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Ohio man arrested for $10 million cryptocurrency fraud scheme

While much of the world’s attention is on the disaster at FTX, an Ohio man was arrested Friday on criminal charges related to his alleged involvement in a cryptocurrency investment fraud scheme that raised at least $10 million from investors.

According to court documents, Rathnakishore Giri, 27, of New Albany, allegedly misled investors by fraudulently promoting himself as an expert cryptocurrency trader, with a specialty in trading Bitcoin derivatives.

The indictment alleges that Giri falsely promised investors that he would generate lucrative returns with no risk to their principal investment amount, which he guaranteed to return.

In reality, Giri often allegedly used money provided by new investors to repay old investors – a hallmark of a Ponzi scheme.

In addition, Giri allegedly had a record of investment failures, including a long history of losing investors’ principal investments, and misled investors about reasons for delays when they sought to cash out their investments or otherwise obtain the return of their “guaranteed” principal.

Giri is charged by indictment with five counts of wire fraud. If convicted, he faces a maximum penalty of 20 years in prison on each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

In August, the U.S. Commodities Futures and Trading Commission (CFTC) filed legal action, including a cease-and-desist order, against Giri and his two businesses, SR Private Equity LLC and NBD Eidetic Capital LLC that claims they operated a bitcoin-related Ponzi scheme to defraud his investors.

Cryptocurrency is a digital money designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.

Sam Bankman-Fried resigned as CEO and FTX filed for bankruptcy on Nov. 11 after his empire valued at more than $30 billion imploded.

John J. Ray — an insolvency expert who steered energy firm Enron through its infamous $23 billion bankruptcy following a massive accounting scandal — has been selected as the new FTX CEO even though he allegedly engaged in registered insider trading, according to the U.S. Securities and Exchange Commission (SEC).

Bankman-Fried founded what he claimed were two separate companies: a hedge fund called Alameda Research and FTX crypto exchange. As Bankman-Fried aggrandized his own cryptocurrency token, he used it as collateral to create loans for himself, at the same time running a classic Ponzi scheme by robbing his depositors to to gamble on the markets.

The 30-year-old, who has been holed up in his $40 million penthouse in the tax-friendly haven of the Bahamas since his downfall, could not be reached.

The utter pandemonium surrounding FTX bankruptcy has had a significantly negative impact on the cryptocurrency market.

If you believe you are a victim, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov.

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