US Prosecutors File a Forfeiture Lawsuit Against the Banana.Fund’s $6.5M Crypto Ponzi Scheme
U.S. prosecutors have filed a lawsuit seeking the forfeiture of crypto funds under the management of Banana.Fund, an alleged crypto Ponzi which operated at the height of the crypto market boom in 2017. The prosecutors claim that Banana.Fund scammed unsuspecting prospects close to $6.5 million, masquerading as a crowdfunding project in blockchain and crypto niche.
Coindesk which first reported this development highlighted that Banana.Fund admin had in fact agreed to reimburse up to $1.7 million but did not see through to his word. Notably, the unnamed administrator had already admitted to the project failing hence the decision to return clients’ funds.
Documents have now revealed the personality to be a British man by the name of Richard Matthew John O’Neill alias ‘Jo Cook’. His announcement on the Banana.Fund project termination came back in 2018, barely a year after pivoting on blockchain to create a level playground in crowdfunding. O’Neill, however, noted that he could reimburse investors up to 3 times their funds at the time,
“We’ve failed up!” claiming to have $1,730,000 in USDT that could be used as reimbursement, “Pure dumb luck” he noted in a statement shared with Coindesk.
It was not long before these sentiments that the U.S. Secret Service seized 482 Bitcoins and 1,721,868 Ether from the admin account which held Banana.Fund crypto assets. The alleged Ponzi had managed to scam a total of 417 investors with one of them losing a whopping 82 Bitcoins in the process.
The Banana.Fund ‘Click Bait’
To gather such an amount of funding, the Banana.Fund brains, led by O’Neill, had to come up with a pretty convincing story. It is not surprising that the blockchain and crypto niche came as an option, especially at the onset of the 2017 bull-run. O’Neill’s initial pivot was based on using blockchain tech for its fundamental value proposition according to information shared with Cointelegraph at the time,
“use blockchain for what it is good for: implementing transparent and irreversible global transactions … creating a level playing field for all users to pursue their business ideas, free of charge.”
Given the nature of unsuspecting investors, Banana.Fund went on to raise 481 Bitcoins which is roughly $5.5 million as of press time. Prospects were buying in from 0.02BTC upwards which meant that their share in Banana.Fund was determined by the amount deposited with the ‘Ponzi’.
Prosecutors have now leveled that these proceeds were not used for crowdfunding as stated at the beginning of the project. Instead, the unnamed ‘person 1’ engaged in Bitcoin laundering and executed around 40,000 trades within a year, generating $540,000 in profits. The go on to state that ‘person 1’ had $11 million worth of crypto assets in their account at some point and could therefore reimburse investors for missed opportunities.
According to the prosecutors, only a handful of investors have since been compensated. The forfeiture lawsuit might change this situation should the federal government gain control of the crypto assets under Banana.Fund.