U.S Attorney Nabs Bitcoin Middleman For Fraud

The case of the missing Bitcoins

In January, I reported on a dispute involving J. Barry Thompson, the managing director of Volantis Escrow Platform LLC, a global escrow and trade facilitation platform that focuses on Bitcoin escrow services, and Symphony, an Irish investment company that specializes in trading crypto currencies. Symphony had entrusted Thompson with €3,600,000 to purchase Bitcoin on its behalf in an atomic swap (which refers to the near-instantaneous exchange of money for Bitcoin). Symphony never received any Bitcoin and the money was never returned. In that case, the plaintiff withdrew the complaint it had brought in federal court in Pennsylvania and, instead reached a private settlement with Thompson. Thompson then breached the agreement by failing to make the first settlement payment.

I am writing with an update

Yesterday, 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 announced the unsealing of a Complaint in Manhattan federal court charging Thompson with commodities fraud and wire fraud offenses against Symphony and another company. The 27-page criminal complaint alleges that the defendant committed one count of commodities fraud and one count of wire fraud against each of the companies. Specifically, the complaint alleges that Thompson induced each company to send him sums totaling more than $7 million to fund Bitcoin purchases based on false representations that he had the Bitcoin under his control and that there would be no zero settlement risk. Thompson was arrested in Easton, Pennsylvania, and was presented before United States District Judge Joseph Leeson in the Eastern District of Pennsylvania. Ironically, this is the very same judge which originally heard the case brought by Symphony, and had declined to find evidence of any wrongdoing by Thompson, even though he had much of the same evidence described in the criminal complaint.

U.S. Attorney Geoffrey S. Berman said in a statement that, “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.”

Tying it all together

Thompson will be prosecuted in the Southern District of New York in the coming months. Perhaps they will try to flip him. Based upon the complaint, Thompson appears to be working with a network of criminals. Stay tuned.

It is axiomatic that criminals aren’t always recognizable as such. Sometimes they have good pedigrees and do honorable work, which appears to be the case here. For example, Thompson serves as treasurer for the Xprize Foundation, a non-profit organization that creates public competitions to promote technological solutions to benefit humanity. That ought to merit some inquiry. In the United States, the accused are presumed innocent until proven guilty. And so we must make the same presumption here. But after reading the complaint, it does make one wonder.

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