The Justice Department sentenced a Swedish man to 15 years in prison for a $16 million crypto-fraud scheme

DOJ
Brian Netter, a lawyer for the women’s soccer team in an equal pay case, will be a top defender of Biden policies at the Justice Department.

  • A Swedish man was sentenced to 15 years in prison for swindling $16 million from victims in a crypto scheme.
  • Roger Nils-Jonas Karlsson, 47, ran an investment fraud scheme from 2011 until 2019 from Thailand.
  • He lured victims to purchase shares from his company using cryptocurrencies but transferred the funds directly to his personal account.
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A Swedish national was sentenced to 15 years in prison after swindling thousands of victims out of more than $16 million in a cryptocurrency fraud, the Department of Justice said in a statement Thursday.

Roger Nils-Jonas Karlsson was arrested on June 17, 2019 in Thailand and was extradited to the US. He pleaded guilty on March 4, 2021.

According to the DOJ, the 47-year-old ran an investment fraud scheme from 2011 to 2019.

His scheme involved convincing victims to purchase shares of his company, Eastern Metal Securities, using cryptocurrencies such as bitcoin and promising them “astronomical returns” tied to the price of gold.

Karlsson used his website to lure potential investors to purchase shares of less than $100 a piece with an eventual payout of 1.15 kilograms of gold per share. On January 2, 2019, gold was worth more than $45,000 per kilogram.

Karlsson – known by several aliases including Steve Heyden, Euclid Deodoris, Joshua Millard, Lars Georgsson, Paramon Larasoft, and Kenth Westerberg – would then wire the funds provided by the victims to his personal bank accounts, which he used to fund his lavish lifestyle. This included snapping up expensive homes, a racehorse, and a resort in Thailand.

Karlsson’s fraud targeted financially insecure investors, the department said, causing many of them severe financial hardship.

The scheme, however, was not over once the funds were transferred.

To prolong his fraud, Karlsson would even update his victims with the state of their assets. In one instance, when he was trying to explain payout delays, he said he was working with the Securities and Exchange Commission.

As part of the sentence, Karlsson was ordered to forfeit his resort and other properties and accounts. He also issued a money judgment in the amount of $16,263,820.

The US is now seeking restitution on behalf of his victims.

Cryptocurrency fraud schemes have been on the rise ever since digital assets exploded in popularity in recent years. Fraudsters have also become creative in the ways they swindle people.

Some instances included fraudulent cryptocurrency domain registrations, blockchain scams, and criminals impersonating Elon Musk.

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South African regulator says it’s powerless over suspected $3.6 billion bitcoin scam, as crypto is out of its reach

Bitcoin Bubble
Bitcoin replica coins are seen on November 13, 2017

  • South Africa’s regulator said it’s powerless to act on a suspected $3.6 billion bitcoin scam.
  • Two brothers who founded Africrypt appear to have gone missing, along with bitcoin worth billions.
  • South Africa’s FSCA said the company appears to be a Ponzi scheme designed to defraud investors.
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South Africa’s financial services regulator has said it can’t take any action over a suspected scam that lawyers say has caused as much as $3.6 billion worth of bitcoin to go missing.

The country’s Financial Sector Conduct Authority said Thursday that Africrypt, the company linked to the lost holdings, looks like a Ponzi scheme set up to defraud investors.

Yet the FSCA said that as cryptocurrencies are not regulated financial products or services in South Africa, it is powerless to do anything in this case.

“At this stage we have only found evidence of crypto asset transactions,” it said in a statement. “Currently crypto assets are not regulated in terms of any financial sector law in South Africa and consequently the FSCA is not in a position to take any regulatory action.”

Africrypt was created by brothers Ameer and Raees Cajee in 2019, and based in Johannesburg in South Africa.

According to a police statement seen by Bloomberg, the company promised high returns of up to five times principal investments.

Yet Hanekom Attorneys, the lawyers for the affected investors, now say that the brothers – and as much as $3.6 billion of bitcoin – have vanished, in what they describe as a “heist”. Insider was unable to contact the crypto company, whose website is down.

The FSCA said: “This entity was offering exceptionally high and unrealistic returns akin to those offered by unlawful investment schemes commonly known as Ponzi’s.”

“The public is urged to understand that unrealistically high returns suggests that the investment scheme is likely to be fraudulent,” it added.

Africrypt’s apparent closure, and the inability of regulators to deal with it, raises fresh concerns about the safety of cryptocurrency investments around the world.

Crypto markets are currently largely unregulated. Watchdogs have routinely warned that investors should be prepared to lose all their money.

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A man in Germany said he fell for a fake Elon Musk crypto scam that cost him $560,000

Elon Musk
  • A man in Germany confessed to losing bitcoin worth half a million dollars in a scam.
  • He told the BBC that he fell for a Twitter account posing as Elon Musk offering to double his money.
  • It is one of the largest ‘giveaway scams’ ever reported.
  • See more stories on Insider’s business page.

A man in Germany says he lost bitcoins worth $560,000 by falling for a scammer posing as Elon Musk, the BBC reported.

The man from Cologne – who did not give the BBC his real name – described giving away his fortune in the mistaken belief that Musk would double his money.

The BBC said his loss was one of the largest single amounts to be taken in a so-called giveaway scam.

Musk caused a stir on February 21 by tweeting: “Dojo 4 Doge,” a reference to cryptocurrency Dogecoin. He often tweets his enthusiasm for cryptocurrencies – moving markets in the process.

Scammers try to profit from this enthusiasm by filling the replies to Musk’s genuine tweets with posts from accounts designed to mimic his.

The man who spoke to the BBC said he clicked on one.

The link led to a professional-looking page, the BBC reported, which described an offer whereby people could send Musk bitcoin and receive twice as much in return.

The website offered to double quantities between 0.1 bitcoin and 20 bitcoin – worth between $5,600 and $1.1 million using bitcoin’s price as of March 16, 2021.

But the page’s authors had nothing to do with Musk.

The BBC did not specify which website ran the scam, but an example can be seen here on a now-deleted page on Medium – a blogging site that allows anyone to publish professional-looking pages:

elon musk bitcoin scam
A screenshot of a now-deleted page claiming to be giving away bitcoin from Elon Musk.

elon musk bitcoin scam
A screenshot of a now-deleted page claiming to be giving away bitcoin from Elon Musk.

The BBC said that a ticking timer added a sense of urgency to the man’s decision. He opted to send his full holding of 10 bitcoin for the offer, the BBC reported. Exchanged for dollars, they would be worth $560,000.

The BBC reported that he thought: “This is definitely real.”

The man told the BBC that he realized his mistake when the timer counted down, and no money came.

“I went upstairs and sat on the edge of the bed to tell my wife. I woke her up and told her that I’d made a big mistake, a really big mistake,” he told the BBC.

Cryptocurrency scams have soared in recent years, with little recourse for those who are duped. In 2019 alone, scammers took $4.6 billion from crypto traders, Insider’s Sophia Ankel and Prabhjote Gill reported.

Fake cryptocurrency giveaways often target social media accounts of high-profile figures, either hacking into their account and tweeting on their behalf, or disguising another account to look official.

It’s not the first time Musk – a well-known cryptocurrency enthusiast – has been used to give cover to a scam.

In July 2020, hackers managed to take over the Twitter accounts of people including Musk, Barack Obama, Bill Gates, Jeff Bezos, Apple, and Kim Kardashian, posting similar giveaway scams.

twitter bitcoin scam
A screenshot of Bill Gates’ hacked Twitter account in July 2020.

twitter bitcoin scam
A screenshot of Elon Musk’s hacked Twitter account in July 2020.

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