Crypto influencer Thomas John Sfraga pleads guilty to wire fraud in $1.3 million fraud
Key Takeaways
The Justice Department alleged that investors were lured with misleading claims, including promising victims up to a 60% return on their investments within three months.
The DOJ said the majority of the victims were believed to be Sfraga’s friends and neighbors, and that Sfraga betrayed their trust to “swindle them out of more than $1.3 million of their hard-earned savings.”
Thomas John Sfraga, known as ‘TJ Stone’ in the cryptocurrency world, pleaded guilty to fraud charges in Brooklyn federal court on Thursday. Sfraga is accused of defrauding more than a dozen victims into investing in bogus ventures, including fraudulent cryptocurrency schemes.
Sfraga promised investors up to 60% returns within three months on its fake cryptocurrency digital wallet, according to a statement released by the U.S. Department of Justice (DOJ) on Friday. Instead of investing the funds as promised, Sfraga allegedly pocketed the money and used some of it to repay early victims of his scheme. He now faces up to 20 years in prison and must pay $1.33 million in restitution.
“For years, Sfraga brazenly lied to his friends, neighbors and investors, embezzling more than $1.3 million of their hard-earned life savings,” said U.S. Attorney Breon Peace. The DOJ release noted that Sfraga’s experience spans real estate development, media relations, podcasting, cryptocurrency, and hosting a cryptocurrency event in New York.
Sfraga also falsely claimed ownership of “Vandelay Contracting Corp.” and “Building Strong Homes LLC.” The reference to “Vandelay Industries,” a fictional company featured on the TV show “Seinfeld,” was part of an effort to convince investors to fund a nonexistent construction project.
The DOJ’s May 17 statement detailed how Sfraga persuaded victims to invest in fictitious cryptocurrency “virtual wallets” that promised high returns. The Ministry of Justice added, “He promised the victims that he would increase the return on their investments by up to 60% within three months.” In reality, Sfraga was operating a Ponzi scheme that used investments from new entrants to pay returns to previous investors.
“Sfraga diverted that money for his own benefit, to pay his own expenses, and to pay former victims and business associates,” the DOJ explained.
Sfraga’s plan was elaborate and well planned. He used his status and reputation in the cryptocurrency community to lure unsuspecting investors. The Justice Department alleged that investors were lured with misleading claims, including promising victims up to a 60% return on their investments within three months.
The DOJ said the majority of the victims were believed to be Sfraga’s friends and neighbors, and that Sfraga betrayed their trust to “swindle them out of more than $1.3 million of their hard-earned savings.”
The latest development comes just days after cryptocurrency kingpin Aiden Pleterski was charged by Canadian authorities with money laundering and fraud of more than 5,000 Canadian dollars ($3,666).
Last month, Irin Dilkinshka was sentenced to four years in federal prison and the forfeiture of more than $100 million after pleading guilty to participating in the multibillion-dollar fake OneCoin cryptocurrency scheme.
How profitable is Bitcoin mining during a bear market? AltFINS Review: Top Technology Tools Provider Montenegro’s Justice Minister Rules Extradition Money Laundering Risks in Cryptocurrency-Related Cryptocurrencies
