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U.S. authorities have charged a New York man with allegedly running a Ponzi scheme involving digital assets Bitcoin and Ether.

The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against crypto trader Jeremy Spence (aka Coin Signals), alleging that he fraudulently solicited more than US$5 million from investors in a digital asset investment scheme.

Spence was also charged with one count of commodities fraud and one count of wire fraud by the U.S. Attorney’s Office for the Southern District of New York.

The allegations have not been proven, and he’s presumed innocent of the criminal charges.

The authorities alleged that Spence solicited investors in various cryptocurrency investment pools that he created and managed — including the Coin Signals Bitmex Fund, the Coin Signals Alternative Fund, and the Coin Signals Long Term Fund — based on misrepresentations about the success of his crypto trading.

They also alleged that he reported fictitious account balances to investors to prevent redemptions, and used money from new investors to pay back earlier investors in “a Ponzi-like fashion.”

Audrey Strauss, U.S. attorney for the Southern District of New York, said in a statement that the alleged conduct “should strongly signal would-be investors to thoroughly educate themselves in the cryptocurrency ecosystem before falling prey to investment scams promising huge returns for small investments that are indeed too good to be true.”