Key Player In $13M Crypto Ponzi Pleads Guilty
A major player in a crypto Ponzi scheme that duped victims out of $13 million with claims of using artificial intelligence-powered crypto trading bots and a fake government agency has pleaded guilty.
The US Department of Justice said on Monday that Vincent Anthony Mazzotta Jr admitted to his role in defrauding investors by promising high yields made through fictitious investment firms that use AI-powered crypto trading bots.
Mazzotta pleaded guilty to money laundering and conspiracy to obstruct justice, which together carry a maximum penalty of 15 years in prison. A judge has yet to determine the sentence.
The Justice Department first indicted Mazzotta in late 2023 in a superseding indictment in the agency’s existing case against his alleged co-conspirator, David Saffron. Saffron has pleaded not guilty.
David Kagel was also charged in connection with the scheme and in October was sentenced to five years’ probation and ordered to pay restitution of over $13.9 million after pleading guilty to conspiracy to commit commodity fraud.
Mazzotta used fake government agency: DOJ
The DOJ said that Mazzotta used firms, including Mind Capital and Cloud9Capital, to run the scheme and make off with millions in investor funds.
It added that Mazzotta then helped create a fake government agency called the Federal Crypto Reserve and charged victims thousands under the guise of investigating his firms, which “had disappeared with the victims’ investments.”
Tyler Hatcher, special agent in charge of the IRS Los Angeles Field Office, said that by using fake “US governmental entities to legitimize their scams,” it attracted the “scrutiny of actual federal authorities.”
Victims’ money used to fuel luxurious lifestyle
The Justice Department alleged in its original indictment that between December 2017 and July 2023, users’ deposits to the companies were laundered through crypto mixers and then spent on a range of luxurious items such as private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef and private security guards.
The defendants allegedly used a range of fake companies while running the scheme, including Circle Society, Bitcoin Wealth Management and Omicron Trust.
Related: Crypto scammer gets 8 years for $40M eEmpowerCoin, ECoinPlus scams
Prosecutors said Mazzotta also went by the aliases Anthony, Delta Prime, and Director Vinchenzo, while Saffron used the monikers David Gilbert, Dave Gabe, The Blue Wizard and Bitcoin Yoda.
“Bitcoin Yoda” to face trial
The DOJ said Mazzotta was prompted to work with other unnamed co-conspirators to conceal and destroy evidence at Saffron’s apartment after Saffron was indicted in June 2022.
Mazzotta is said to have destroyed an iPad and falsified business records to conceal his own involvement in the scheme.
Saffron has been behind bars since August 2023 and is facing a trial on Sept. 16. He is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering and money laundering.
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