Federal Court Fined New York Man $36 Million for Crypto Fraud
Crypto fraud
crypto scam
New York
William Koo Ichioka, a New York resident, has been fined over $36 million for orchestrating a fraudulent cryptocurrency and forex investment scheme that promised unrealistic returns.
Last updated:
September 23, 2024 10:36 EDT
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Hassan Shittu
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Hassan Shittu
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Last updated:
September 23, 2024 10:36 EDT
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In a recent case, a U.S. federal court has ordered William Koo Ichioka, a New York resident, to pay over $36 million in restitution and penalties after being found guilty of orchestrating a fraudulent cryptocurrency and foreign exchange investment scheme.
The Commodity Futures Trading Commission (CFTC), which has tightened its grip on the cryptocurrency market, led the case.
Crypto Fraud: Ichioka’s $36 Million Fine and 48 Months Jail Time
Judge Vince Chhabria of the U.S. District Court for the Northern District of California
ordered
Ichioka to pay $31 million in restitution to victims and an additional $5 million in civil penalties.
The court found Ichioka guilty of running a deceptive scheme between 2018 and 2021. In this scheme, he lured investors with promises of guaranteed returns—specifically, 10% every 30 business days.
The fraudulent promises attracted substantial investment, which Ichioka partially used for foreign currency and digital asset trading.
However, much of the funds were funneled into his lifestyle, with expenditures on luxury items such as watches, jewelry, high-end vehicles, and rent for his residence.
The court’s decision follows an earlier
consent order
from August 2023, which permanently banned Ichioka from trading in markets regulated by the CFTC and prohibited him from registering with the commission in the future.
In addition to the restitution order, Ichioka will also serve 48 months in prison, followed by five years of supervised release.
The Fraudulent Scheme: A Classic Crypto Ponzi Scheme
Ichioka’s fraudulent scheme began in 2018 when he promised investors exceptionally high and unrealistic investment returns, a classic red flag for Ponzi schemes.
According to
court documents
, while some funds were indeed invested in forex and cryptocurrencies as promised, Ichioka commingled the funds with his personal accounts. He diverted significant amounts to cover personal expenses.
The court noted that Ichioka went to great lengths to conceal his fraudulent activities by creating false financial documents and issuing fake account statements to investors, making it appear that their investments were performing well.
This classic Ponzi scheme structure, where old investors are paid returns using new investors’ capital, allowed Ichioka to continue deceiving participants for several years.
The fraudulent returns and false documentation kept investors in the dark until the scheme began to unravel under regulatory scrutiny.
In June 2023, the U.S. Department of Justice (DOJ) also charged Ichioka with several criminal offenses, including wire fraud, securities fraud, commodities fraud, and filing false tax returns.
On the same day, Ichioka pled guilty to all charges and was sentenced to 48 months in federal prison, alongside the financial penalties and restitution ordered by the CFTC.
The case against Ichioka is not the first or new. The CFTC, in collaboration with other U.S. regulatory bodies such as the Securities and Exchange Commission (SEC) and the DOJ, has ramped up efforts to hold individuals accountable for misleading investors in a market they deem almost illegal.
A recent report
reveals that U.S. residents lost an estimated $5.6 billion to cryptocurrency fraud in 2023, a 45% increase from the previous year.
Regulators are particularly concerned about fraudulent schemes that prey on older investors.
The same report
cites data
from the Federal Bureau of Investigation (FBI) showing that individuals over the age of 60 were disproportionately targeted, accounting for nearly $1.6 billion in losses.
Notably, in Q2 2024, the crypto industry
suffered $572 million in losses
from scams and hacks, with decentralized finance (DeFi) platforms particularly vulnerable.
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