A category of fraud carried out through or in connection with cryptocurrency, encompassing conduct such as fraudulent initial coin offerings, fake cryptocurrency exchanges or investment platforms, so called rug pulls in which the creators of a cryptocurrency project abandon it and abscond with investor funds, and the use of cryptocurrency to receive payment in connection with other fraud or extortion schemes such as ransomware. It emerged as a significant and rapidly growing category of financial crime alongside the broader adoption of cryptocurrency from the 2010s onward, with law enforcement agencies in a number of countries reporting substantial and continuing increases in reported losses tied to it.
Facts
Elements of OffenseExit scams (rugpulls) and many Ponzi schemes involving cryptocurrencies are performed through Initial Coin Offerings 1 Notable ExampleOneCoin, founded in 2014 by Ruja Ignatova, estimated to have generated US$4 billion in income 1 Classification
Offense GradeSerious or Indictable Offense 1 Connections
Sources
1. Cryptocurrency and crime (Wikipedia)
Methods, Fraud
Most exit scams (or rugpulls), as well as many ponzi schemes involving cryptocurrencies, are performed through Initial Coin Offerings (ICOs)
Notable cases, ICO-related scams, OneCoin
OneCoin is one of the more notable examples of cryptocurrency-ponzi schemes: founded in 2014 by Ruja Ignatova, OneCoin is estimated to have generated US$4 billion in income.
View the Source18 U.S. Code section 1343 (Cornell LII)
Cornell Law School, Legal Information InstituteIn Group: Online Fraud and Payment Card Crime, Statute textQuote, In Group: Online Fraud and Payment Card Crime, Statute text
Whoever, having devised or intending to devise any scheme or artifice to defraud , or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.
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