Roger Karlsson, a Swedish crypto scammer and founder of fintech startup Eastern Metal Securities, sentenced to 15 years in prison after pleading guilty to fraud

The recent rise in the popularity of bitcoin has driven record investments into the crypto market with millions of naive crypto investors betting their hard-earned money on speculative digital assets like bitcoin, Ether, Dogecoin, and other meme coins. As more investors jump on the bandwagon to cash in on the crypto craze, so the increase in the number of crypto scammers ready to take advantage of gullible and greedy investors.

Back in May, the U.S. Security Exchange Commission (SEC) charged founders of crypto startup Bitconnect of Ponzi scheme after defrauding over $2 billion from retail investors. According to the SEC, five individuals from BitConnect were charged for promoting a global unregistered digital asset securities offering that raised over $2 billion from retail investors.

BitConnect is just one of the many companies involved in crypto scams and money laundering. The Department of Justice (DOJ) recently reported that Roger Nils-Jonas Karlsson, a 47-year old Swedish crypto scammer and the founder of fintech startup Eastern Metal Securities, has been sentenced to 15 years in prison for securities fraud, wire fraud, and money laundering charges.

The DOJ says that Karlsson ran an investment fraud scheme from 2011 until his arrest in Thailand in June 2019. He pleaded guilty in March after defrauded more than 3,500 victims of more than $16 million.

According to court filings, Karlsson, also known by several aliases including Steve Heyden, Euclid Deodoris, Joshua Millard, Lars Georgsson, Paramon Larasoft, and Kenth Westerberg, encouraged victims to buy shares in a scheme called “Eastern Metal Securities” using cryptocurrencies like bitcoin, promising “astronomical returns” tied to the price of gold.

The funds paid by these victims were instead directed to Karlsson’s personal bank accounts, where the money was put toward expensive homes, a racehorse, and a resort in Thailand. Karlsson has been ordered to forfeit this Thai resort and various other properties and accounts as part of the sentence.

Karlsson was arrested on June 17, 2019, in Thailand and was extradited to the United States to face the charges. A federal grand jury later indicted Karlsson and EMS on July 25, 2019.

“The internet has pioneered extraordinary opportunities for commerce,” said Acting U.S. Attorney Hinds. “Unfortunately, the same tools that have provided innovative methods of doing business also have provided fertile grounds for fraudsters to take advantage of the unwary. This case demonstrates that we will pursue fraudsters who seek to find their victims in the Northern District of California, even if such criminals operate from outside the country.”

“Karlsson’s false promises of a profitable investment with minimal risk bilked tens of millions of dollars from his unsuspecting victims,” said IRS-CI Special Agent in Charge Jackson. “Karlsson’s admission today will hopefully provide some measure of justice for more than 3,500 victims he scammed and put them on a path to financial restoration. We were glad to provide our expertise in tracing virtual currency in this investigation, diminishing the belief of anonymity associated with these transactions.”

During the hearing, Karlsson admitted that he used the website to invite potential investors to purchase shares of the plan for less than $100 per share, promising an eventual payout of 1.15 kilograms of gold per share, an amount of gold which as of Jan. 2, 2019, was worth more than $45,000, according to a report from the DOJ.

Karlsson advised investors that, in the unlikely event that the gold payout did not happen, he guaranteed to them 97% of the amount they invested. Karlsson later admitted he had no way to pay off the investors. Instead, the funds provided by victims were transferred to Karlsson’s personal bank accounts and he then used proceeds to purchase expensive homes and a resort in Thailand.

DOJ says Karlsson faces a maximum sentence of 20 years in prison and a maximum $250,000 fine for the wire fraud and securities fraud charges, and 20 years in prison and a $500,000 maximum fine for the money laundering charge.