Acting Assistant Attorney General Nicole M. Argentieri Delivers Keynote Address at the 40th International Conference on the Foreign Corrupt Practices Act
A Serbian man has been extradited to the United States, where he faces charges in two separate federal indictments in the Northern District of Texas and Eastern District of New York for his alleged participation in coordinated cryptocurrency and binary options schemes.
On Feb. 3, pursuant to a request for provisional arrest followed by a request for extradition, Georgian authorities arrested Kristijan Krstic, 48, in Batumi, Georgia. The U.S. Marshals Service (USMS) completed the removal of Krstic on Oct. 30 from Georgia to the Northern District of Texas.
Krstic arrived in the Northern District of Texas made his initial appearance today in the U.S. District Court for the Northern District of Texas, where he will first face charges before being transferred to face additional charges in the Eastern District of New York.
“This extradition is the result of continued coordination between the Justice Department and our Georgian law enforcement partners in the fight against transnational organized crime,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “We are committed to protecting the people of this nation by investigating and prosecuting individuals involved in cryptocurrency fraud.”
Northern District of Texas
In March 2020, a federal grand jury in the Northern District of Texas indicted Krstic for his role in defrauding investors worldwide out of more than $70 million through fraudulent cryptocurrency and binary options investment platforms. Krstic and more than a dozen other alleged fraudsters were also indicted on charges of conspiracy to commit wire fraud and conspiracy to commit money laundering in the superseding indictment in July 2020.
“The work on this case exemplifies the whole of the Justice Department to bring cyber-criminals – including those who use cryptocurrency and other purported cyber investment platforms to victimize the citizens of the United States – to justice,” said U.S. Attorney Leigha Simonton for the Northern District of Texas. “The U.S. Attorney’s Office for the Northern District of Texas will work hand-in-hand with our law enforcement partners to ensure that cyber-criminals are held accountable regardless of their location.”
According to court documents, the defendants allegedly helped create and market more than 20 fraudulent cryptocurrency and binary options investment platforms, including Start Options, Trinity Mining, Hedger Tech, BTC Mining Factory, Bitcoin Trading World, Dragon Mining, BTC Trader Online, Crypto Trading World, Go Solar Mining, BTC Falcon, Perpetual Energy, Perfect-Options, Options Rider, Option Giants, Banking Options, Aeon Options, Bancde Options, Instant Options, Fast Options, and Elite Options.
“The FBI remains committed to pursuing subjects across international boundaries who are increasingly utilizing sophisticated virtual asset schemes to defraud investors,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Victims were told their investment in Start Options and B2G would return significant wealth, but many were defrauded and harmed as a result. The FBI thanks our national and international partners for their efforts throughout the investigation to help bring justice for the victims.”
“This extradition occurred because of international cooperation and the FBI’s persistence to hold this individual accountable for defrauding thousands of innocent victims. Some victims lost their entire savings to this scheme and have not been able to financially recover,” said Special Agent in Charge Chad Yarbrough of the FBI Dallas Field Office. “We would like to thank our international partners for assisting us with the arrest and extradition of Mr. Krstic. He will now finally face charges for his actions in the United States.”
Krstic is charged in the Northern District of Texas with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering in an alleged scheme to create, promote, market, and organize fraudulent online investment platforms. If convicted, he faces a maximum penalty of 20 years in prison for each count.
The FBI Dallas Field Office is investigating the case.
Assistant U.S. Attorneys Michelle Winters and Nicole Dana for the Northern District of Texas are prosecuting the case. Assistant U.S. Attorneys Dimitri Rocha and John de la Garza for the Northern District of Texas assisted with forfeiture matters.
Eastern District of New York
In February 2021, a federal grand jury in the Eastern District of New York also indicted Krstic for his role in a cryptocurrency scheme in which he solicited U.S. investors using two fraudulent online investment platforms. According to court documents, Krstic was the founder of two digital-asset investment platforms, Start Options and B2G, and also served as the chief financial officer of Start Options. As alleged, between approximately 2017 and 2018, Krstic and others fraudulently induced U.S.-based investors to purchase securities in the form of investment contracts in Start Options and B2G. To perpetuate the fraud, Krstic allegedly used the alias “Felix Logan” and created the Twitter handle “@felixlogan_cfo” to communicate with investors in Start Options and B2G.
The indictment alleges that Start Options purported to be an online investment platform that provided cryptocurrency mining and digital-asset trading services, including trading in cryptocurrencies, commodities, stocks, and indices. Start Options also allegedly claimed that it was “the largest Bitcoin exchange in euro volume and liquidity” and that it was “consistently rated the best and most secure Bitcoin exchange by independent news media.” The indictment further alleges that B2G purported to be an “ecosystem” that would allow users to trade B2G tokens, as well as digital and fiat currencies, “on a secure, comprehensive platform.” Krstic and others allegedly represented that once investors opened a B2G account, a deposit of B2G “open[ed] a door to all the curtains inside Aladdin’s cave. Dollars buy B2G; B2G tokens can be exchanged back into dollars, or for Euros, or for other national fiat currencies. B2G holdings can be traded for original bitcoin or other altcoins.”
“Kristijan Krstic used the hype and mystery of cryptocurrency to separate unwitting investors from their money,” said Special Agent in Charge Tyler Hatcher of the IRS Criminal Investigation (IRS-CI) Los Angeles Field Office. “Krstic founded two online investment platforms which allowed him to steal $7 million in investor funds before closing up shop. Fleeing the country did not stop IRS-CI and our law enforcement partners from continuing our pursuit of justice, and today’s extraction demonstrates that no criminal is out of our reach.”
According to the indictment, however, the money that investors in Start Options and B2G sent was never invested and instead, was laundered internationally to a Philippines-based financial account and digital-currency wallet and diverted to John DeMarr, a U.S.-based promoter of the fraud. Subsequently, DeMarr allegedly transferred to Krstic approximately $7 million in investor funds from B2G and Start Options, and then Krstic stopped responding to all communications and absconded with those investors’ funds. A press release issued by Start Options claimed that the company had been sold to Russian venture capitalists.
Krstic is charged in the Eastern District of New York with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud, and one count of conspiracy to commit money laundering. If convicted, he faces a maximum penalty of 20 years in prison.
On Jan. 31, DeMarr, 55, of Santa Ana, California, the former Director of North American Operations for Start Options and B2G, was sentenced to five years in prison for his role in the scheme.
U.S. Attorney Breon Peace for the Eastern District of New York joined in the announcement.
IRS-CI and the FBI Los Angeles Field Office are investigating the case.
The government of Georgia, including the Prosecution Service of Georgia, Ministry of Justice of Georgia, and the Ministry of Interior of Georgia, provided significant assistance in the extradition of Krstic to the United States. Republika Srpska Police (RS-MUP) assisted as well. The Justice Department’s Office of International Affairs also provided substantial assistance in securing the arrest and extradition of Krstic. USMS transported Krstic from Georgia to the United States.
Trial Attorney Tian Huang of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Kaitlin Farrell, Hiral Mehta, and David Pitluck for Eastern District of New York are prosecuting the case, with assistance on forfeiture matters from Assistant U.S. Attorney Laura Mantell for the Eastern District of New York.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.