A United States court has sentenced a 33-year-old San Francisco man for pulling off a multi-million dollar cryptocurrency fraud during the hype of initial coin offerings (ICOs) in 2018.

Tuesday’s sentencing came after Jerry Ji Guo pled guilty to one count of wire fraud in August 2019. He was sentenced to six months in prison, along with a restitution penalty of $4.39 million.

His sentencing includes an additional three year period of supervision following his release from jail.

Taking Advantage of the ICO Craze

Guo approached crypto startups as an ICO consultant, offering marketing and publicity services. He then embezzled the clients’ cash and cryptocurrencies, the current value of which is estimated to be over $20 million.

He was arrested and indicted in 2018. Initially, he was charged with eight counts of wire fraud. However, seven counts were dismissed after his guilty plea to one. 

In late 2019, the US government obtained a preliminary order to forfeit Guo’s client funds and further obtained warrants to seize the stolen cash and cryptocurrency. Guo is now cooperating with the government in the identification of the victims and returning the stolen funds through the forfeiture process.

“Some criminals believe mistakenly that cryptocurrency is beyond the reach of law enforcement,” said US Attorney David Anderson said in a statement. “This case shows we can use criminal forfeiture to compensate fraud victims even when cryptocurrency is used in the fraud.”

The US authorities have become very vigilant towards the growing cryptocurrency scams. Finance Magnates recently reported on the arrest of a cryptocurrency trader for his involvement in a Ponzi scheme.

“The FBI is tasked with pursuing crimes and the various means and methods that criminals use to commit those crimes,” FBI San Francisco Special Agent in Charge, Craig Fair said. “In the financial sector, cryptocurrency has emerged as a significant threat as it affords criminals with a space to conduct activity that is particularly difficult to trace and detect.”