Pile of cryptocurrency coins
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A former promoter of crypto-related investment schemes has been sentenced to jail time by a U.S. district court judge.

In a federal court in Brooklyn, N.Y., John DeMarr was ordered to serve 60 months in prison and to forfeit US$3.5 million.

In July 2021, DeMarr pled guilty to one count of conspiracy to commit securities fraud in connection with allegations that he defrauded investors in a couple of crypto companies based on “materially false and misleading representations” about the companies’ plans to engage in crypto mining and trading.

“In reality, the funds were never invested and instead diverted to accounts controlled by DeMarr and others and used for various personal expenditures, including the purchase of a Porsche, jewelry, and the remodeling of DeMarr’s home in California,” the U.S. Department of Justice (DoJ) said.

Along with the criminal charges, in 2021, the U.S. Securities and Exchange Commission (SEC) also charged DeMarr and two others alleging that retail investors were duped out of more than US$11 million through a pair of fraudulent and unregistered digital asset securities offerings.

The offerings allegedly used paid promoters, celebrity testimonials, and fake endorsements to lure investors.

“DeMarr and others also created false press releases and whitepapers about B2G, fabricated B2G account statements, and refused to allow investors to withdraw their money,” the DoJ said.

“DeMarr took advantage of those who trusted him, persuading them to double down on their investments when he knew that his cryptocurrency companies and their dubious celebrity endorsements were scams being used to fund his lavish lifestyle,” said Breon Peace, U.S. attorney for the Eastern District of New York, in a release.