On January 26, 2021, federal prosecutors in New York unsealed a criminal complaint against 24-year old Jeremy Spence (aka “Coin Signals”). As alleged, Spence took cryptocurrency worth over $5 million from more than 170 individual investors after making false representations in connection with these cryptocurrency funds.
The allegations in the complaint allege the following scheme: From November 2017 through April 2019, Spence solicited investors in various cryptocurrency investment pools that Spence had created and managed. Spence solicited these investments through false representations, including that Spence’s crypto trading had been extremely profitable when, in fact, Spence’s trading had been consistently unprofitable. For example, on January 28, 2018, Spence posted a message in an online chat group falsely claiming that his trading of investor funds over the past month had generated a return of more than 148%. As a result of this misrepresentation, investors transferred additional funds to Spence. In fact, over that same period of approximately one month, Spence’s trading resulted in net losses in the accounts in which he traded investor funds. To forestall redemptions by investors, and to continue to raise money from investors to fund his scheme, Spence generated fictitious account balances, which he made available to investors online. Instead of accurately reporting the trading losses Spence was incurring, the account balances falsely indicated to investors that they were making money by investing with Spence. To hide his trading losses, Spence used new investor funds to pay back other investors in a Ponzi-like fashion. In total, Spence distributed cryptocurrency worth approximately $2 million to investors substantially from funds previously deposited by other investors.
Spence is charged with one count of commodities fraud. Also on January 26, the Commodity Futures Trading Commission filed a federal civil enforcement action Spence arising from the same facts. The CFTC complaint seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.