FBI Charges Investment Manager in $10M Crypto Ponzi Scheme

Federal authorities have charged an Ohio man with taking part in a fraudulent cryptocurrency investment scheme that raised at least $10 million from investors.

According to a news release from the U.S. Justice Department, Rathnakishore Giri, 27, is accused of misleading investors by falsely claiming to be an expert in cryptocurrency trading specializing in bitcoin derivatives.

He is charged with five counts of wire fraud and faces up to 20 years in prison on each count if convicted, the department said.

“Giri falsely promised investors that he would generate lucrative returns with no risk to their principal investment amount, which he guaranteed to return,” the release said. “In reality, Giri often allegedly used money provided by new investors to repay old investors — a hallmark of a Ponzi scheme.”

Authorities also allege that an FBI investigation found that Giri had a lengthy history of losing investors’ principal contributions, and misled investors about why he couldn’t let them cash out their investments or get a return on their “guaranteed” principal.

The charges against Giri come as federal authorities are gearing up for a much larger crypto investigation, involving the collapsed exchange FTX and its former CEO Sam Bankman-Fried (or SBF, as he’s often called).

“While the scandal and its fallout occurred across cryptocurrency marketplaces,” PYMNTS wrote recently, “the tactics SBF and FTX are being accused of deploying resemble those of a standard Ponzi scheme rather than a blockchain-based, crypto-native scam.”

Among the government bodies that want answers is the House Oversight Committee’s Subcommittee on Economic and Consumer Policy. Last week, its chairman, Rep. Raja Krishnamoorthi asked FTX to turn over documents and information as part of its probe into the crypto exchange’s collapse.

Krishnamoorthi is seeking detailed information on the liquidity crisis that triggered the collapse of FTX and its decision to declare bankruptcy. He also wants to know what the company plans to do to “ensure that every single dollar is returned to American consumers who placed their trust in your company.”