Crypto celebrity Thomas Sfraga pleads guilty to wire fraud
Thomas John Sfraga, also known as ‘TJ Stone,’ pleaded guilty to fraud charges in Brooklyn federal court on Thursday.
Sfraga promised investors up to 60% returns within three months on its fake cryptocurrency digital wallet, according to data released Friday by the U.S. Department of Justice. Instead, he allegedly used some of his funds to pay those who fell victim to his plans. He faces up to 20 years in prison and $1.33 million in restitution, according to a Justice Department release.
“For years, Sfraga shamelessly lied to friends, neighbors and investors, embezzling more than $1.3 million in hard-earned life savings,” U.S. Attorney Breon Peace said in a statement. Sfraga has experience in real estate development, media relations, podcasting and cryptocurrency, as well as hosting cryptocurrency events in New York.
Sfraga also claimed to own “Vandelay Contracting Corp.” and “Building Strong Homes LLC.” As the DOJ notes, George Constanza, a character on the American TV show “Seinfeld,” allegedly gave an interview to a fictitious company called Vandlay Industries. Sfraga allegedly convinced investors to fund non-existent construction projects.
FBI investigation into Sfraga
In a December 2023 complaint announcing Sfraga’s arrest, special agents with the Federal Bureau of Investigation noted that Sfraga engaged in fraudulent activity related to cryptocurrency staking.
Cryptocurrency staking involves locking up digital assets to support the blockchain’s proof-of-stake consensus system, which allows stakers to earn rewards in the form of yield.
Sfraga allegedly told victims that individuals could set up virtual wallets to purchase pools of cryptocurrency, and that “staking generated significant returns with little to no risk,” the lawsuit states.
“Sfraga described the investment as a ‘risk-free’ and ‘out-of-the-box situation.’ Investors will benefit whether the value of the cryptocurrency rises or falls, because they can sell their stake to others and profit from cryptocurrency trading. Because you will get it.”
Sfraga told the same victim that “a new investment round for staking was scheduled, but the minimum investment amount was $25,000,” adding that the investment deadline was June 8, 2022.
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