Justice Department Slaps Escrow Firm Director in $7 Million Bitcoin Fraud

The Manhattan Federal Court has charged the accused of multiple counts of wire fraud and commodities fraud. | Source: Shutterstock

US authorities have arrested the operator of a Bitcoin escrow company for defrauding two firms of $7 million.

Jon Barry Thompson – a Pennsylvania man who is the director of the Bitcoin escrow firm Volantis – has been arrested and charged with two counts of wire fraud and two counts of commodities fraud, the US Department of Justice (DOJ) stated in a press release yesterday.

Thompson encouraged investors to buy bitcoin through his escrow company as his service would “eliminate any risk of loss during the purchase,” Manhattan U.S. Attorney Geoffrey S. Berman stated in the press release.

Two companies – one investing $3 million and the other $4 million – have sent Thompson fiat to purchase Bitcoin.

However – after several days of lying and sending false documents to his clients –, the organizations neither received their fiat nor their bitcoin from the defendant. Instead, Thompson misappropriated thousands of dollars of the victims’ funds.

Probably in an attempt to put the blame on another organization, Thompson has transferred a part of the victims’ funds to a third party service to exchange fiat to bitcoin.

But Thompson has never received any BTC from the third party firm. According to the DOJ, the defendant was aware of the “warning signs” of the services, but he still conducted the transaction.

If found guilty, Thompson could face a maximum sentence of 60 years in prison, the DOJ stated in the press release.

CCN.com reported on a similar case yesterday, in which a federal grand jury has indicted a New Jersey resident for running an illegal Bitcoin exchange.