The co-founder of a company involved in a global crypto fraud has been sentenced to prison, and ordered to pay US$26.9 million in restitution to investors, in a U.S. federal court.
Earlier this year, in a California court, the former co-owner of Bahamas-based Axis Digital Ltd., Shengsheng He, pled guilty to a charge of conspiracy to operate an unlicensed money transmitting business in connection with an alleged crypto investment scam that saw investors lose almost US$37 million.
According to court filings, from call centres in Cambodia, participants in the scheme contacted investors through social media, unsolicited phone calls and text messages, and online dating sites, touting fraudulent crypto investments.
Investors were misled and promised high returns from their alleged investments, which were actually diverted to an offshore bank in the Bahamas controlled by Axis Digital. Those funds were then converted into the tether stablecoin and transferred to other participants in the scheme.
U.S. authorities reported that eight co-conspirators have pled guilty for their roles in the alleged investment fraud and money laundering conspiracy, including the other alleged co-founder of Axis Digital, Jose Somarriba.
Now, a U.S. court has sentenced He to 51 months in federal prison, and ordered him to pay US$26.9 million in restitution.
“The defendant was part of a group of co-conspirators that preyed on American investors by promising them high returns on supposed digital asset investments when, in fact, they stole nearly US$37 million from U.S. victims using Cambodian scam centers,” said Matthew Galeotti, acting assistant attorney general with the U.S. Department of Justice, in a release.