United States authorities have sentenced a CEO of an investment firm to prison for orchestrating a fraudulent crypto scheme. In the crypto scam, known as ‘cherry picking,’ he collected funds from investors for trading but would only later decide whether to allocate the trades to the investors or himself based on their profitability.
“Kambolin defrauded investors located in the United States and abroad by, among other things, depriving them of profitable trades,” the report states.
Cherry Picking Crypto Scam
According to a statement released by the United States Department of Justice (DoJ), Peter Kambolin, CEO of Systematic Alpha Management was sentenced to two-years in prison for allegedly leading a crypto scam referred to as cherry picking.
“During the relevant period, Kambolin executed trades for pool participants together with trades he executed on behalf of his proprietary accounts, and fraudulently allocated the profits and losses of the trades to benefit his own accounts.”
Cherry-picking is a fraudulent scheme where an individual executes trades without attributing those trades to a particular trading account. This is not done until the individual determines whether or not the trade has become profitable or suffered losses.
However, Kambolin effectively monitored the performance of all trades throughout the day, selectively retaining the most profitable crypto trades for himself. Meanwhile, this allowed him to enjoy the advantages of risk-free trading, while his investors experienced losses.
Kambolin used the proceeds of the scheme to fund personal expenses. This included renting a beachfront apartment. Furthermore, transferring proceeds to foreign bank accounts his business partner controlled in Belarus and Dominica.
Meanwhile, a recent report from Chainalysis reveals that the majority of crypto scams last year were through the use of stable coins. However, it noted that crypto scamming fell significantly last year, with total illicit revenue down 29.2%.
Illicit Transaction Volume by Crime Category and Asset Type, 2023. Source: Chainalysis
Read more: 15 Most Common Crypto Scams To Look Out For
Crypto Investment Scams on the Rise
However, this comes after several arrests in relation to crypto scamming in recent times.
In November 2023, BeInCrypto reported that two individuals from Arizona were up for charges for their involvement in a crypto investment scheme.
The indictment includes a total of 55 counts, encompassing charges of Wire Fraud and Transactional Money Laundering.
There was several companies under the pair’s name. One of them, Now Mining, offered “risk-free” investments in leases of Bitcoin mining machines allegedly located overseas.
Meanwhile, another, VIP Mining, involved direct investments in Bitcoin mining machines in Arizona.
Read more: How To Identify a Scam Crypto Project
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