{"id":14531,"date":"2025-07-30T08:05:45","date_gmt":"2025-07-30T06:05:45","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=14531"},"modified":"2025-07-30T08:05:45","modified_gmt":"2025-07-30T06:05:45","slug":"cryptocurrency-scheme-insider-admits-guilt-in-13-million-fraud-case","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/07\/30\/cryptocurrency-scheme-insider-admits-guilt-in-13-million-fraud-case\/","title":{"rendered":"Cryptocurrency Scheme Insider Admits Guilt in $13 Million Fraud Case"},"content":{"rendered":"

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A significant participant in a cryptocurrency Ponzi scheme that misled victims out of $13 million with assertions of utilizing AI-driven crypto trading bots and a fictitious government body has confessed.<\/p>\n

The US Department of Justice revealed<\/a> on Monday that Vincent Anthony Mazzotta Jr acknowledged his involvement in deceiving investors by guaranteeing<\/a> high returns through phony investment companies employing AI-based crypto trading bots.<\/p>\n

Mazzotta has confessed to money laundering<\/a> and conspiracy to thwart justice, which together could result in a maximum sentence of 15 years in prison. A judge is yet to finalize the punishment.<\/p>\n

The Justice Department initially indicted<\/a> Mazzotta in late 2023 under a superseding indictment in the agency\u2019s ongoing case against his supposed accomplice, David Saffron. Saffron has entered a plea of not guilty.\u00a0<\/p>\n

David Kagel was also implicated in relation to the scheme and in October received a sentence of five years\u2019 probation<\/a> and was ordered to reimburse over $13.9 million after admitting guilt to conspiracy to carry out commodity fraud.<\/p>\n

Mazzotta employed a counterfeit government agency: DOJ<\/h2>\n

The DOJ indicated that Mazzotta utilized companies such as Mind Capital and Cloud9Capital to orchestrate the scheme and abscond with millions in investor funds.<\/p>\n

It further stated that Mazzotta assisted in the creation of a bogus government body dubbed the Federal Crypto Reserve and charged victims thousands under the pretense of probing his firms, which \u201chad vanished with the victims\u2019 investments.\u201d<\/p>\n

Source: <\/em>Los Angeles US Attorney\u2019s Office\u00a0<\/em><\/a><\/figcaption><\/figure>\n

Tyler Hatcher, special agent overseeing the IRS Los Angeles Field Office, stated that by utilizing fabricated \u201cUS governmental entities to validate their frauds,\u201d it drew the \u201cattention of genuine federal agencies.\u201d<\/p>\n

Funds from victims spent on an extravagant lifestyle<\/h2>\n

The Justice Department asserted<\/a> in its original indictment that between December 2017 and July 2023, users\u2019 contributions to the firms were laundered through crypto mixers<\/a> and subsequently spent on a variety of lavish items such as private chartered flight trips, upscale hotel stays, private mansion rentals, a personal chef, and private security personnel.<\/p>\n