- Jeremy Spence, a cryptocurrency trader called “Coin Signals”, was sentenced to 42 months in prison.
- Spence was convicted of defrauding 170 people of more than $5 million.
- Spence misled people by pretending that his cryptocurrency trades were more profitable than they really were.
A 25-year-old Rhode Island crypto trader known by the moniker “Coin Signals” has been sentenced to 42 months in prison for defrauding 170 people of more than $5 million.
Jeremy Spence was sentenced to prison this week for a crypto scam he ran from November 2017 to April 2019. According to a Justice Department press release, Spence managed several crypto investment funds and then solicited money from eager investors, claiming that his operations they were much more profitable than they were.
All three funds – Coin Signals Bitmex Fund, Coin Signals Alternative Fund and Coin Signals Long Term Fund – were created and operated by Spence. Investors would then transfer cryptocurrencies such as bitcoin and ethereum to Spence to make investments.
The problem, however, was that Spence falsely claimed the trades were generating high returns, prompting interested investors to wire additional funds, according to a court filing. The filing accused Spence of soliciting more than $5.37 million worth of crypto at the time from more than 170 individual investors.
To cover the net losses of these investors, Spence tried to mislead them with fictitious account balances in order to keep raising money. Spence also used the new funds raised from investors’ fresh crops to cover losses and pay cash to old investors to keep the scheme going.
The Justice Department further added that Spence, instead of accurately reporting his losses, continued to falsify investors’ account balances, making them think they were continually making money when they were not.
Spence pleaded guilty to the crypto scam last November.
Spence will have three years of supervised release and will be required to pay restitution of $2,847,743 upon his release.
Spence’s sentence is the latest in a series of high-profile crypto crimes to come to light. This February, rapper Heather Morgan and her husband Ilya Lichtenstein were charged with laundering $4.5 billion in stolen bitcoin. The duo was arrested on February 8 at their New York City apartment on charges related to hacking cryptocurrency exchange Bitfinex in 2016.