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Cryptocurrency is At The Center of Multi-Million Dollar Investment Security and Commodities Fraud

The Criminal Division of the IRS arrested Swedish businessman Roger Nils-Jonas Karlsson, for allegedly operating a fraudulent pension plan using cryptocurrency. Karlsson allegedly used fake websites “registered to a fictitious person” to advertise shares of a “Pre-Funded Reversed Pension Plan” (PFRPP). The criminal complaint states that Karlsson allegedly invited potential investors to buy shares of this plan at $98 per share. In exchange, Karlsson promised to eventually return 1.15 kilograms of gold per share to the shareholder as return on investment. In early 2019, 1.15 kilograms of gold was worth $45,000, making investors in the plan a 460 percent return for each share owned. The plan’s investors made payments using virtual currencies, also known as cryptocurrency. Bitcoin, Ethereum, and Litecoin prominent cryptocurrencies and were allegedly used to pay Karlsson. With the assistance of his company, Eastern Metal Securities, Karlsson allegedly defrauded victims into losing more than $11 million.

The U.S. Securities and Exchange Commission does not regulate cryptocurrencies, which are considered risky. The lack of regulation makes it sometimes impossible to get cryptocurrency refunded from fraudulent transactions because banks or government organizations do not guarantee these currencies. In cases where a company or individual commits securities or commodities fraud against the government, private citizens often play an essential role by acting as whistleblowers.

© 2020 by Tycko & Zavareei LLP

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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

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