Crypto Entrepreneur Faces Five Years Over Fraudulent Scheme

Crypto entrepreneur Peter Kambolin, the former CEO of Systematic Alpha Management, has entered a guilty plea for his involvement in a conspiracy to commit commodities fraud, resulting in a prison sentence of up to five years.

Crypto Entrepreneur Pleads Guilty

According to the report, the United States Department of Justice has stated that the ex-CEO of an investment firm based in Miami conducted a “cherry-picking” scheme. In this scheme, he promoted his firm as providing algorithmic trading strategies focused on futures contracts, encompassing cryptocurrencies and commodities, as disclosed in their statement on October 12.

Defrauding Investors

As per the Department of Justice (DOJ), Kambolin engaged in defrauding investors both domestically and internationally. He did this by denying them the opportunity to partake in profitable trades, diverting the proceeds for his own personal expenses. This included covering the rent for a beachfront apartment. 

Legal representatives stated: “In doing so, Kambolin defrauded investors located in the United States and abroad by, among other things, depriving them of profitable trades.”

The illicit gains from his scheme were funneled into foreign bank accounts overseen by a collaborator in Belarus and Dominica.

Crypto Entrepreneur Falsely Portrayed Services

The authority accused Kambolin of deceiving investors by falsely portraying his fund as primarily engaged in trading crypto futures and foreign exchange futures. Notably, half of the trading in each pool overseen by Kambolin actually revolved around equity index futures contracts. 

Shimon Richmond, the Assistant Inspector General for Investigations, pointed out: “Yesterday’s plea recognizes the importance of holding the defendant accountable for his actions in misleading and defrauding investors through a cherry-picking scheme, and using proceeds from the scheme to fund his own personal lifestyle.”

Hacks in the Crypto Sector

Hackers engaged in unlawful activities escalated their efforts to defraud cryptocurrency investors of their well-earned money. According to a report named the “Illicit Crypto Ecosystem Report” released by blockchain intelligence company TRM Labs in June of this year, approximately $7.8 billion was swindled from cryptocurrency investors in 2022 due to pyramid and Ponzi schemes.