DOJ Charges Two Men Over $650 Million Crypto Ponzi Scheme
It's a familiar tale: promises of unusually high returns that sound too good to be true. Yet, people continue to fall for them, often with devastating consequences. The Department of Justice (DOJ) has charged two men in connection with a massive cryptocurrency Ponzi scheme that duped investors out of $650 million.
The indictment, unsealed yesterday in the District of Puerto Rico, names Michael Shannon Sims as the founder and promoter of OmegaPro, while Juan Carlos Reynoso led its Latin America operations. Both men are accused of running an international crypto multi-level marketing scheme that deceived investors over 16 months, promising them 300% returns on investments.
According to the indictment, from 2019 to 2023, Sims and Reynoso claimed that OmegaPro's elite traders would generate significant profits through foreign exchange (forex) trading. Investors were instructed to purchase investment packages using cryptocurrency. However, the duo falsely advertised the safety of these investments by touting the skills of their hired traders and the company's trading performance.
To gain credibility, Sims and Reynoso hosted high-profile promotional events, including projecting the firm's logo onto the Burj Khalifa in Dubai, which served as OmegaPro's headquarters. They also flaunted their wealth on social media, showcasing luxury cars, expensive vacations, and designer items to convince others that OmegaPro was a legitimate investment opportunity.
However, behind the scenes, investors faced significant difficulties withdrawing their money from their accounts. In January 2023, OmegaPro announced that it had suffered a network hack, claiming that investments were secure and being transferred to another platform called Broker Group. But victims found themselves unable to access their funds as they were laundered through wallet addresses controlled by OmegaPro executives and then allegedly transferred to company insiders and high-ranking promoters.
Both defendants face charges of conspiracy to commit wire fraud and conspiracy to commit money laundering, carrying a maximum sentence of 20 years in prison if convicted. The case is another stark reminder of the dangers of unsavory investment opportunities that prey on people's hopes and fears.
Interestingly, Andreas Szakacs, one of OmegaPro's co-founders, was arrested in Turkey earlier this year over allegations that he defrauded investors out of $4 billion through a cryptocurrency Ponzi scheme. While the latest case involves significantly smaller sums, it highlights the ongoing threat posed by these types of scams.