Coin Signals founder to pay $2,847,743 after jail sentence for crypto Ponzi scam

The consent order resolves a CFTC action filed against Jeremy Spence on January 26, 2021 alleging that he operated a virtual currency Ponzi scheme in which he fraudulently solicited individuals to invest in digital assets such as bitcoin and ether.

Jeremy Spence aka Coin Signals has been discovered to have obtained over $5 million in digital assets such as bitcoins and ether from clients in a Ponzi scheme that covered his large business losses and whose supposed profit payments to customers were in fact funds misappropriated from other customers.

He was found to have misrepresented his trading profitability and the amount of assets he had under management because he took client funds and issued false performance claims. Spence eventually admitted to clients that he had engaged in “lies and deceptions”.

Jeremy Spence sentenced to 42 months in prison

A parallel criminal suit had also been filed in New York, charging him with one count of commodity fraud in violation of CEA and CFTC regulations and one count of wire fraud.

Spence pleaded guilty to commodity fraud under CEA and CFTC rules and was sentenced on May 11, 2022 to 42 months incarceration and three years of supervised release. He was also ordered to pay restitution of $2,847,743.

CFTC Commissioner Kristin Johnson has publicly come forward to comment on the Coin Signals scam and the need to stop crypto fraud amid liquidity crises and a lack of responsible governance at crypto exchanges. currency and other leading crypto intermediaries that have rocked the digital asset ecosystem.

“I note that today we see an illustration of another example of the CFTC’s best efforts to use our existing authority to protect customers. Today the CFTC announced the entry of an order of Consent Order for a Permanent Injunction and Other Equitable Relief Against Defendant Jeremy Spence by the Honorable John G. Koeltl of the United States District Court for the Southern District of New York. Specifically, the Consent Order concludes that, from December 2017 to approximately April 2019, Spence operated a digital Ponzi scheme known as “Coin Signals” designed to defraud cryptocurrency investors Spence’s scheme captured over $5 million in cryptocurrencies on approximately 175 user accounts.

“Spence enticed clients using various social media platforms and touting a crafted trading record, imagined list of assets under management and creative depiction of highly profitable returns. Through his duplicity, Spence was able to rack up significant business losses. In keeping with the original old-school Charles Ponzi scheme, Spence distributed funds from current clients to newly approached investors, describing the same as “profits.”

“I want to specifically acknowledge the hard work of the Division of Enforcement. I also want to commend the staff of the Division for bringing this action, including Elizabeth Brennan, Brent Tomer, Lenel Hickson, Jr. and the Office of the ‘General Counsel.

“While Spence’s prison sentence will limit his ability to continue this scheme, other bad actors are ready, willing and able to step into his shoes and prey on the hopes and fears of victims. Accordingly, I strongly encourage members of the public to stay informed of potential scams and abuses in the digital asset markets by visiting our Investor Advice page.