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A man who ran a cryptocurrency Ponzi scheme and was sentenced to five years in prison has landed in court again on charges of running an unlicensed crypto trading platform.
The 45-year-old Bahraini man was also charged with stealing BD60,000 from a man who invested in his platform as a result of his alleged deception.
The High Criminal Court heard that the defendant, who was active on local crypto group chats, used to help the alleged victim buy and sell digital currency, but then launched his own crypto management service.
“I saw an advert on social media for crypto investment and I contacted the person behind it, who I already knew,” he explained. “He convinced me to put money in, via a deposit scheme.
“He told me I would get a five per cent to 10pc return on my investment, based on the duration of the investment.”
The man told the court that he invested more than BD61,000, or 162,000 USDT – a cryptocurrency named Tether, which has the same value as a US dollar.
A forensic accountant was appointed to track his funds across platforms and blockchain records, and concluded that he had lost a total of 117,284 USDT, or BD44,200.
The court heard that the Bahraini would tell clients to send money to his wife’s bank account to be placed into digital wallets. As his personal bank accounts were frozen, he also used his sisters’ bank accounts to receive funds.
In February, the defendant was found guilty of duping 19 people out of more than BD382,000 using the same trick, for which he was sentenced to five years in prison and fined BD100,000.
The court also ruled to order him to return the investors’ money, confiscated any profits generated by his activities, and granted a request from victims to pursue damages in the Civil Court.
He had been convicted of the same charges on which he is currently standing trial, namely raising funds to manage and grow without acquiring a Central Bank of Bahrain licence and taking money through deceptive means.
The GDN earlier reported that the defendant registered two companies in the UK in an attempt to appear credible, and promised high returns to his victims, convincing them that the investments were ‘perfectly safe’.
He also named the companies after a legitimate online investment platform, claiming that he owned and operated the foreign exchange and cryptocurrencies trading service.
The defendant was designated as ‘director’ of the now-defunct companies, according to Companies House, a business register run by the British government.
The business was registered to an address in London that belongs to a co-working space, an address, the court heard, that had previously been used by since-exposed scam companies.
The genuine platform, which the defendant imitated, has its headquarters in Mauritius.
According to the victims, when the investments were first made the defendant would usually send them handsome profits. The success would eventually dry up and he would become unreachable.
The court heard that the unscrupulous fraudster also took advantage of a reconciliation with his estranged sisters – after 16 years of no contact – to orchestrate the scam.
Since his personal bank accounts were frozen due to earlier lawsuits, he used his sisters’ accounts to run the scheme after the family had severed ties with him for an extended period of time.
One of his sisters stated that they reconnected through a family reconciliation initiative, and said he offered to help her manage her investments as part of rebuilding their relationship.
She told authorities that she had no knowledge of what he was using her bank accounts for, and that she just transferred funds at his request and followed his instructions without questioning him.
The hearing was adjourned to October 27 for defence arguments.
zainab@gdnmedia.bh
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