US Seizes $6.5 Million in Bitcoin and Tether from ‘Banana Fund’ Ponzi Scheme

The US Department of Justice has seized crypto funds totaling approximately $6.5 million from administrators of a Ponzi scheme known as the “Banana Fund.”

The DOJ filed a complaint over the seizure of the funds last Wednesday.

The Banana Fund administrator is an unnamed foreign national, according to the complaint. A US Secret Service (USSS) investigation found that administrators pooled investments for the Banana Fund but allegedly used investors’ funds for private trading in cryptocurrencies, eventually using their profits to buy homes. Accounts associated with the Banana Fund are registered to a residential address in Toledo, Spain.

Although the administrator once announced that the investment has reached 557 bitcoin and 1.73 million tether. USSS investigators have recovered 482 bitcoins and 1,721,868 tether.

“As a result, the USSS executed a seizure warrant for the funds and initiated this action to begin returning these funds to the administrator victims,”

the DOJ said in a statement.

Administrators initially touted the Banana Fund as a crowdfunding platform using bitcoin to finance the project, opening for investment in 2016. However, the DOJ alleges that the token market promised in the Banana Fund white paper never materialized. Bitcoin invested in the fund is “frequently” laundered to four different locations, according to the complaint.

In 2018, the Banana Fund website redirected to a Google docs page associated with an administrator indicating the fund had failed and directing investors to enter their information to receive a refund. During this time, the DOJ alleged that exchange records showed administrators were still actively buying and selling with the funds and claimed they only had $1,730,000 available for refund when their account balance showed around $11,000,000.

The DOJ argues that administrators are subject to foreclosure, meaning the US government will retain the seized funds. Because they “knowingly” commit fraud via wire communication in violation of US law

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