Principal Of Cryptocurrency Escrow Company Charged In Manhattan Federal Court With Fraudulent Scheme Involving Over $7 Million

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint in Manhattan federal court charging JON BARRY THOMPSON, a/k/a “J. Barry Thompson,” the principal of the cryptocurrency escrow company Volantis Escrow Platform LLC and the related company Volantis Market Making LCC (collectively “Volantis”) with commodities fraud and wire fraud offenses.  As alleged, THOMPSON took over $7 million from two victim companies after making false representations in connection with Bitcoin transactions.  THOMPSON was arrested this morning in Easton, Pennsylvania, and will be presented later today before United States District Judge Joseph Leeson in the Eastern District of Pennsylvania.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jon Thompson induced investors to engage in cryptocurrency transactions through his company, Volantis Market Making, by touting a transaction structure that would eliminate any risk of loss during the purchase.  As his clients soon realized, however, Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies. Whether a transaction involves cryptocurrency, or any other type of currency, commodity or security, this Office is committed to rooting out fraud and protecting the integrity of our markets.”

FBI Assistant Director-in-Charge Sweeney said:  “Thompson allegedly thought no one would ask where their actual money went when they trusted him to invest in Bitcoin.  Using phrases and terminology that the victim companies didn't understand, he allegedly preyed on their ignorance of the emerging cryptocurrency.  Our job at the FBI is to investigate fraud and follow the money wherever it leads.”

As alleged in the Complaint unsealed today in Manhattan federal court:[1]

THOMPSON claimed in promotional materials that 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 induced one victim company (“Company-1”) to send Volantis over $3 million to fund the purchase of Bitcoin for Company-1 after falsely assuring Company-1 that THOMPSON had the Bitcoin in hand and Company-1’s money could not be lost.  After taking Company-1’s money and failing to provide any Bitcoin in return, THOMPSON lied for days about why the deal had not worked out and the location of Company-1’s Bitcoin and money, which was never returned.  Among other things, THOMPSON provided Company-1 with a false account statement purporting to show Company-1’s money held for it by THOMPSON, when in fact THOMPSON had already misappropriated thousands of dollars of Company-1’s money.  Additionally, even though THOMPSON had told Company-1 that before any transaction “cash is with me, coin is with me,” THOMPSON sent over $3 million of Company-1’s money to a third-party entity purportedly in exchange for Bitcoin without first receiving any of the Bitcoin in hand.  THOMPSON never returned Company-1’s money, nor provided it with any Bitcoin.

In July 2018, THOMPSON induced another victim company (“Company-2”) to send Volantis over $4 million to fund the purchase of Bitcoin for Company-2 based on false representations.  After receiving Company-2’s money, THOMPSON sent a substantial portion of the money to a third party—about whom THOMPSON was aware of several warning signs—without first receiving any Bitcoin in return.  THOMPSON never provided Company-2 with any Bitcoin, nor did he return Company-2’s money.  THOMPSON also lied to Company-2 about the location of the Bitcoin and the reasons the transaction was not completed.

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THOMPSON, 48, of Easton, Pennsylvania, is charged with two counts of commodities fraud, each of which carries a maximum sentence of 10 years in prison, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and also thanked the 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.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.