Principal Of Cryptocurrency Escrow Company Pleads Guilty To Multimillion-Dollar Fraudulent Scheme
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced that JON BARRY THOMPSON, a/k/a “J. Barry Thompson,” the principal of a cryptocurrency escrow company, pled guilty today in Manhattan federal court to commodities fraud. THOMPSON’s guilty plea results from his involvement in a scheme to defraud a company of over $3 million. In June and July 2018, THOMPSON made false promises to the company to induce it to send THOMPSON’s company over $3 million for Bitcoin that THOMPSON never had and that the investing company never received.
THOMPSON was arrested on July 25, 2019, and pled guilty today before U.S. District Judge Edgardo Ramos.
Acting Manhattan U.S. Attorney Audrey Strauss said: “As he admitted today, Jon Barry Thompson fraudulently induced a company to send him more than $3 million, which the company understood would be used for the purchase of Bitcoin with ‘no risk.’ While Thompson had pledged not to part with the company’s money until he had possession of the Bitcoin, in fact Thompson sent the money to a third party without first receiving the Bitcoin, and the money was never recovered.”
According to the Complaint, the Indictment, and other statements made in open court:
THOMPSON claimed in promotional materials that his cryptocurrency escrow company, Volantis Escrow Platform LLC, and the related company Volantis Market Making LCC (collectively “Volantis”), “minimize[d] settlement default risk” in cryptocurrency transactions. THOMPSON claimed that because Volantis acted as a custodian of assets for “both sides of the transaction, there is no risk of default.”
In June and July 2018, THOMPSON made false statements to a company (“Company-1”) to induce Company-1 to send Volantis over $3 million to fund the purchase of Bitcoin for Company-1. THOMPSON falsely assured Company-1 that THOMPSON would act as an escrow and that Company-1’s money could not be lost. In particular, THOMPSON told Company-1 that the transaction would take place through an “atomic swap process” after THOMPSON had custody of both the Bitcoin and Company-1’s cash. THOMPSON falsely represented that he would not transfer Company-1’s cash to the seller until he had the Bitcoin in hand. Based on these fraudulent representations, Company-1 wired THOMPSON $3.25 million. THOMPSON then wired over $3 million of Company-1’s money to a third-party entity without first receiving any of the Bitcoin in hand. After taking Company-1’s money, THOMPSON lied for days about the status of the transaction and the location of Company-1’s Bitcoin and money, which was never returned.
* * *
THOMPSON, 49, of Easton, Pennsylvania, pled guilty to one count of commodities fraud. This charge carries a maximum term of 10 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
THOMPSON will be sentenced on January 7, 2021, at 10:00 a.m.
Ms. Strauss praised the investigative work of the Federal Bureau of Investigation and also thanked the U.S. Commodity Futures Trading Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jordan Estes and Drew Skinner are in charge of the prosecution.