US Authorities Pull the Plug on $25 Million Crypto Ponzi Scheme
South Florida federal prosecutors have put the brakes on an alleged diamond-related investment scam and cryptocurrency-based Ponzi scheme.
The authorities charged 51-year-old Jose Angel Aman, of Washington D.C., with wire fraud, for operating a fraudulent scheme that raised over $25 million from hundreds of investors to develop a Blockchain-based platform for financing, trading and paying for precious diamonds.
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The SEC’s Cyber Unit obtained earlier an emergency asset freeze against South Florida-based Argyle Coin and filed charges against its principal Jose Angel Aman. The agency called the project as an outright securities fraud that doesn’t differ from a typical pyramid or Ponzi scheme.
Self-proclaimed diamond industry veteran Jose Arman founded argyle Coin with the goal of building an e-commerce platform powered by cryptocurrency for the precious metal industry.
Argyle Coin promoted their offering as the world’s first cryptocurrency to correlate their tokens with real diamonds. It also claims to create a new class of ICOs that will guarantee the performance of its blockchain platform.
Further, the investors were assured their investment was risk-free. With millions in diamonds in a safe deposit box, their investment was protected if the global diamond market went south, said Aman, explaining why their investment was secure.
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Instead of using investor funds to develop the business, Aman and his partners misappropriated more than $10 million. Aman used some of the money for personal expenses, while remainder of the investor funds were used to pay “purported returns” to investors in Aman’s other companies, which were operating similar schemes.
The scheme was far bigger than the ICO plans alleged in the DoJ’s filing against the diamond dealers. Specifically, the agency alleges that Argyle Coin was a continuation of a fraud scheme that Aman orchestrated with two other companies he owned a few years ago.
Back in 2014, Aman’s diamond investment companies – Natural Diamonds Investment Co. (Natural Diamonds) and Eagle Financial Diamond Group Inc (Eagle)- operated from offices on Worth Avenue in Palm Beach and illegally raked in roughly $25 million from at least 100 investors.
It further explains “at the end of the investment period, Aman and the partners would convince the investors to roll over their money by falsely claiming that the investors had the full value of their investments to put into new deals. They allegedly provided sham “Reinvestment Contracts” to the investors, a tactic they used to buy time until Aman could locate new investors and additional money.”
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