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.
This article was released by the United States Attorney’s Office.