In the United States, law enforcement authorities have seized $6.5 million worth BTC and Tether from an alleged crypto Ponzi scam dubbed the Banana Fund. The US Department of Justice seized the funds inc crypto after filing for the forfeiture last week. It comes after investigators found the fund had been siphoning off investor funds to finance the administrator’s own personal cryptocurrency speculation. The crypto fund is headed up by an unnamed foreign national, who used investors’ money to speculate on their own crypto transactions.
Seized funds will be returned to victims.
The unnamed individual bought a house with the investors’ money, with fund documents registered to an address in Toledo, Spain. While the Banana Fund was known to have raised 557 BTC and 1.73 million USDT, law enforcement agents were only able to recover 482 BTC and 1,721,868 USDT. The Department Of Justice stated that it would now begin an action to restore the funds to the Ponzi scheme’s victims. As a result, USSS executed a seizure warrant on those funds and commenced this action to begin returning these crypto funds to the administrator’s victims.
The Banana Fund started soliciting investments in 2016.
The Banana Fund initially solicited investments to finance projects as a form of crowdfunding, which would ultimately reward investors accordingly. The alleged Ponzu scheme received first investments in 2016, but by 2018, the fund website was redirecting to a Google Docs form, telling investors the fund had failed. The website asked investors to input their details to receive a refund. However, the exchange records show that the fund was still using investors’ money to trade digital currencies via the administrator in his personal name.
Crypto scams around the world have increased amid the ongoing global pandemic. Last month, the social media giant Twitter witnessed a massive security breach where hackers put out tweets from high profile accounts soliciting bitcoins.