.”
He also promised that he would not transfer the funds to the seller until he had received the Bitcoin in hand. Following his false presentation, the unnamed company agreed to send $3.25 million to Volantis.
However, Thompson wired the funds to a third-party without firstly receiving any of the bitcoins in hand. He lied for days about the transaction status and the location of the coins and funds, which the defrauded company never saw again.
Up To 10 Years In Prison
The DOJ announcement informed that authorities arrested Thomson on July 25h, 2019. He pled guilty to one count of commodities fraud over a year later before US District Judge Edgardo Ramos in Manhattan federal court.
As a result, Thompson could face imprisonment of up to 10 years. The Judge will determine the sentencing scheduled to take place on January 7th next year.
It’s worth noting that Thompson has admitted to only one of the two charges he received last year. The US Attorney for the Southern District of New York, Geoffrey Berman, informed in September 2019 that Thompson had taken about $4 million from another company by presenting the same false promises mentioned above.
If found guilty on both counts of wire fraud and commodities fraud, his sentence could rise to 20 years in prison.