The U. S. District Court for the Southern District of New York has ordered Jeremy Spence, founder of Coin Signals, to pay $2,847,743 in restitution to victims of a fraudulent virtual currency scheme.
The consent order resolves a CFTC action filed against Jeremy Spence on January 26, 2021 alleging that he operated a virtual currency Ponzi scheme in which he fraudulently solicited individuals to invest in digital assets such as bitcoin and ether.
Jeremy Spence aka Coin Signals was found to obtain more than $5 million of digital assets such as bitcoin and ether from customers in a Ponzi scam that covered his significant trading losses and whose payouts of supposed profits to customers were actually misappropriated funds from other customers.
He was found to misrepresent his trading profitability and the amount of assets he had under management, as he took customer funds and issued false performance statements. Spence eventually admitted to customers that he had engaged in “lies and deceit.”
Jeremy Spence sentenced to 42 months of incarceration
A parallel criminal action had also been filed in New York, charging him with one count of commodities fraud in violation of the CEA and CFTC regulations and one count of wire fraud.
Spence pled guilty to commodities fraud under the CEA and CFTC regulations and was sentenced on May 11, 2022 to 42 months of incarceration and three years of supervised release. He was also ordered to pay restitution of $2,847,743.
CFTC Commissioner Kristin Johnson has publicly come forward to comment on the Coin Signals scam and the need to stop crypto fraud amid liquidity crises and a lack of responsible governance at cryptocurrency exchanges and other prominent crypto-intermediaries that have roiled the digital asset ecosystem.
“I note that today we see an illustration of one more instance of the CFTC’s best efforts to use our existing authority to protect customers. Today, the CFTC announced the entry of a consent order for permanent injunction and other equitable relief against Defendant Jeremy Spence by the Hon. John G. Koeltl of the United States District Court for the Southern District of New York. Specifically, the Consent Order finds that, from approximately December 2017 to April 2019, Spence operated a digital Ponzi scheme under the name “Coin Signals” designed to defraud cryptocurrency investors. Spence’s scheme captured more than $5 million in cryptocurrencies from approximately 175 user accounts.
“Spence enticed customers using various social media platforms and touting an engineered trading record, imagined list of assets under management, and creatively crafted description of highly profitable returns. Through his duplicity, Spence was able to rack up significant trading losses. Consistent with Charles Ponzi’s original, old-school scheme Spence distributed current customer funds to newly solicited investors describing the same as “profits.”
“I want to recognize the hard work of the Division of Enforcement expressly. I also want to commend the Division staff for bringing this action, including Elizabeth Brennan, Brent Tomer, Lenel Hickson, Jr., and the Office of the General Counsel.
“While Spence’s prison term will limit his ability to continue this scheme, other bad actors stand ready, willing, and able to take his place and prey on victims’ hopes and fears. Accordingly, I strongly encourage members of the public to stay informed about the potential scams and abuses in the digital assets markets by visiting our investor advisory page.
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