Promoter of crypto scheme touted by Steven Seagal pleads guilty, faces 5 years in prison – Regulation Bitcoin News

A promoter of the first cryptocurrency scheme by famed martial artist and actor Steven Seagal has pleaded guilty to his involvement. The scheme falsely claimed that it “could generate 8,000% return for investors within a year.”

Promoter of crypto scheme pleaded guilty

The US Department of Justice (DOJ) announced Friday that 55-year-old John DeMar has pleaded guilty to “his involvement in a coordinated cryptocurrency and securities fraud scheme through alleged digital currency platforms and foreign-based financial accounts.”

DeMarr, along with others, “confessed to conspiring to defraud investor victims by prompting them to invest in their companies, ‘Start Options’ and ‘B2G’, based on “materially false and misleading representations.” He was indicted in February. The DOJ said both schemes were frauds.

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

DeMarr and others began offering securities through the Start Options website in approximately December 2017. Investors had to deposit their funds in bitcoin, US dollars or euros. The funds were locked for a fixed period and investors were promised “massive gains”.

However, instead of using the money to invest in the cryptocurrency as advertised, DeMar and others diverted the money into accounts they controlled “and Porsche, to purchase jewelry and remodel DeMar’s home in California.” Including used for various personal expenses.

Start Options also falsely claimed to display celebrity endorsements to promote its securities offering. The DOJ noted:

Based on this and other fraudulent promotional material, investors sent millions of dollars worth of bitcoin, ethereum and fiat currency into financial accounts, including cryptowallets controlled by DeMarr and others, in the US and abroad.

In late January 2018, instead of allowing investors to withdraw their funds after the lock-in period ended, DeMarr and others required them to roll their accounts into an unregistered initial coin offering (ICO) of B2G. Key, the token which he falsely promoted. “Indeed, investors never actually received any digital tokens, and the proceeds from the offering were not used to develop the B2G platform,” the Justice Department said.

As part of the plot, DeMarr and others paid various promoters, including an actor famous for martial arts films made in the 1980s and 1990s, to act as promoters and celebrity spokespersons, falsely claiming that B2G ‘8000%’ can generate returns. to investors within a year, and he was a participant in the ICO.

The celebrity the DOJ referred to was Steven Seagal, who in February of last year was accused by the US Securities and Exchange Commission (SEC) of illegally promoting a cryptocurrency investment scheme that calls for “the next generation of bitcoin”. claimed to be. Siegel failed to disclose that he was being compensated in cash and cryptocurrency by B2G for marketing his tokenized products like Twitter and Facebook.

DeMarr and others also created false press releases and whitepapers about B2G, fabricated its account details, and denied investors their money. “He pleaded guilty to one count of conspiracy to commit securities fraud,” the DOJ said, noting that “DeMar faces a maximum sentence of five years in prison.”

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