Coin Fire Claims - Cryptsy Under Federal Investigation


#1

The noose begins to tighten.


Coin Fire is now able to report that multiple federal investigations are underway regarding Crypsty.

The online exchange is under several investigations with multiple agencies including the Securities and Exchange Commission, the Internal Revenue Service, and the Criminal Investigation Division of the Internal Revenue Service, among others.

Documents from various investigations obtained by Coin Fire show a litany of purported wrongdoing by the company and several team members. The large number of allegations levied against the company varies from agency to agency in more than 300 pages of documents. In some instances, the investigation alleges that the company failed to obtain appropriate licenses. In one particular instance, a connection is made between a Cryptsy team member and GAW Miners’ fraudulent operations. Other government agencies report a failure to report gains appropriately, market manipulation, the sale of unlicensed securities, money laundering, and more.

The document cache obtained by Coin Fire contains materials ranging from the Securities and Exchange Commission to the Department of Homeland Security. The earliest records in the cache against Crypsty contain minor investigations of wrong-doing and are dated prior to the larger investigation of Mr. Homero Joshua Garza and Mr. Carlos Garza; however, the information discovered during the GAW Miners investigation caused lead investigators from multiple organizations to begin scrutinizing Crypsty and its parent company, Project Investors, more closely. The investigation against Cryptsy intensified after a “PayCoin controller” was exchanged to the company and the two investigations began to run concurrently.

In one document, FinCen began to examine allegedly illegal transactions where money was being moved to accounts connected to suspected terrorists, but the investigation had since stalled. This document was set aside and ignored for several months until recent information indicated potential transactions with suspected terrorists. Later documents referenced this earlier FinCen document, with the most recent alleging that both Project Investors and Cryptsy were aware of an account on their platform being used by an individual with ties to banking watch lists and restrictions.

The documents also explore other allegations. In one report, an organization alleges that the company utilized automated trading software on a platform that directly benefitted Crypsty staff members. The report also alleges that a key Cryptsy staff member performed fraudulent transactions related to the movement of PayCoin by Mr. Garza.

Another document shows one organization beginning a probe of PayCoin’s blockchain history. This document alleges that Cryptsy was being used by Mr. Garza to disguise money movement for both him and his associates. Furthermore, the report claims that the company was aware of this movement and not merely complicit; this allegation is echoed by material within the document indicating that (1) staff member engaged in these fraudulent transactions and transfers, and directly engaged in market manipulation.

A wide variety of federal agencies have taken an interest in cryptocurrency companies over the last year, with many preparing for administrative actions and even criminal charges in early 2016. These agencies have been seen cooperating on several levels. One agent with the Securities and Exchange Commission told Coin Fire that they were,

“Looking at the worst offenders in cryptocurrency and would be closing in further on our unofficial “top ten” list of which Cryptsy and Project Investors will find itself to be in the Top 5.”


[SCAM] GAWMiners, Paybase, ZenCloud
[SCAM] GAWMiners, Paybase, ZenCloud
#2

Why am I not even slightly surprised? Disappointed, because of the potential impact of negative publicity on an industry we all have an interest in succeeding, sure…but not surprised.

When all that stuff about cryptsy having a “prime controller” came out and that guy kept posting in BCT in defense of his companies behaviour I decided right then that that was probably not the most dodgy thing they were involved in. Anyone remember their “poll” to decide what they should do with their “prime controller”, when the answer was perfectly obvious to anyone?

If I remember rigtly allen provided a great deal of the information regarding cryptys dodgy trading.


#3

Its very unfortunate that the biggest enemy of crypto are the actual users and service provider of said crypto. Crypto needs zero negative publicity and there are too many operations that are gonna attract the heat. Hell, there are only two legit mining operations, yet scams and HYIPs pop up seemingly every two seconds. Crypto will always be seen as a joke while this is allowed to happen. We need to get ourselves in order before the governments regulate the ■■■■ out of it and destroy the true meaning of crypto. Very unfortunate the path it is taking right now…


#4

Well… I just said bye bye to Cryptsy… Like you all said crypto needs no more bad publicity. I guess I’ll just move on over to another exchange. Jesus H ■■■■■■ Christ man. SMDH


#5

This kind of â– â– â– â–  just makes it harder for folks like myself who are trying to do legit good things with Bitcoin.


#6

sounds alot like Garza :smiley:


#7

You’re watching the Trollbox too I see LOL


#8

Exactly like Garza. And look where he ended up. We have no hope with all of this as there seems to be an endless supply of these “characters” manufactured daily to infiltrate the crypto world.


#9

Annnnnddddd now I can no longer chat on the Trollbox because I have no balance LOL. Oh well. Let them all eat cake


#10

People don’t want legit good things to do with bitcoin, that is the only problem. They just want the next scam to feed their coins to. I still advocate for widespread adoption, but it is harder and harder each day to take seriously.


#11

here is some latest comments from craptsy


#12

The response(s) are literally the same as Garza’s when he was replying to Coinfire’s accusations last year.
I wonder if we’ll get another batch of “leaked” emails to entertain ourselves through the winter…


#13

I disagree, Mt Gox blew over, Garza will fade, life moves on. We’re only at base camp, the summit is miles away. Patience and persistence, as with all business. Rarely does overnight success in technology actually happen. Usually, the really good tech that matters takes time to find its true path. Once it has, it becomes a part of life in a way people forget what life was like before the new tech existed.


#14

I agree with the most of this, especially about the tech being young. But after how many of these scams will come new legislation? Legislation that will no doubt strip one or more of the underlying “features” of crypto which have brought us all together. The more legislation there is, the more government involvement there is. The more goverment involvement there is there more like the big banks crypto will become. I got into crypto because I didn’t like what big banking has become. That is why these types of things worry and stress me out…one step closer to same ■■■■ I disliked that brought me to crypto.


#15

To be fair we hear about all these scams and stuff but unless they reach the level of MT. GOX and make the mainstream news most people never hear about it and know nothing of them. that includes those that are interested in BTC. I have a friend that has a few miners knows about BTC, has wallets and uses BTC on occasion but does not follow any of the forums or info on altcoins. He has never heard of GAW, Paycoin, Cryptsy, ScryptCC or any of the Crypto news/blogs. As far as he is concerned anything besides BTC is just so much fluff and he is not interested in any of it.

When a spam attack slows everything down he will come ask me whats up with the blockchain but for the most part he is completely oblivious to what else is going on. I think for every one of us that knows about this stuff there are a hundred people on the periphery that pay no attention to it let alone the millions that have no involvement in crypto whatsoever.


#16

Glad to see at least one scam is still labeled as such.

Is it possible that the Garzas are being considered for the “bankster” exemption from criminal prosecution? On its face it would seem their corporations are too small, but then again, here we are a year later with no criminal charges on the table.


#17

The only thing which could save their bacon, I reckon, is the strong ties they have to that wall street idiot. If there’s the possibility of bad press for a firm like cantor then they might just let it go…


#18

I personally think they will look to make an example of him, in the face of the rampant scams and schemes that pop up weekly around these parts (crypto, not GH).


#19

They need to look into their Mintsy scam too.


#20

Um… yeah.

  • Fraud

  • Money Laundering

  • Securities violations / MSB violations / Copyright violations

  • Aiding & abeting a known blacklisted foreign millionaire/billionaire

  • Death threats

  • Using Internet / telephones to threaten, deceive & commit fraud

What have I omitted?

Educated guess:

  • Tax fraud, (IRS)