The rapidly evolving crypto industry has attracted investors into the space like bees to honey. However, the exponential growth of the industry over the years that has made this decentralized has also attracted a fair share of fraudulent actors. One particularly concerning issue that has come to the forefront is the alarming rise in cases of contract-free decentralized autonomous organization (DAO) venture capital (VC) investments. Not too long ago, Cryptopolitan brought to light one such case of R-930 Capital and its CEO, Richard Asamoah Boateng “https://www.cryptopolitan.com/decrypting-the-dark-side-of-crypto-syndicate-investments/”.
More than a hundred who claimed to be victims shared their ordeal dealing with R-930 Capital, describing a pattern of investments being redirected for personal gain rather than equitable distribution among the investors. The said redirection involved multiple layers of activities such as selling tokens, terminating agreements with the projects to receive refunds, and misappropriating the returned investments without redistributing them to the original customers, according to our sources. Also, despite the persuasions of those victims, R-930 Capital failed to make any response or resort to any of their grievances. Cryptopolitan was approached by those victims anonymously once again stating that the CEO of R-930 Capital, Richard Asamoah Boateng joined the victims again and promised to return their investment funds. But, in exchange, he asked those victims to persuade Cryptopolitan to take down the article published narrating their ordeal.
While the victims were expressing their ray of hope that would arrive upon taking down the article to Cryptopolitan, a contrary fact was brought to light by another source of ours, stating that Richard Asamoah Boateng has been negotiating with other investors to sell the assets (acquired with the investment funds of these victims) at a discounted price.
The Peril of Discounted Assets
Investors who are enthusiastic about buying such assets at a discounted price should become vigilant that purchasing such assets shall have numerous legal implications in the real world. As per any legal system across the globe, assets purchased with illegally obtained funds can become subject to forfeiture, and in some cases, they may be deemed legally invalid. These are some of the many other consequences one may summon upon buying such assets:
Civil Asset Forfeiture: Some legal systems allow for the civil forfeiture of assets that are believed to be the proceeds of illegal activities. This means that even if criminal charges are not brought against the owner of the assets, the government can initiate a legal process to seize and forfeit those assets if they are believed to be connected to criminal activity.
Criminal Proceeds Laws: Many countries have specific laws that target the proceeds of crime. These laws can result in the forfeiture of assets acquired with funds obtained through illegal activities, such as drug trafficking, money laundering, or fraud.
Fines and Penalties: If found guilty of purchasing illegal assets, you may be subject to fines, penalties, and restitution orders, which require you to pay back any gains or profits acquired from illegal assets.
Imprisonment: Depending on the seriousness of the offense and the applicable laws, individuals found guilty of buying illegal assets may face imprisonment. Money laundering, for example, is often associated with significant prison sentences in many jurisdictions.
Civil Liability: Apart from criminal consequences, you could also face civil lawsuits from victims or other parties affected by the illegal activities associated with the assets. These civil lawsuits can result in monetary judgments against you.
It is important to note that the severity of these consequences can vary based on the specific facts of the case, the jurisdictional laws, and the evidence available. Engaging in any transaction involving assets of questionable legality is unwise and can lead to significant legal problems. In addition to legal consequences, involvement in purchasing illegal assets can harm one’s personal and professional reputation. It may have long-lasting effects on one’s ability to conduct business or profession and one’s standing in the community.
“Vigilantibus non dormientibus jura subveniunt”
The literal translation of this Latin phrase is “law will not help those who sleep on their rights”, and this applies to all those investing their funds in contract-free VC investments. Along with investing funds, it is the very duty of the investors to exercise vigilance and carry out transactions through legal contracts. Investors could also resort to audited smart contracts as an alternative to carrying out extensive legal contracts. Smart contracts can be legalized without having to legalize the crypto instruments that it is dependent on.
Cryptocurrency’s Self-Regulation: A Timely Imperative
In the realm of cryptocurrencies, self-regulation refers to the creation of standards, industry associations, and a set of ethical principles that guide businesses operating within the cryptocurrency ecosystem. These standards cover a wide range of aspects, including customer identification (KYC), transparency, and safeguarding against cybersecurity breaches.
“Sam Bankman-Fried: From Crypto Success to Legal Conviction”
The conviction of Sam Bankman-Fried is the top story in the crypto world right now and is described as one of the biggest financial frauds in the history of the USA. The 31-year-old crypto entrepreneur has been sentenced to prison for 110 years after a month-long trial. Bankman-Fried faced seven different charges, and misappropriation and diversions of funds are among them, and it is also one that is similar to our current case of R-930 Capital.
According to the complaint filed by the SEC, Bankman-Fried has successfully secured over $1.8 billion from equity investors, with around $1.1 billion originating from approximately 90 investors based in the United States through FTX, headquartered in The Bahamas. When presenting the investment opportunity to these investors, Bankman-Fried portrayed FTX as a secure and responsible cryptocurrency trading platform. He particularly highlighted FTX’s advanced automated risk management systems designed to safeguard customer assets. However, the lawsuit contends that, in reality, Bankman-Fried was engaged in a fraudulent scheme spanning several years to hide the following from FTX investors:
The undisclosed diversion of funds of FTX customers to Alameda Research LLC, his privately-owned cryptocurrency hedge fund.
The undisclosed preferential treatment granted to Alameda on the FTX platform, including extending a nearly limitless “line of credit” funded by the platform’s customers and exempting Alameda from specific crucial risk mitigation measures.
The concealed risks associated with FTX’s exposure to Alameda’s substantial holdings of overvalued and illiquid assets, including tokens affiliated with FTX.
Furthermore, Bankman-Fried utilized mingled FTX customer funds at Alameda for undisclosed venture investments, extravagant real estate acquisitions, and substantial political contributions.
Conclusion:
In conclusion, this article sheds light on the growing concerns and pitfalls within the crypto industry, where rapid growth has attracted genuine investors and also exposed them to potential fraudulent activities. The case of R-930 Capital and the alarming rise of contract-free decentralized autonomous organization (DAO) investments serve as stark examples of the risks involved. It underscores that investors must exercise vigilance, engage in legal contracts, and consider audited Smart contracts for added security. Moreover, the article emphasizes the potential legal consequences of purchasing assets acquired with illegally obtained funds, including civil asset forfeiture and imprisonment. Finally, the call for self-regulation in the crypto industry and the cautionary tale of Sam Bankman-Fried’s conviction for financial fraud underscores the need for ethical conduct, transparency, and responsible financial practices in this evolving landscape, urging investors to exercise utmost diligence and scrutiny to safeguard their interests.
