- Jeremy Spence, AKA CoinSignals, has pleaded guilty to commodities fraud
- Spence ran a crypto trading operation which turned into a Ponzi scheme after heavy losses
- Spence was arrested in late 2018 and faces up to 10 years in prison
Jeremy Spence, the cryptocurrency trader who went by the name CoinSignals on Twitter, has pleaded guilty to commodities fraud in relation to the $5 million crypto trading service he offered that turned into a Ponzi scheme. Spence operated during the 2017 bull run and claimed to be earning almost 150% returns for his clients, when in fact he was regularly losing trades and only paid out when new money came in. He was arrested in January and faces up to 10 years in prison.
Huge Losses Led to Ponzi Scheme
Spence was a well-known figure in the crypto space and amassed a large following, with over 170 people handing him millions of dollars bitcoin to trade on their behalf given the returns he claimed to be making. However well things started out however, they soon went pear shaped, with Spence encountering huge losses during the 2018/2019 bear market, in particular when Bitcoin crashed 50% over a couple of days in November 2018.
These losses drove Spence to enlist fresh candidates for his CoinSignals operation as the only means of being able to pay out existing clients. The U.S. Attorney’s Office for the Southern District of New York claims that Spence solicited over $5 million between November 2017 and April 2019.
Spence Faces Years in Prison Despite Apparent Plea Deal
In December 2018, a group of investors launched a class action lawsuit against Spence, and just over two years later Spence was arrested on criminal charges. He was initially arrested for wire fraud as well as commodities fraud, but it seems that he has struck a deal with prosecutors where the wire fraud charge was dropped in return for a guilty plea.
The entire episode is another reminder never to give your cryptocurrency to someone to trade on your behalf unless they are registered and approved by regulators.