The head of a bitcoin escrow service has been indicted for fraud over allegations that he stole $7 million from two customers for bitcoin purchases that never happened.

Jon Barry Thomas, the owner of two firms, Volantis Escrow Platform LLC and Volantis Market Making LCC, is alleged to have stolen the money while making false promises to purchase bitcoin on behalf of the victim companies.

Thomas is said to have offered a service that was claimed to act as a custodian of assets for “both sides of the transaction” with there being “no risk of default.” While doing so, he managed to persuade one company to send him $3 million for the purchase of bitcoin between June and July 2018 while the second company sent him $4 million in July 2018 also for purchasing bitcoin.

In both cases, Thomas is claimed to have lied about the status of the transaction, the location of the bitcoin and the client money, which was never returned. The indictment does not name the companies, but a report from Forbes in January noted that one of the companies targeted by Thomas was Symphony, an Irish investment firm.

Thomas is facing issues on multiple fronts. He has been indicted on two charges of commodities fraud and two charges of wire fraud. The U.S. Commodity Futures Trading Commission has also filed civil charges as well.

“Fraudulent schemes, like that alleged in this case, undermine the integrity of new and innovative markets and cheat innocent people out of their hard-earned money,” CFTC Director of Enforcement James McDonald said in a statement.

“Rooting out misconduct involving crypto assets is essential to furthering the responsible development of this nascent space,” McDonald added. “The CFTC will continue to work to hold fraudsters accountable, and where appropriate, operate in parallel with our criminal law enforcement colleagues.”

Thomas faces a possible long sentence. Each commodities fraud charge comes with a maximum penalty of 10 years in prison while the wire fraud charges carry 20 years each. The CTFC, through its civil case, is also seeking restitution, disgorgement, civil monetary penalties, permanent trading and registration bans along with a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.

Photo: WP Paarz/Flickr