Image Credits: Getty Images

Cryptocurrency promoter pleads guilty


Image Credits: Getty Images

A promoter of the cryptocurrency scheme that was previously promoted by Steven Seagal, the famed martial artist and actor, has pled guilty to his involvement. The scam promised that it could “generate an 8,000 per cent return for investors in one year.”

The promoter of Crypto Scheme Pleads Guilty

John DeMarr, 55, pled guilty Friday to “participating in a coordinated cryptocurrency and securities fraud conspiracy through supposed digital currency platforms and foreign-based financial accounts,” according to the DOJ.

DeMarr acknowledged collaborating with others “to defraud investor victims by enticing them to invest in their companies, ‘Start Options’ and ‘B2G,’ on the basis of materially false and misleading claims.” In February, he was charged. Both schemes, according to the DOJ, were deceptive.

B2G, also known as Bitcoiin2gen, was reportedly an “ecosystem” for its native B2G token where users could trade digital and fiat currencies, while Start Options purportedly was a cryptocurrency mining and trading platform.

In December 2017, DeMarr and others began selling securities through the Start Options website. The funds have to be deposited in bitcoin, US dollars, or euros.

Instead of investing in bitcoin as promised, DeMarr and others moved the funds to accounts controlled by them, where they were “used for various personal expenses, including the purchase of a Porsche, jewellery, and the remodelling of DeMarr’s home in California.”

In order to promote its securities offerings, Start Options falsely claimed to have celebrity endorsements. According to the DOJ, investors contributed millions of dollars in bitcoin, ethereum, and fiat money to financial accounts, including crypto-wallets, controlled by DeMarr and others in the United States and elsewhere, based on this and other fraudulent advertising materials.

DeMarr and others obliged investors to roll over their accounts into an unregistered initial coin offering (ICO) of B2G, the token they falsely advertised, in late January 2018, rather than allowing them to withdraw their monies when the locked-in period ended. “In reality, investors never received any digital tokens, and funds from the offering were not used to develop the B2G platform,” according to the Department of Justice.

As part of the conspiracy, DeMarr and others paid various promoters, including an actor known for martial arts films from the 1980s and 1990s, to serve as a promoter and celebrity spokesperson, falsely claiming that the B2G platform was being developed.

The celebrity in question, according to the DOJ, is Steven Seagal, who was charged by the US Securities and Exchange Commission (SEC) in February of last year for illegally advertising a cryptocurrency investment scheme claiming to be “the next generation of bitcoin.” Seagal neglected to declare that he was paid in cash and cryptocurrency by B2G to promote its token offering on social media platforms such as Twitter and Facebook.

DeMarr and others also faked B2G press releases and whitepapers, falsified its financial accounts, and refused to allow investors to withdraw their funds. The DOJ claimed he “pleaded guilty to one count of conspiracy to conduct securities fraud,” adding that “DeMarr faces serious consequences.”