The reputation of cryptocurrencies and all services related to them is in some serious trouble.
People have been concocting more and more innovative ways to use cryptocurrencies to conduct scams throughout the world. It has not been a long time since CFTC incriminated Cabbage Tech Corp for cooking up a bogus infrastructure in order to rob people. Another such case of fraudulent activity has come to light recently. Eran Eyal, former CEO of Springleap Inc. has been charged with fraudulently soliciting Investors by falsely representing Springleap’s Management Team, advisory board, creative professionals and clients as well. Eyal has also been charged with cyber crimes for hiring a hacker to scrape the database of creative professionals from websites.
Allegedly, Eyal has been charged with swindling up to $600,000 from multiple investors by cunningly deceiving them to purchase convertible notes. Eran had been displaying a falsified infrastructure of his company to solicit investors. Attorney General Barbara Underwood announced this felony indictment on August 25, in which the summary of his crimes was listed. She also made a statement that pointed out the fact that no fraudulent schemer will be released without severe penalty. Eran Eyal has not yet been convicted but if that ball drops, he might be facing from 5 to 15 years in Prison for all his crimes.
Attorney General Underwood said,
As we allege, this massive securities fraud scheme bilked investors out of hundreds of thousands of dollars. Defrauding New Yorkers through false representations and fabrications about a business will not be tolerated by my office – and we’ll continue to do what it takes to root out and prosecute securities fraud.
Spring leap was initially advertised as a global crowdsourcing company that offered a varied set of services, all related to cryptocurrencies. These included marketing, digital media and platform design services to clients. Eyal was able to conduct this hoax by cooking up an infrastructure which did not exist at all. This included the company’s management team, advisory board, creative professionals and an impressive clientele as well. The CTOs listed in the company’s management team boasted remarkable resumes that were fabricated. In reality, the chief technology officers did not exist. Although the people listed as the company personnel did exist, their credentials were phony. The former CEO Eran had also overstated their brilliance by mentioning they were previously at authoritative positions in other major companies in order to make his business look legitimate. Additionally, a number of well-known successful and respected businesses were advertised to be on the made up advisory board.
To pile on, Eyal misled investors into believing that his company had built a community of almost 180,000 creative professionals with extensive experience. This list of experiences was however, a number of lies obtained by a hacker from a legitimate online portfolio website. Allegedly, Eyal had boasted about the cost of the whole project that was merely $25. Not so proud about that now Eyal, are we?
Eyal lured investors by displaying high profile corporations as its clientele. This included a computer corporation as well as a semiconductor design company. He also lied about Springleap being featured as the seventh most innovative company in the world by a well-known business and technology magazine.
Currently, there are four victims of this fraudulent scheme who have invested over $600,000 in Springleap and have gained no profits although the investigation conducted has identified more investors located in Australia, South Africa and UK. All these investments have amounted to a whopping $1.3 million.
Eran Eyal has become trapped into the web of lies that he weaved himself. He is being charged with three counts of grand larceny in the second degree, one count of grand larceny in the third degree, one count of unlawful duplication of computer related material in the first degree, one count of criminal possession of computer related material, one count of scheme to defraud in the first degree and four counts of securities fraud under the Martin Act. It has been revealed that if convicted, he will face 5 to 15 years in prison.
To conclude, crypto related scams have been on the rise since people started viewing it as a profitable investment. Being a relatively newer technology, it offers a disadvantage because most people are not yet familiar and hence unable to tell apart the legit ones from the fraudulent. So it is imperative, that they invest with due diligence in order to remain safe from such swindles.