Q3 advisor targeted for wire fraud, SEC warns of shady crypto deals

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cryptocurrency

A new prosecution of yet another cryptocurrency fraudster is an example of what happens when cybercrime and unscrupulous investment scams target the cryptocurrency sector.

Coindesk reports today that an ‘advisor’ named Michael Ackerman is facing potentially $250,000 in fines and up to 20 years in prison for one count of wire fraud over an algorithm that he said “guaranteed returns” on trading cryptocurrencies.

Investigators found that Ackerman gleaned some $7.5 million off of over 150 investors, and spent a lot of that money on jewelry, cars and home improvements.

Now, Ackerman is just one of many shady operators facing significant prosecution.

“Per evidence submitted by the Department of Homeland Security, Ackerman assured investors Q3 had more than $315 million in assets when in reality it had just half a million left,” writes Paddy Baker chronicling some of this nefarious sleight of hand. “The SEC, Commodity and Futures Trading Commission (CFTC), and the attorney for the Southern District of New York filed charges against Ackerman in February.”

In statements to potential investors in general, the SEC has provided detailed warnings about how these kinds of scams work:

“SEC and CFTC staff have recently observed investment scams where fraudsters tout digital asset or “cryptocurrency” advisory and trading businesses,” agency representatives wrote in April of 2019. “In some cases, the fraudsters claim to invest customers’ funds in proprietary crypto trading systems or in “mining” farms.  The fraudsters promise high guaranteed returns (for example, 20-50%) with little or no risk.”

Specifically, the SEC describes in the same piece what often happens after these miscreants get their hands on an investor’s money:

“After the investors make an investment, typically using a digital asset such as Bitcoin, the fraudsters in some cases stop communicating with the investors altogether.  These fraudsters can quickly send your money overseas, with little chance of you being able to get it back.  Sometimes the fraudsters direct investors to pay additional costs (such as purported taxes) to withdraw fake “profits” earned from the investment.  This is an example of an advance fee fraud scam, where investors are asked to pay a bogus fee in advance of receiving proceeds, money, stock, or warrants.”

That’s not a kosher way to do business.

It’s assumed that the SEC has only seen this kind of troubling trend grow since then. Always look for the “too good to be true” offers for crypto advising, crypto asset management, or crypto mining itself – and steer clear.

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