Krstijan Krstic Indicted in Multi-Million Dollar Securities Fraud Scheme
BROOKLYN, NY – Earlier today, in federal court in Brooklyn, an indictment was unsealed charging Krstijan Krstic with conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering for his alleged participation in a cryptocurrency scheme in which he solicited U.S. investors using two fraudulent online investment platforms.
Seth D. DuCharme, Acting United States Attorney for the
Eastern District of New York, Nicholas L. McQuaid, Acting Assistant Attorney
General of the Justice Department’s Criminal Division, Kristi K. Johnson,
Assistant Director-in-Charge, Federal Bureau of Investigation, Los Angeles
Field Office (FBI), and Ryan L. Korner, Special Agent-in-Charge, Internal
Revenue Service-Criminal Investigation, Los Angeles Field Office (IRS-CI),
announced the indictment.
“As alleged, Krstic convinced U.S. investors to pour
millions of dollars into fraudulent cryptocurrency schemes through
misrepresentations and false statements, and then ran off with their money,”
stated Acting U.S. Attorney DuCharme. “This Office is committed to vigorously
prosecuting those who cheat investors.”
Mr. DuCharme expressed his grateful appreciation to the U.S. Securities
and Exchange Commission, New York Regional Office, for its assistance with the
case.
“Mr. Krstic and others devised fraudulent platforms which
purported to offer sophisticated options appealing to bitcoin investors, then
fabricated positive reports about the company in an attempt to add legitimacy
to the scheme,” stated FBI Assistant Director-in-Charge Johnson.
“Cryptocurrency scams are on the rise. The charges against Mr. Krstic should
send a message that the FBI and our partners take securities fraud very
seriously and will hold accountable individuals who steal from American
investors.”
“Today’s indictment of Kristijan Krstic highlights just how
seriously IRS Criminal Investigation and the federal law enforcement community
are taking criminal activity related to cryptocurrency and online fraud
schemes,” stated Special Agent-in-Charge Korner. “Under the cloak of an
international online digital currency exchange, $7 million in investor funds
from B2G and Start Options were allegedly funneled from unwitting investors
directly to Krstic’s pocket. Whether online or on the streets, financial crime
never pays, and IRS Criminal Investigation will continue to work tirelessly to
ensure those who are involved are brought to justice.
As alleged in the indictment, Krstic was the founder of two
digital-asset investment platforms, “Start Options” and “B2G,” and also served
as the chief financial officer of Start Options. Between approximately 2017 and 2018, Krstic
and others fraudulently induced U.S.-based investors to purchase securities in
the form of investment contracts in Start Options and B2G. To perpetuate the fraud, Krstic used the
alias “Felix Logan” and created the Twitter handle “@felixlogan_cfo” to
communicate with investors in Start Options and B2G.
Start Options purported to be an online investment platform
that provided cryptocurrency mining and digital-asset trading services,
including trading in cryptocurrencies, commodities, stocks and indices. Start Options also claimed that it was “the
largest Bitcoin exchange in euro volume and liquidity” and that it was
“consistently rated the best and most secure Bitcoin exchange by independent
news media.” B2G purported to be an
“ecosystem” that would allow users to trade B2G tokens, as well as digital and
fiat currencies, “on a secure, comprehensive platform.” Krstic and others represented that once
investors opened a B2G account, a deposit of B2G “open[ed] a door to all the
curtains inside Aladdin’s cave. Dollars buy B2G; B2G tokens can be exchanged
back into dollars, or for Euros, or for other national fiat currencies. B2G
holdings can be traded for original bitcoin or other altcoins.”
In reality, the money sent by investors in Start Options and
B2G was never invested as promised, and instead was funneled to a
Philippines-based financial account and digital-currency wallet, and to a
U.S.-based promoter of the fraud.
Subsequently, the U.S.-based promoter transferred approximately $7
million in investor funds from B2G and Start Options to Krstic, and Krstic
thereafter stopped responding to all communications and absconded with those
investors’ funds. A press release issued
by Start Options falsely claimed that the company had been sold to Russian
venture capitalists.
The charges in the indictment are allegations, and the
defendant is presumed innocent unless and until proven guilty. If convicted, Kristic faces up to 20 years’
imprisonment.
This case was investigated by the FBI and IRS-CI. The prosecution is being handled by the
Business & Securities Fraud Section of the U.S. Attorney’s Office for the
Eastern District of New York and the Criminal Division’s Fraud Section. Assistant U.S. Attorneys Kaitlin T. Farrell,
Hiral D. Mehta and David C. Pitluck of the Eastern District of New York,
assisted by a Special Agent of the Eastern District of New York’s Business
& Securities Fraud Section and Trial Attorney Kevin Lowell of the Criminal
Division are prosecuting the case.
Assistant U.S. Attorney Laura D. Mantell of the Eastern District of New
York’s Civil Division is handling forfeiture matters.
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