U.S. seizes $6.5 million in bitcoin and tether from ‘Banana Fund’ Ponzi scheme

The U.S. Department of Justice has seized crypto funds totaling about $6.5 million from the administrator of an alleged Ponzi scheme known as the “Banana Fund.”

The DOJ filed a complaint for the forfeiture of the funds last Wednesday.

The administrator of the Banana Fund is an unnamed foreign national, according to the complaint. An investigation of the U.S. Secret Service (USSS) found that the administrator courted investments for the Banana Fund but allegedly used investor funds for personal trading in cryptocurrencies instead, eventually using their gains to purchase a home. Accounts related to the Banana Fund were registered to a residential address in Toledo, Spain. 

Though the administrator once announced that investments had reached 557 bitcoins and 1.73 million tether, USSS investigators have recovered 482 bitcoins and 1,721,868 tether.

“As a result, USSS executed a seizure warrant on those funds and commenced this action to begin returning these funds to the administrator’s victims,” the DOJ said in a statement.

The administrator originally touted the Banana Fund as a crowdfunding platform using bitcoin to finance projects, opening for investments in 2016. However, the DOJ alleges that the promised token marketplace in the Banana Fund white paper never materialized. Bitcoins invested in the fund were “frequently” laundered to four different locations, according to the complaint.

By 2018, the Banana Fund website redirected to a Google docs page associated with the administrator that indicated the fund had failed and directed investors to input their information to receive a refund. During this time, the DOJ alleges that exchange records show the administrator was still actively buying and selling with the funds and claiming they only had $1,730,000 available to refund when his account balance showed roughly $11,000,000.

The DOJ argues that the administrator is subject to forfeiture, meaning the U.S. government will retain the seized funds, since they “knowingly” committed fraud via wire communications in violation of U.S. law. 

(Excerpt) Read more Here | 2020-08-03 14:19:00

Image credit: source

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