A federal judge in Manhattan released an escrow agent for misleading a crypto investment manager into purchasing $ 3.25 million worth of Bitcoin in 2018.
During a video conference hearing on Feb. 4, Judge Edgardo Ramos of the U.S. Volantis Market Making District ordered Pennsylvania founder John Barry Thompson to pay back the $ 3.25 million to New York-based investment manager, Iterative OTC, and sentenced him to three years of controlled release. Thompson pleaded guilty in October 2020.
According to legal publication Law 360Judge Ramos took into account Thompson’s lack of malicious intent and the fact that he himself was a victim of fraud, stating:
Mr. Thompson is guilty of a serious crime [but] we have to put that in context. This was an unusual fraud. “
Judge Ramos was also willing to give Thompson some leeway over concerns about Covid-19’s impact on the overcrowded US prison system. Because the risk of contracting the virus is very high and there is a lack of readily available vaccinations in prisons, Ramos noted that the US judicial system should “relieve as much pressure from correctional facilities as possible.”
In 2018, Thompson’s escrow company Volantis received $ 3.25 million by Iterative OTC to buy 500 Bitcoin on their behalf. However, while trying to buy the BTC from a third party, Thompson found himself making a loss to the sellers Reportedly took Iterative’s $ 3.25 million without providing Bitcoin in return.
The two salesmen, suspended attorney Phillip Reichenthal and fugitive Randy Craig Levine, are now facing fraud in an ongoing lawsuit before US District Judge Lewis A. Kaplan in Manhattan.
Despite the loss of the money, Thompson lied to Iterative for days about the failed transaction and forged account statements to show a balance for the BTC that was never bought.
In July 2018, Thompson again forged documents after a second client transferred Volantis $ 4 million to buy BTC that was never acquired. Judge Ramos ordered Thompson to pay back the $ 4 million.
Thompson assured the judge that he would keep a clean slate, insisting that while he was guilty of defrauding his customers, he intended the deals to succeed.
“I can promise you honor… I won’t be in contact with the law again,” he said.