Coin Signals Trader Sentenced To 3 Years In Prison For $5M Fraud

Coin Signals trader was sentenced to 3 years in prison for $5 million fraud or running a crypto scheme that solicited funds from investors so let’s read more today in our latest cryptocurrency news.

The US Department of Justice sentenced the 25-year old crypto trader known as Coin Signals, to 42 months in prison for defrauding investors out of more than $5 million. According to the official press release, the convict named Jeremy Spence solicited funds from investors via crypto investment pools that he ran from November 2017 to April 2019.

The fraudster managed crypto funds including three big ones like Coin Signals Alternative Fund, Coin Signals Bitmex Fund, and the Coin Signals Long Term Fund. He claimed that his trades were doing well and generated a lot of profit which prompted investors to send him crypto like ETH and BTC to operate on their behalf. He even posted a message in an online chat group claiming that his trading of investor funds over the past month generated a return of more than 148% and as a result, some investors sent him more funds. The US DOJ pointed out that Spencer’s claims were false:

“SPENCE solicited more than $5 million through false representations, including that SPENCE’s crypto trading had been extremely profitable when, in fact, SPENCE’s trading had been consistently unprofitable… In fact, over that same period of approximately one month, SPENCE’s trading resulted in net losses in the accounts in which he traded investor funds.”

To cover up the net losses that were incurred while trading with the investor’s funds, Spence created a fake account balance to keep raising moeny and started operating a Ponzi scheme. He used the funds from the new investors to pay old ones and kept this going for as long as possible. He was able to distribute over $2 million worth of assets to investors via this scheme:

“Instead of accurately reporting the trading losses SPENCE was incurring, the account balances falsely indicated to investors that they were making money by investing with SPENCE.”

He got arrested back in January of 2021 by the FBI and separate civil charges were brought against him by the CFTC. He pled guilty to the charges in November 2021 and in addition to the prison sentence, Spence will have three years of supervised release and restitution payment of over $2 million after his release.