The U.S. Department of Justice (DOJ) has seized about $6.5 million worth of bitcoin and Tether’s USDt stablecoin from the administrator of the alleged crypto Ponzi scheme “Banana Fund.”
Following an investigation conducted by the U.S. Secret Service (USSS), a forfeiture suit against the cryptocurrency account holding the funds of the Banana Fund’s unnamed administrator was filed in a bid to return investors the $6.5 million worth of crypto seized from the fund.
The unnamed operator of the Banana Fund reportedly solicited funds from investors after launching the project in 2017, but admitted later on the project failed, and promised to return a total of $1.7 million it alleged it had left – but failed to do so.
Its white paper shows it was supposed to be a crowdfunded business development company that would use blockchain technology to boost transparency.
Instead of returning the funds, documents show that the administrator of the fund used the cryptoassets to trade and got to a balance of $11 million using them. The administrator spent weeks “buying and selling multiple coins for personal gain,” and at one point attempt to withdraw funds to buy a house.
Speaking to CoinDesk Kris Zelisko, a victim of the fund who invested 1.01 BTC in it, stated:
[The fund’s operator] literally gambled with our BTC on Poloniex and he had few good trades.
The operator then engaged in a year-long bitcoin laundering scheme that in two weeks generated $540,000 in profit. He did not, however, pay investors back. In a statement, the DOJ revealed the USSS recovered 482 BTC and 1.73 million USDt from the fund’s operator. It reads:
As a result, USSS executed a seizure warrant on those funds and commenced this action to begin returning these funds to the administrator’s victims.
The DOJ further argued the administrator is subject to forfeiture, which means the government will keep the seized funds as the Banana Fund’s operator “knowingly” committed fraud and violated U.S. law.
Featured image via Pixabay.
