U.S. seizes $6.5 million in bitcoin and tether from 'Banana Fund' Ponzi scheme


The U.S. Department of Justice has seized crypto funds totaling about $6.5 million from the administrator of an alleged Ponzi scheme known as the "Banana Fund."

The DOJ filed a complaint for the forfeiture of the funds last Wednesday.

The administrator of the Banana Fund is an unnamed foreign national, according to the complaint. An investigation of the U.S. Secret Service (USSS) found that the administrator courted investments for the Banana Fund but allegedly used investor funds for personal trading in cryptocurrencies instead, eventually using their gains to purchase a home. Accounts related to the Banana Fund were registered to a residential address in Toledo, Spain. 

Though the administrator once announced that investments had reached 557 bitcoins and 1.73 million tether, USSS investigators have recovered 482 bitcoins and 1,721,868 tether.

"As a result, USSS executed a seizure warrant on those funds and commenced this action to begin returning these funds to the administrator's victims," the DOJ said in a statement.

The administrator originally touted the Banana Fund as a crowdfunding platform using bitcoin to finance projects, opening for investments in 2016. However, the DOJ alleges that the promised token marketplace in the Banana Fund white paper never materialized. Bitcoins invested in the fund were "frequently" laundered to four different locations, according to the complaint.

By 2018, the Banana Fund website redirected to a Google docs page associated with the administrator that indicated the fund had failed and directed investors to input their information to receive a refund. During this time, the DOJ alleges that exchange records show the administrator was still actively buying and selling with the funds and claiming they only had $1,730,000 available to refund when his account balance showed roughly $11,000,000.

The DOJ argues that the administrator is subject to forfeiture, meaning the U.S. government will retain the seized funds, since they "knowingly" committed fraud via wire communications in violation of U.S. law. 

Related Reading

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

TRON USDC now available

Delivering on a vision for an interoperable global standard for dollar digital currency, Circle and TRON have partnered to make USD Coin (USDC) available on the TRON blockchain, which has grown to more than 56 million accounts and nearly 2.5 billion transactions since its founding just four years ago. TRON is home to a broad ecosystem for digital assets in Asia and around the world, and the TRON community can now benefit from easy access to the world's fastest-growing, regulated dollar digital currency. 
Read Full Story
Sponsored Post

Layer-1 Platforms: A Framework for Comparison

The Block Research was commissioned by Algorand to create Layer-1 Platforms: A Framework for comparison, which provides a “look under the hood” at seven platforms: Algorand, Avalanche, Binance Smart Chain, Cosmos, Ethereum/Ethereum 2.0, Polkadot, and Solana. We assess their technical design, related ecosystem data, and qualitative factors such as key ecosystem members to get an understanding of how they differ. Having done this analysis, we draw some insights for what the future of the broader smart contract landscape could look like for years to come. 
Read Full Story
Aug 11, 2021, 5:18PM UTC