Former banker pleads guilty to crypto fraud, sentenced to 41 months in prison

Rashawn Russell, a former Deutsche Bank executive, was sentenced to 41 months in prison on May 31 in Eastern District Court of New York in Brooklyn.

Russell was charged with wire fraud via cryptography and unrelated access device fraud. He previously pleaded guilty to the charges in September 2023.

Detail the fraudulent scheme

The Department of Justice (DOJ) reported that Russell orchestrated a fraudulent investment fund known as the R3 Crypto Fund, which operated from November 2020 to August 2022.

The fund promised investors significant returns on investments. However, instead of investing the money as promised, Russell diverted the funds for personal use. He used money from later investors to repay early movers, creating a classic Ponzi scheme.

On top of that, he also misled investors by falsely claiming to have transferred redemption funds when asked.

Russell's fraudulent activities came to light when prosecutors charged him with crypto-related wire fraud in April 2023. The former banker admitted to all charges in September, leading to his conviction.

Russell's case is part of a broader crackdown on cryptocurrency fraud, reflecting the growing scrutiny of such cases in the digital asset space. Over the past two months, several other people have been convicted or charged with similar crimes.

A good example occurred on May 18, when Thomas John Sfraga pleaded guilty to wire fraud. involving a fake crypto wallet. He was also involved in other schemes designed to deceive investors.

Notably, on the same day, two individuals were stopped for money laundering on seven counts. The two acts were linked to an amount of 73 million dollars of “pig butchery“crypto scam”.

Another scenario was the case of Anton and James Peraire-Bueno. On May 15, the DOJ accused brothers with conspiracy to commit money laundering and wire fraud. They were accused of manipulating the Ethereum blockchain to fraudulently profit from it.

In another case, on April 12, Shakeeb Ahmed, an IT security engineer, was sentenced to three years in prison.

His sentence was followed by three years of supervised release for executing flash loan attacks on digital asset exchanges in 2022. The Southern District Court of New York handled this case.

Fraudulent crypto trend

At the same time, the trend of fraudulent activity appears to be easing this year, according to a May 30 report. report from blockchain security company Immunefi. The report showed that crypto losses due to fraud and hacking decreased by 12% compared to the previous year.

As of May 2024, total losses were $52 million, compared to more than $59 million in May of the previous year. Additionally, this figure shows a 28% drop from the losses reported in April.

The report further highlights a continuing trend of decreasing losses from hacks and crypto fraud in the Web3 industry. Earlier in March, Immunefi released a report indicating that losses in the first quarter of 2024 had decreased by 23% compared to the previous year.