One of the alleged perpetrators in a crypto Ponzi scheme that promised investors high returns from AI-powered trading bots has pleaded guilty in the case.
Back in 2023, U.S. authorities charged Vincent Anthony Mazzotta Jr. — also known as Vincent Midnight, Delta Prime, and Director Vinchenzo — for his role in a scheme that allegedly defrauded investors by falsely promising high, short-term profits from automated trading powered by artificial intelligence in various crypto firms, including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital and Cloud9Capital.
However, rather than using investors’ assets as promised, the scheme’s perpetrators allegedly misappropriated the money for personal use and used various methods, including “blockchain hopping” and crypto “mixers” to hide the diverted assets.
Additionally, they allegedly created a fictitious government agency, the Federal Crypto Reserve (FCR), which solicited investors to fund a purported investigation into the various crypto-investment firms that had taken their money.
“Vincent Mazzotta defrauded investors in a sophisticated cryptocurrency scheme and then doubled down by using a fake government entity to further victimize those who had entrusted him with their money,” said Matthew Galeotti, acting assistant attorney general in the U.S. Justice Department’s criminal division, in a release.
Mazzotta has now pleaded guilty to charges of money laundering and conspiracy to obstruct justice for his role in the scheme. He was originally charged, along with a co-conspirator, with wire fraud, money laundering, conspiracy to commit wire fraud and money laundering, and obstruction.
He is due to be sentenced on Dec. 15.
In 2021, a U.S. district court ordered one of the firms, Circle Society, to pay US$14.8 million in restitution, US$15.8 million in disgorgement, and a US$1.5-million penalty for defrauding investors, in an enforcement action brought by the U.S. Commodity Futures Trading Commission (CFTC).