The US Department of Justice has brought criminal charges against an Ohio man for his alleged involvement in a $10 million cryptocurrency Ponzi scheme.
Announced last week, 27-year-old Rathnakishore Giri allegedly pulled off the scam by convincing investors to invest in his fund. He falsely promoted himself as an expert cryptocurrency trader with special training in Bitcoin derivatives. However, he has a record of investment failure and even lost investors’ principal investments.
Giri promised guaranteed “lucrative returns with no risks” to the investors of hits cryptocurrency fund. However, in reality, he paid off old investors with proceeds brought in from new investors, making it a classic Ponzi scheme.
He even misled investors about the delays when they tried to cash out their investment or even sought returns on their principal.
A Luxurious Trap
He lured investors also by “boasting about his own personal wealth and lavish lifestyle,” the indictment detailed. He drove two Lamborghinis, a Tesla, and an Audi R8. He even showed off high-end watches, flew on private jets, and rented luxury homes.
“Instead of using all investor funds for cryptocurrency investments as promised, defendant Giri diverted certain investor funds to other purposes such as payment of his own personal expenses or repayment of principal or interest on earlier investments in a manner consistent with a Ponzi scheme,” the indictment added.
The Department of Justice now charged Giri with five counts of wire fraud. If convicted, he could face a maximum prison time of 20 years for each count of charges.
Earlier in August, the US Commodity Futures Trading Commission (CFTC) charged Giri for defrauding investors of $12 million. The charges brought by the financial market regulator were in the same line as the Department of Justice but were civil in nature.
Meanwhile, the crypto industry is reeling from fraud allegations with the recent collapse of Sam Bankman-Fried’s crypto exchange FTX. Once a crypto billionaire, Bankman-Fried allegedly misappropriated client funds for taking leveraged bets on the crypto market. FTX and it’s over 130 affiliates have now filed for bankruptcy protection in the US.