The United States Federal Bureau of Investigation (FBI) has indicated a Pennsylvanian man for allegedly defrauding $7 million from prospective Bitcoin investors through an effectively fake ‘escrow’ service.
The head of two cryptocurrencies ‘firms’, Barry Thompson has allegedly promised to minimise the risk when purchasing big amounts of cryptocurrency, according to local authorities.
However, this was based on the notion that Thompson would act as a custodian for both sides of the transactions, but Thompson never actually intended to offer any escrow services at all.
“Thompson allegedly thought no one would ask where their actual money went when they trusted him to invest in Bitcoin,” said FBI Assistant Director-in-Charge Sweeney.
“Using phrases and terminology that the victim companies didn’t understand, he allegedly preyed on their ignorance of the emerging cryptocurrency.”
Investigators from the FBI have claimed that the ‘business owner’ defrauded two businesses in summer last year, one for more than $3 million and then another for over $4 million.
Thompson allegedly assured one of the companies that he had Bitcoin on-hand and that any money handed over to him wouldn’t be lost.
Authorities added that he produced a fake account statement showing millions of dollars ready to be used to purchase Bitcoin, despite having already misappropriated thousands of dollars.
“After taking […] money and failing to provide any Bitcoin in return, Thompson lied for days about why the deal had not worked out and the location of [the] Bitcoin and money, which was never returned,” said the FBI.
As reported by The Next Web, the FBI agents claim Thompson sent millions of dollars with the intention to be used for acquiring Bitcoin to third parties but no coins were actually produced.
“Thompson never provided […] any Bitcoin, nor did he return [the company’s] money,” they added. “Thompson also lied […] about the location of the Bitcoin and the reasons the transaction was not completed.”
Thompson has been charged with two counts of commodities fraud as well as two counts of wire fraud, both of which can carry a maximum prison sentence of twenty years.