Arizona Man Pleads Guilty in $13M Crypto Ponzi Scheme Involving Fake AI Trading Bots

Arizona Man Pleads Guilty in $13M Crypto Ponzi Scheme, Faces Up to 15 Years - Decrypt

Victims were duped twice, first through bogus crypto investments, then again by being charged fees for fake investigations into the very scams that stole their money. A man who posed as a crypto-savvy government official and helped engineer a $13 million Ponzi scheme has admitted guilt in federal court. Vincent Anthony Mazzotta Jr. pleaded guilty Monday to one count of money laundering and one count of conspiracy to obstruct justice, according to a statement by the U.S. Attorney's Office for the Central District of California. Mazzotta helped target victims through a web of crypto investment companies with names such as Mind Capital and Cloud9Capital while working alongside Australian co-defendant David Gilbert Saffron from 2017 to 2023. The pair falsely claimed to use automated trading bots powered by artificial intelligence to generate high crypto trading returns that never materialized. An indictment from December 2023 revealed Mazzotta operated under several aliases, including "Vincent Midnight," "Delta Prime," and "Director Vinchenzo," while communicating with victims. The indictment detailed how the conspirators spent investor funds on luxury items, including private jet charters, Hollywood Hills mansion rentals, personal security details, and high-end hotel accommodations. Mazzotta and Saffron also established the Federal Crypto Reserve, a fictitious entity designed to appear as a government-backed crypto recovery service. Victims who had already lost money in the initial scheme were then charged additional fees for "investigations" into the very companies that had stolen their funds. Experts told Decrypt that the Federal Crypto Reserve tactic represents a particularly cruel form of secondary victimization that exploits victims' desperation and shame after losing money to the initial scam. "Crypto recovery scams are very common with scammers targeting victims by claiming they can help recover stolen crypto," said Karan Pujara, founder of scam defense platform ScamBuzzer. "The hope of getting their money back and guilt from making a mistake make victims vulnerable," Pujara added, noting that their emotional state can "lead them to another error, knowingly or unknowingly, causing them to fall for secondary recovery scams." The expert advised victims approached by recovery services to "not respond, just block" any communications, as engaging can expose victims to additional social engineering attacks. Pujara advised investors evaluating AI trading services to apply a simple logic test. "If the returns they are offering are too good to be true, then it is a scam," he said. "If someone truly had such a profitable algorithm, they wouldn't be selling subscriptions for just a few hundred dollars." Mazzotta is scheduled to be sentenced on December 15 and faces up to 15 years in federal prison. The case comes amid a surge in crypto-related scams targeting a variety of different communities. Last week, a Denver grand jury indicted Colorado pastor Eli Regalado and his wife on 40 felony charges for allegedly orchestrating a $3.4 million crypto scheme through their online church, promising "divine guidance" for their worthless INDXcoin.

Arizona Man Pleads Guilty in $13 Million Crypto Scam Using AI & Fake Agency

$13 million Crypto Ponzi Exposed: AI Bots and Fake Agency Used in Scam In a major crypto fraud case, Vincent Anthony Mazzotta Jr., a 36-year-old man from Arizona, has pleaded guilty to running a complex that misled investors through the use of fraudulent AI trading bots and a fake crypto recovery agency. The plea, entered in a California federal court, marks the culmination of a years-long investigation into a multi-layered scam that operated between 2017 and 2023. Crypto Ponzi scheme operations are becoming increasingly sophisticated, luring investors with false promises of high returns.