Two Individuals Arrested for Crypto Scheme
The United States Department of Justice (DOJ) has filed charges against Australian national David Gilbert Saffron and Los Angeles resident Vincent Anthony Mazzotta Jr. for allegedly orchestrating a $25-million artificial intelligence (AI) crypto-trading Ponzi scheme.
Deceptive Commitments by the Duo
The indictment claims that the duo operated trading programs, falsely promising to use an AI automated trading bot to generate high-yield profits from victims’ cryptocurrency investments.
Upon receiving user deposits, Saffron and Mazzotta allegedly diverted funds.
The money went towards extravagant personal expenses, including private chartered jet flights, luxury hotels, mansion rentals, a personal chef, and private security guards.
Charges on the Duo
The defendants are also accused of concealing victims’ cryptocurrency investments through interchain swaps and the use of cryptocurrency mixers to avoid detection.
The scheme operated under various names such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, Federal Crypto Reserve, and Cloud9Capital.
The accusations against the pair are outlined in the official press release.
As mentioned in the official statement:
“Saffron and Mazzotta are charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering. Saffron is also alleged to have committed felonies while on pre-trial release. If convicted, they each face a maximum penalty of 20 years in prison for each count of conspiracy to commit wire fraud and money laundering, 20 years in prison for each wire fraud count, 10 years for each money laundering count, and five years for conspiracy to obstruct justice. Saffron also faces up to 10 years in prison consecutive to any other sentence for committing felonies while on pre-trial release.”
DOJ’s Scrutiny on Crypto
In light of increased scrutiny on blockchain entities, the DOJ has been actively monitoring compliance, with a recent focus on cryptocurrency exchange Binance following its $4.3-billion settlement for money laundering and U.S. sanction breaches.
The DOJ’s criminal division will closely monitor Binance’s activities.
This includes sections for money laundering and asset recovery, national security, counterintelligence and export control, and the office for the Western District of Washington’s United States Attorney.