The United States Attorney for the Southern District of New York today announced the unsealing of a Complaint in Manhattan federal court charging cryptocurrency trader Jeremy Spence with commodities fraud and wire fraud offenses.
Spence is the individual behind the “Coin Signals” scheme. As alleged, he took cryptocurrency worth over $5 million from more than 170 individual investors after making false representations in connection with these cryptocurrency funds. Spence was arrested this morning in Rhode Island and will be presented later today before Magistrate Judge Patricia A. Sullivan in the U.S. District Court for the District of Rhode Island.
Spence, who is 24 years old, is charged with one count of commodities fraud, which carries a maximum sentence of 10 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison. The particular sentence of the defendant will be determined by a judge.
As alleged in the Complaint unsealed today, from November 2017 through April 2019, Spence solicited investors in various cryptocurrency investment pools that he had created and managed. He solicited investments for several funds, the largest and most active of which were the Coin Signals Bitmex Fund (CS Mex Fund), the Coin Signals Alternative Fund (CS Alt Fund), and the Coin Signals Long Term Fund. Investors who wanted to participate in a fund would transfer cryptocurrency, such as Bitcoin and Ethereum, to Spence in order for him to invest it.
Spence’s trading had been consistently unprofitable. He, however, falsely claimed that his trading of investor funds over one month had generated a return of more than 148%. In fact, over that same period of approximately one month, his trading resulted in net losses in the accounts in which he traded investor funds.
In order to hide his trading losses, Spence used new investor funds to pay back other investors in a Ponzi-like fashion. In total, he distributed cryptocurrency worth approximately $2 million to investors substantially from funds previously deposited by other investors.