Federal Court Fines New York Man $36 Million for Crypto Fraud
Date: 2024-09-26 Author: Gabriel Deangelo Categories: IN WORLD
In a recent case, a U.S. federal court has ordered William Koo Ichioka, a New York man, to pay more than $36 million for running a fraudulent cryptocurrency and foreign exchange investment scheme. The ruling comes as a result of a case brought by the Commodity Futures Trading Commission (CFTC), which is tightening its scrutiny over cryptocurrency transactions.
$36 Million in Fines and Prison Time for Fraud
Judge Vince Chabbria of the U.S. District Court for the Northern District of California ordered Ichioka to pay $31 million to investors who were harmed and an additional $5 million in civil penalties. Ichioka also received a 48-month prison sentence for his role in the fraudulent scheme, which lasted from 2018 to 2021.
Ichioka lured investors with promises of a guaranteed return of 10% every 30 business days, which looked attractive but was completely false. The funds were partly used for currency and cryptocurrency transactions, but most of them went to his personal needs: buying expensive watches, jewelry, cars and renting luxury housing.
Ponzi scheme and false promises
Ichioka's scheme followed the classic scenario of a financial pyramid. He promised his clients extremely high and unrealistic returns, which in itself is a red flag for any investment program. As it became known during the investigation, some of the funds were indeed invested in cryptocurrencies and currency markets, but a significant share simply settled in Ichioka's personal accounts.
He also created false financial documents and issued false reports to make investors believe their investments were profitable. This mechanism allowed Ichioka to pay out old investors with money raised from new investors, a key element of the Ponzi scheme. However, the scheme soon began to fall apart under pressure from regulators.
Charges and Sentences
In June 2023, the US Department of Justice also brought a number of criminal charges against Ichioka, including securities fraud, currency fraud, and false tax returns. Ichioka pleaded guilty to all charges and was sentenced to 48 months in prison.
Ichioka's case is part of a broader crackdown by US regulators on cryptocurrency fraud. According to the report, US citizens lost about $5.6 billion in 2023 due to cryptocurrency scams, up 45% from the previous year. Fraudsters particularly targeted older people, with more than $1.6 billion in losses going to those over 60.
