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These Crypto Millionaires Got Into Massive Legal Troubles

MonicaDecember 29, 2022

Just because you’re a millionaire in the crypto world doesn’t make you immune to legal trouble. Some of the biggest crypto millionaires are facing legal troubles that already have or could result in them going to prison. It’s a lot of responsibility to take care of that amount of money, especially if your means of acquiring it is illegal.

Sometimes, though, these crypto millionaires had something else hidden up their sleeves. It seems that many of them are so good at playing the game, that they’re usually doing something illegal on the side. Somehow, these millionaires evaded the law for many years without penalties, but oftentimes, authorities caught them. Find out which crypto millionaires found themselves on the wrong side of the law below.

Bitcoin.com

Playing The Game

Becoming a crypto millionaire is pretty simple, at least on the surface. All you have to do is buy low and sell high. While it’s not quite as black and white as that, the more you play that game, the richer you become. There are some crypto millionaires out there who tried to use their fortune for good. And nearly half of the millennial millionaires have 25% of their wealth in crypto. That’s a lot of cash coming directly from crypto trades. Unfortunately, some people get so greedy and skilled at the game that they look for other ways to make money that involve fraud, scamming, or stealing.

Unfortunately, many crypto millionaires made their way to fame this way. Even though many scammers get caught, the length of the sentence never truly deters people from continuing their illegal acts, though the sentences do send a message. It’s a serious crime, so let’s hope these crypto millionaires recognize that. Let’s dive into the movers and shakers who got caught.

Sportskeeda

Ilya Lichtenstein and Heather Morgan

Whenever there’s a breach in security, especially on the internet, it makes it easy for skilled hackers to slither their way in and steal millions if not billions of dollars. Recently, authorities arrested two crypto millionaires for conspiracy to launder $4.5 billion in stolen cryptocurrency. Ilya Lichtenstein and his wife Heather Morgan attempted to use the 2016 hack of Bitfinex to their advantage.

According to Justice, they “employed numerous sophisticated laundering techniques, including using fictitious identities to set up online accounts; utilizing computer programs to automate transactions, a laundering technique that allows for many transactions to take place in a short period; depositing the stolen funds into accounts at a variety of virtual currency exchanges and dark net markets and then withdrawing the funds.” The remainder of the stolen funds equated to 94,000 Bitcoin ($3.6 billion) and remained in their online wallet. The operation took a lot of patience and skill, and it worked for some time. That is until authorities caught on and they were caught (via Justice).

Quartz

Facing 25 Years In Prison

Lichtenstein and Morgan’s attempts at laundering money cost them up to 20 years in prison. Not only that, but their conspiracy to defraud the USA also cost them a maximum of five years in prison. Criminals always leave trails, no matter how careful they believe they are being. This is a warning for anyone thinking about committing an illegal act involving cryptocurrency to think again. According to FBI Deputy Paul M. Abbate, their “case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead.” Lichtenstein and Morgan left a trail of breadcrumbs that the FBI was able to follow, and now they’re paying for it behind bars.

Bitcoinist

Charlie Shrem

Shrem was a crypto millionaire who ended up getting into huge legal trouble long before Bitcoin reached tens of thousands of dollars. Now, people will remember his name forever in the crypto world. Silk Road is an illegal website where people buy drugs, weapons, and hitmen. Shrem is a classic story about being in the wrong place at the wrong time. When he caught a BitInstant user reselling Bitcoin on the Silk Road, he tried to do the right thing.

Shrem said, “he bought bitcoin and then would resell [them to people who] would then go buy drugs and stuff like that. I knew about it. I didn’t care and I was a young kid, and I didn’t care enough to stop it because I was making money.” Shrem was collecting millions, even though he knew what he was doing was against the law. Young minds don’t know any better, which is how he got into massive legal trouble. But this cautionary tale didn’t necessarily deter more people from making the same mistakes at all.

Shrem – Observer

One Year In Prison

When Shrem had a change of heart, he tried to send an email to the guy to get him to stop. In his email, he said, ‘I know you’re reselling. You better stop, you know. You better calm down,’ and “even after shutting down BitInstant, Shrem was arrested, charged with money laundering and operating an unlicensed money-transmitting business.” Shrem spent one year in federal prison, which ended up helping him more than hindering him. Without any distraction from the outside world, he was able to recreate his life and start over again. He got a job as a dishwasher when he got out and said the entire experience humbled him.

Estonian World

Sergei Potapenko and Ivan Turõgin

This pair of crypto millionaires from Estonia conducted a sly, multi-faceted scheme. They would lure their victims into fraudulent equipment rental contracts using their cryptocurrency mining service called HashFlare. Not only that but “they also caused victims to invest in a virtual currency bank called Polybius Bank. In reality, Polybius was never actually a bank and never paid out the promised dividends. Victims paid more than $575 million to Potapenko and Turõgin’s companies.” With those millions of dollars stuffed into their wallets, the couple used shell companies to launder their proceeds and purchase expensive luxury cars and real estate (via Justice).

ITuudised

20 Years In Prison

Authorities caught them, and now they may face up to 20 years in prison. These counts include 16 counts of wire fraud and one count of conspiring to commit money laundering. They’re awaiting the decision of a federal court judge, who will determine their sentence using the U.S. Sentencing Guidelines (via Justice).

Vox

Sam Bankman-Fried

If you’ve heard of FTX, then you’ve heard of 30-year-old crypto celebrity Sam Bankman-Fried. The failed crypto exchange began in May 2019, but recently, millions of people using FTX lost millions if not billions of dollars and few people are sure why. US prosecutors filed criminal charges against Bankman-Fried, and his entire life changed. Authorities arrested him while in the Bahamas when the Securities and Exchange Commission said it authorized separate charges relating to Bankman-Fried’s ‘violations of securities laws’.” He went from celebrity to criminal in a matter of moments.

NY Magazine

If Convicted, He’ll Spend 115 Years In Prison

One of the first downfalls of FTX was that Bankman-Fried “built a “backdoor” into FTX’s accounting system, allowing him to alter the company’s financial records without tripping accounting red flags. (He) used this “backdoor” to transfer $10 billion in FTX customer funds to Alameda, the hedge fund, and at least $1 billion is now missing.” How this went under the radar is beyond us, but now he’s paying for it. After the entire ordeal, he got into massive legal trouble. According to Time Magazine, he could face an eight-count federal indictment with up to 115 years in prison.

Bloomberg

Eddy Alexandre

Alexandre created a company called EminiFX that promised returns of at least five percent every week. But that’s not what happened. The “investigation found that $250 million was collected from investors from September 2021 until May 2022 and that there were 62,000 EminiFX user accounts.” The returns were too good to be true. For example, if an investor put in $10,000, EminiFX promised $77,000 in returns. That sounds like a scam right from the get-go.

Change.org

Awaiting Trial

Reports suggest the swindle amounted to $59 million. Alexandre is waiting for trial. Investigators discovered “there was some trading going on, but it was in Alexandre’s personal brokerage account. The records show Alexandre invested $9 million, “almost exclusively in funds that are traceable to EminiFX corporate accounts,” and even then, Alexandre’s trading resulted in over $7 million in losses.” People put their faith in Alexandre only to lose millions of dollars. Anything that promises big bucks in a short amount of time is always a scam.

NY Post

Nicholas Truglia

Truglia helped out with a high-profile crypto scam that sent him to prison. The scam was simple, and according to Engadget, he was “allegedly taking part in a scheme that stole $22 million in cryptocurrency from blockchain adviser Michael Terpin in 2018. The perpetrators are said to have asked Truglia to convert Triggers tokens stolen from Terpin into Bitcoin after breaching the consultant’s phone.” There were multiple people involved in this scam and multiple skills, but Truglia is the only one facing charges of up to $80 million.

NY Post

18 Months In Prison

He’s now facing 18 months behind bars for the scam, although his alleged autism helped him get a lighter sentence than he normally would have, “which defense attorney Jeffrey Udell claimed made it harder to understand the real-world consequences of the theft” (via Engadget). His misunderstanding of the consequences might’ve been the reason the thieves chose him for the job, but we’ll never truly know. Let’s hope his sentence deters a few scammers from committing these acts of fraud and theft, though it won’t stop everyone.

CNN

John McAfee

McAfee attempted tax evasion and fraud. The crypto millionaire’s wild ride is coming to an end. He managed to evade the law for a while, but now “the SEC accuses McAfee of being paid more than $23.1 million worth of cryptocurrency assets for promoting several ICO token sales without disclosing that he was being paid to do so. Furthermore, the DOJ has levied several counts of tax evasion against McAfee, saying that he “willfully attempted to evade” payment of income taxes owed to the federal government” (via TechCrunch). Authorities dove into the investigation and McAfee’s fraudulent activity. Findings suggest he received more than $11.6 million worth of BTC and ETH tokens, plus an additional $11.5 million.

Multiple Decades In Prison

For every count against McAfee, he may receive up to five years in prison. He has about 10 counts in addition to five counts of “willful failure to file a tax return, each carrying a maximum penalty of one year in prison” (via TechCrunch). If we do the math correctly, that comes out to multiple decades in prison. According to BBC, he was recently found dead in his prison cell. An autopsy report is underway.

Bitdefender

James Wolfgramm

Wolfgramm scammed thousands of people. Authorities of the federal grand jury are now charging him with money laundering and wire fraud. According to Bitdefender, “the charges are about a scam that is said to have collected nearly US $1.7 million from two victims. Wolfgramm posted images on social media of expensive sports cars he claimed to own, suitcases full of cash, and screenshots of cryptocurrency wallets containing millions of dollars worth of digital currency.” It turns out that he copied a lot of these images from various websites online and social media accounts of random people. He pretended to be one of those hotshot crypto millionaires when he was curating an image for himself to fool people. This proves that we can’t trust everything we see on the internet nowadays.

Bitdefender

Charged With Seven Felonies

Wolfgramm was charged with seven felonies, including two counts of money laundering and five counts of wire fraud. Bitdefender reports, “OCF customers are said to have received millions of dollars from clients who believed that their money would be kept on deposit, not knowing that their funds were being spent by Wolfgramm and OCF on “unrelated business expenses.” At least he was caught and is being charged for it.

Manchester Evening News

Aram Sheibani

Crypto millionaires truly believe they’re above the law. Aram Sheibani is no exception, and he funded his lavish lifestyle through fraud, deceit, and money laundering. He was a crypto millionaire with “NZ$10 million in properties, $3 million in cryptocurrency, and a luxury Porsche worth more than $47,000,” according to NZ Herald. Not only that, but officials found him guilty of tax evasion, forged documents, drugs, cryptocurrency recovery codes, and two phones with military-grade encryption, which he smashed to get rid of the evidence (via NZ Herald).

Daily Record

37 Years In Prison

Because of the numerous crimes he committed Sheibani is going to spend 37 years in prison. According to Sergeant Lucy Pearson, of Great Manchester Police’s (GMP) Economic Crime Unit, “Sheibani is a calculated, deceitful and scheming criminal who believes he’s above the law. His greed shows no limits. Sheibani funded his materialistic lifestyle of luxury with fraud and criminality. He successfully masqueraded himself as a legitimate businessman to conceal his ill-gotten gains. He is a dishonest individual who has not shown any remorse for his actions throughout this entire investigation, refusing to cooperate with police and attempting to destroy evidence” (via NZ Herald). Also, he tried everything in his power to stay innocent. It backfired.

Reddit

Aiden Pleterski

Pleterski scammed a bunch of crypto investors, and “allegedly owes $35M to more than 140 investors” (via CBC). Who would trust a young 23-year-old with millions of dollars? Especially one who called himself the “Crypto King.” Tons of millionaires did just that. Creditors are unsure of where the $35 million ended up, and are doing everything in their power to recover it. According to CBC, “Pleterski’s lawyer told CBC Toronto that his client disputes many of the claims against him and believes the financial claims from many people who gave him money “have been wildly exaggerated.” The young man, dubbed “the Crypto King” in several paid-for promotional articles, owned 11 vehicles, was leasing four other luxury cars, flew on private jets, and was paying $45,000 a month to rent a lakefront mansion in Burlington, Ont.” It looks pretty obvious where all that money ended up.

CBC

Cellphone Arrest

Pleterski was clever enough in that he narrowly avoided arrest by handing over all his cellphones and diamond-studded Rolex (via CP24). At first, he refused, but moments before the court, where he was bound to get into massive legal trouble, he handed over the assets. CP24 reports, “we wouldn’t have obtained those assets if it wasn’t for us going back to court and asking for him to be arrested because he provided both assets right before the court appearance.” Authorities are still looking into the scandal.

Cryptopolitan

Sky Justin Gornik

To try and hack the system, Sky Justin Gornik committed illegal acts that landed him in massive legal trouble. He took orders on various websites and sold drugs in exchange for cryptocurrency. According to Cryptopolitan, these substances included ketamine, carfentanyl, oxycodone, and fentanyl. Authorities also arrested the crypto millionaire’s supplier, Steven Wallace George from Oklahoma, for operating a lab creating pure fentanyl.

Shutterstock

70 Months In State Prison

To pay for the illegal substances, Gornik used millions of dollars worth of cryptocurrency. Now, authorities are charging him and sentencing him to 70 months in state prison. Not only that, but he must return millions of dollars worth of cryptocurrency, and “all of the cryptocurrencies he possesses were in direct correlation with his drug-dealing “business” and he kept them on Bittrex and Poloniex” (via Cryptopolitan).

Daily Mail

Andrew Rodriguez

Rodriguez didn’t launder money or steal billions of dollars like some of our other crypto millionaires on this list. But he did get into massive legal trouble, and that was through drunk driving and killing someone on a moped. The story is horrendous and heartbreaking. But it just goes to show you that people truly believe money makes them invincible. He reached a speed of 141 mph in his Lamborghini before slamming into a grandfather on a moped, killing him. The Daily Mail gives us the grim details, and said “the impact was so extreme that Anderson was cut in half with his torso ending up more than 200 feet away from his legs.” There’s no going back from that one.

Daily Mail

20 Years In Prison

Rodriguez may face only six to 20 years in prison, which we don’t think is enough. Let’s hope the experience was traumatic enough that he never does that again. The Las Vegas Review-Journal reported that “he had been arrested on suspicion of DUI causing death, reckless driving, and driving without a valid license,” and the judge sentenced him to the negotiated six to 20-year prison term, court records show.” No amount of time is enough to make that crypto millionaire pay for what he did.

Fortune

Roger Ver

Also known as ‘Bitcoin Jesus,’ Roger Ver amassed a huge wealth of $520 million as an early bitcoin investor and also an investor in multiple bitcoin-related startups, though he is known as a controversial investor (via Vulcan Post). He was an early investor. He was easily able to acquire a ton of money and use it to his benefit.

Coin Desk

10 Months In Prison

Previously, a judge sentenced Ver to 10 months in prison for selling explosives on eBay. We’re not sure if that risk was worth going to prison for but he gave it a shot, anyway. According to Vulcan Post, “since then, he has renounced his American citizenship and became a Japanese resident. He also has a Saint Kitts and Nevis passport. Today Ver is the CEO of Bitcoin.com and the co-creator of Bitcoin Cash.” He had a tumultuous past. But he was able to reconcile and is now one of the top-ranking crypto millionaires out there.

Viasat

Javier Biosca

Biosca was a clever scammer who managed to deceive hundreds of clients. This includes notaries, Russian mobsters, businessmen, and lawyers from March 2019 to the fall of 2020. All he did was throw around a bunch of big words, including “digital wallet” and “blockchain,” and he managed to score at least $52,000 from every person he interacted with. His entire scam was a pyramid scheme, where monetary value grows. The last person is usually the one who gets the worst end of the deal, but in this case, it was everyone (via El Pais).

El Pais

Suicide

This is one of the saddest stories on this list. Instead of getting into massive legal trouble, Biosca thought his only way out was to commit suicide. According to El Pais, “on Tuesday, November 22, Javier Biosca jumped from the fifth floor of a hotel in Estepona, Spain. His suicide ended a career as an international broker that was as brief and irregular as the cryptocurrencies he handled.” Biosca was one of the biggest crypto scammers in Spain. He left behind a wife and son.

TronWeekly

Chancers

Luna, a crypto coin that made millions and then inevitably crashed, was the downfall of cryptocurrency streamer Chancers. He lost about $2.4 million when the coin crashed, and in turn, felt like death was knocking at his door. No one wants to lose that amount of money in such a short amount of time, but that’s the game you play when you get immersed in crypto. Instead of taking the hit, the crypto millionaire decided to do something about it. Do Kwon invented Luna, and during the crash, thousands of people turned to social media to ask for advice.

Chancers went a step further, and “angry with the lack of communication from Mr. Kwon, he searched online and found the crypto millionaire’s home address in Seoul. ‘I wanted to ask him about his plans for Luna. I suffered a huge loss and wanted to talk to him directly,’ Chancers said.” We’re not sure we’d go to the house of the founder to ask questions, but Chancers took a chance.

Financial News

Criminal Record In Korea

Because of the ordeal, officials arrested Chancers in Korea. He now has a criminal record. While he’s not facing decades in prison, he still got into legal trouble. According to BBC, “Chancers says he will most likely face a fine and a criminal record that could make his life difficult. He said, “I lost a lot of money and now I’m being investigated by the police. I originally served as a civil servant in Korea – but if I am convicted of this case, I may not be able to return to the civil service again. In Korean culture, the problem itself is not important but rather the fact that it caused a scandal. I even had to apologize publicly as a sinner. I had no idea this would be so big. It’s very sad.'” It is sad, but seriously, what did he think was going to happen?

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