- Jeremy Spence has been ordered to pay victims of his Ponzi scheme $2.8 million
- The scheme was popular between 2017 and 2018, with $5 million invested
- Spence blew up his fund in late 2018 and used fresh capital to pay out withdrawal requests
Jeremy Spence, who operated the Coin Signals crypto trading platform in 2017 and 2018 which evolved into a Ponzi scheme, has been ordered to pay over $2.8 million to victims. Spence’s Coin Signals was a popular destination for those who wanted exposure to leveraged crypto markets without having any knowledge of how to do so, but he blew up his fund and used fresh money to pay out those asking for withdrawals.
Spence Hid Massive Losses
Spencer operated the Coin Signals platform between approximately December 2017 through April 2019, offering to trade cryptocurrencies on behalf of regular people who had no trading experience. Spence built his reputation on successes during the 2017 bull run, but when the bear market hit he wasn’t able to replicate his success.
Spence was hit by some significant losses but, rather than admit them, took steps to conceal them:
The order also found that Spence engaged in numerous efforts to conceal his misconduct, including misrepresenting his trading profitability and the amount of assets he had under management, misappropriating customer funds, and issuing false performance statements.
Spence eventually admitted to customers that he had engaged in “lies and deceit” to cover up his losses, but this wasn’t the worst of it.
In order to give the impression that things were still going to plan, Spence was forced to use fresh capital to pay out withdrawal requests – a typical Ponzi scheme but a natural response to the situation as he thought he could get it all back with the funds that remained.
More Than $5 Million Taken
In total, Spence fraudulently solicited and obtained more than $5 million of digital assets from users, with the bear market causing deposits to dry up and withdrawals in increase. Unable to fund withdrawals anymore, Spence’s operation was reported to police in December 2018 and he was arrested in January last year.
Spence pleaded guilty to commodities fraud in December last year and was last week ordered to pay $2,847,743 in restitution to victims of the fraudulent scheme. Spence is also permanently banned from ever registering with or trading under the auspices of the Commodity Exchange Act (CEA) and CFTC regulations.
