Briefly
- Federal prosecutors have charged two OmegaPro executives with operating a $650 million crypto rip-off masked as a foreign exchange funding platform.
- The pair allegedly used lavish occasions and false guarantees of 300% returns to lure traders worldwide, then froze withdrawals in late 2022.
- The DOJ’s case follows a wider crackdown, together with final month’s sentencing of Gotbit’s founder for inflating token volumes by way of wash buying and selling.
Federal prosecutors within the U.S. have charged two males with orchestrating one of many largest crypto funding scams in current historical past.
Michael Shannon Sims, 48, and Juan Carlos Reynoso, 57, had been indicted within the District of Puerto Rico for conspiracy to commit wire fraud and conspiracy to commit cash laundering, in keeping with the U.S. Division of Justice assertion launched Tuesday.
The pair are accused of defrauding hundreds of victims worldwide of over $650 million by way of OmegaPro, which prosecutors described as a “international fraud scheme” disguised as a reputable foreign exchange and crypto buying and selling platform.
In line with prosecutors, Sims and Reynoso established the OmegaPro multi-level advertising scheme in January 2019, instructing traders to buy “funding packages” utilizing digital forex with guarantees that elite merchants would generate large earnings by way of foreign currency trading.
Prosecutors say the pair, together with others, lured hundreds of victims with guarantees of triple-digit returns, solely to siphon funds into crypto wallets they managed.
They then distributed to insiders and high-ranking promoters to obscure the funds’ origins, with each defendants allegedly profiting hundreds of thousands from the scheme.
“As alleged, the defendants preyed upon susceptible people within the U.S. and overseas, defrauding them of over $650 million by making false guarantees of considerable returns and that their cash was protected,” mentioned Matthew R. Galeotti, head of the DOJ’s Felony Division.
Sims served as OmegaPro’s founder and strategic guide, whereas Reynoso led operations throughout Latin America and elements of the USA, together with Puerto Rico.
Prosecutors allege Sims and Reynoso used extravagant occasions, like projecting the OmegaPro emblem on the Burj Khalifa, and social media shows of luxurious to entice victims.
“Too good to be true”
Karan Pujara, founding father of the rip-off protection platform ScamBuzzer, advised Decrypt that crypto MLM scams exploit highly effective psychological triggers.
“Even when one thing is just too good to be true, many fall for it,” Pujara mentioned, noting that “these scams primarily based on false hope and excessive returns have been operating for a few years and will proceed.” He added that, “The one factor that adjustments is the face of the scammer, who’s grasping sufficient to steal, and the sufferer, who’s grasping sufficient to YOLO their life financial savings.”
Pujara famous there’s “a really skinny line between proper and mistaken” with regards to high-profile influencers who take part in such schemes.
OmegaPro’s unraveling
The alleged OmegaPro scheme started unraveling in November 2022 when the agency disabled withdrawals, claiming technical points.
Associates started reporting being locked out of their accounts round November seventh, with withdrawal issues escalating by November twentieth, in keeping with a report by BehindMLM, an MLM evaluate web site.
Regardless of assurances from Reynoso and others in January 2023 that investments had been safe and being transferred to a brand new platform known as Dealer Group, victims had been unable to entry their funds from both platform, the report mentioned.
The platform acquired regulatory fraud warnings from a number of jurisdictions, together with France, Belgium, Spain, and Peru, earlier than its collapse in July 2023.
The duo’s indictment follows the arrest of co-founder Andreas Szakacs in Istanbul final yr after a Dutch whistleblower representing 3,000 defrauded traders alerted Turkish authorities, as per a neighborhood media report.
Turkish authorities consider the platform’s funds had been linked to the notorious OneCoin crypto fraud that swindled traders of $4 billion in 2017.
“Based mostly on earlier hack and rip-off circumstances, the probabilities of recovering property are very uncommon,” Pujara mentioned, including that scammers keep away from conventional exchanges and use faux KYC particulars from different international locations.
If convicted, Sims and Reynoso every face a most penalty of 20 years in jail on every rely.
Simply final month, crypto market maker Gotbit and its founder had been sentenced for utilizing wash buying and selling to inflate token volumes.
Founder Aleksei Andriunin acquired a lowered sentence after pleading responsible, forfeiting $23 million in crypto.
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