Fake ICO consultant sentenced for embezzling cryptocurrency now worth $20 million

The US resident pretended to be an expert on investing in cryptocurrencies.
Written by Charlie Osborne, Contributing Writer

A US resident who masqueraded as a cryptocurrency consultant has been sentenced for embezzling cryptocurrency and cash fraudulently obtained from investors. 

The US Department of Justice (DoJ) said on Tuesday that Jerry Ji Guo, a resident of San Francisco, will spend six months behind bars and has been ordered to pay $4.4 million in restitution for his activities.

The 33-year-old former journalist admitted to reshaping himself as an expert and consultant on cryptocurrency and Initial Coin Offerings (ICOs). 

ICOs are investor events that originally formed to give emerging projects an alternative funding route to angel investment or loans. Participants in legitimate ICOs receive project-branded tokens for their contribution, and should the project succeed, this could allow investors to reap substantial profits. However, ICOs are risky and have paved the way for exit scams and fraud.  

In Guo's case, he conned investors by promising he would perform "consultancy, marketing, and publicity services," according to US prosecutors. However, instead of keeping his promise, investor cash and cryptocurrency -- including Bitcoin (BTC) and Ethereum (ETH) ended up being drained from wallets used by companies to deposit funds up-front in order to secure his 'services.'  

The cryptocurrencies taken from investors have surged in value over the past few years and the combined funds, with cash, are now worth an estimated $20 million. 

A federal grand jury indicted Guo in 2018 and he pleaded guilty to one count of wire fraud a year later. Seven other counts of wire fraud were dismissed. At the time of the indictment, Guo faced up to 20 years behind bars.

Alongside the prison sentence and reparation, Guo will also have to submit to three years of supervised release.

The DoJ's Money Laundering and Asset Recovery Section obtained warrants in February 2020 to seize the stolen funds and says that the government "is [now] in a position to return the stolen property to the victims."

Earlier this month, US prosecutors sentenced the former owner of RG Coins, Rossen Iossifov, to 10 years in prison after he was found guilty of laundering funds from online auction scams through his cryptocurrency exchange. 

The DoJ and FBI are constantly hunting down the perpetrators of cryptocurrency-related fraud and schemes, and now, the US Securities and Exchange Commission (SEC) maintains a list of both fiat investment and crypto businesses that consumers should be wary of. 

In January, SEC added a further eight cryptocurrency organizations to its watch list which tout everything from unrealistic returns to ICO legal protection, and risk-free cryptocurrency trading.

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