Cryptocurrencies

John Barksdale Charged with Cryptocurrency Securities Fraud in Ormeus Coin Sale | USAO-SDNY

John Barksdale Charged with Cryptocurrency Securities Fraud in Ormeus Coin Sale |  USAO-SDNY

Damian Williams, United States Attorney for the Southern District of New York, and Ricky Patel, Acting Special Agent in Charge of the New York Office of Homeland Security Investigations (“HSI”), announced today that JOHN ALBERT LOAR BARKSDALE had been arrested abroad. on charges of conspiracy, securities fraud and wire fraud. The charges stem from a scheme perpetrated by BARKSDALE to sell a cryptocurrency token called Ormeus Coin (asset symbol “ORME”) through misrepresentations regarding the size, value and alleged profitability of mining assets of Ormeus Coin cryptocurrency. In particular, through a series of marketing materials designed to sell Ormeus Coin, BARKSDALE and others falsely represented, among other things, that Ormeus Coin was secured by a $250 million cryptocurrency mining operation, which would have been one of the largest operations of its kind in the world and that its mining revenues exceeded $5 million per month.

US Attorney Damian Williams said: “As alleged, John Barksdale perpetrated a scheme to sell the Ormeus Coin cryptocurrency to investors around the world through a web of lies, which he disseminated through the through in-person roadshows, social media, and even a jumbotron in The Times. Square. Among other allegedly false statements he made, Barksdale lied by saying that Ormeus Coin was secured by a $250 million cryptocurrency mining operation that had revenues in excess of $5 million per month, when in fact Ormeus’ mining operations have never approached such value or had such revenue. Together with our law enforcement partners here and abroad, we will work tirelessly to prosecute those who commit fraud against the public in the sale of cryptocurrencies.

HSI New York Acting Special Agent in Charge, Ricky J. Patel: “As alleged, Barksdale acted like a walking salesman and peddled lies, exaggerations and misrepresentations regarding a cryptocurrency called Ormeus Coin, which deceived thousands of investors around the world and has taken in over $70 million. The men and women of HSI will not allow fraudsters to sell inflated and unrealistic income dreams to innocent investors in an attempt to line their pockets. Leveraging federal and international partnerships, Barksdale now faces prosecution in the Southern District of New York for his alleged criminal acts.

According to the indictment unsealed in Manhattan federal court:[1]

From or around 2017 until at least October 2021 or around this date, BARKSDALE and its parent (“CC-1”) perpetrated a scheme to sell Ormeus Coin, an ERC-20 compliant smart contract based token on the Ethereum blockchain, through false representations. Ormeus Coin was offered to investors around the world, including the United States and the Southern District of New York, through listing packages sold by Ormeus Global, a multilevel marketing company controlled by BARKSDALE and CC-1, various digital currency exchanges, and directly from BARKSDALE and its associates.

Through a series of white papers, in-person roadshows, online webinars and videos, social media platforms, and other marketing materials endorsed by BARKSDALE and CC-1, BARKSDALE and CC-1 have misrepresented, among others, that Ormeus Coin was a digital currency system secured by a $250 million cryptocurrency mining operation, which would have been one of the largest such operations in the world. In order to counter misrepresentations regarding the size and value of cryptocurrency mining assets that allegedly secured the value of Ormeus Coin, BARKSDALE, among other things: (i) endorsed marketing materials that falsely depicted photos of a alleged Ormeus Coin mining facility; (ii) misleadingly referred to an “Ormeus Reserve Vault” (“ORV”) that stored over 3,000 Bitcoin allegedly derived from Ormeus Coin’s mining operations, which were presented as securing the value of Ormeus Coin; and (iii) falsely stated that Ormeus Coin’s mining revenue exceeded $5 million per month. For example, on or about February 9, 2018, Ormeus Coin ran an advertisement on a jumbotron in Times Square in Manhattan, New York, which proclaimed, in a caption above a giant ORME symbol, “$250 Million Cryptocurrency Mining Farm Revealed in Legal Audit by Ormeus Coin. On or around February 12, 2018, a photograph of the Times Square advertisement was posted on Ormeus Global’s Twitter account with the caption “Live from New York, Ormeus Coin Advertising its 250 million cryptocurrency mining farm dollars in Times Square, Manhattan!” In truth, Ormeus’ mining operations have never approached a value close to $250 million and have never produced revenue exceeding $1 million in a month, and the Bitcoin stored in the “Ormeus Reserve Vault” belonged to a third party.

Many investors have purchased listing packages through Ormeus Global and bought Ormeus Coin through digital currency exchanges or directly from BARKSDALE and its associates. The investors made these purchases based at least in part on BARKSDALE’s misrepresentations regarding the size, value, and purported profitability of the cryptocurrency mining assets controlled by Ormeus Global and Ormeus Coin, as well as the purported security that the ‘ORV provided the value of Ormeus. Piece of money. Through this program, from or around June 2017 to at least or around April 2018, Ormeus Global has raised at least approximately $70 million through the sale of listing packages to over 8,000 investors in the world. From or around June 2017 to at least October 2021 or around this date, Ormeus Coin was sold to at least around 12,000 investors, including at least 200 US-based investors. At its peak, Ormeus Coin had a market capitalization of around $52 million in or around January 2018.

* * *

BARKSDALE, 40, is charged with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud and one count of charge of wire fraud. Conspiracy to commit securities fraud is punishable by up to five years in prison. All other counts each carry a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of defendants will be determined by the judge.

Anyone who believes they have been a victim of the alleged crimes committed in connection with Ormeus Global or Ormeus Coin may contact HSI at https://www.ice.gov/webform/ice-tip-form or [email protected]

Mr. Williams praised the outstanding investigative work of HSI and USPIS, and thanked the United States Securities and Exchange Commission, which today filed a parallel civil action, for its assistance. Mr. Williams also thanked the Office of International Affairs of the Criminal Division of the United States Department of Justice, the United States Department of State and the United States Marshals Service, all of which provided significant assistance in this investigation.

This matter is being handled by the Bureau’s Complex Fraud and Cybercrime Unit. Assistant U.S. Attorneys Sarah Lai, Sagar Ravi and Olga I. Zverovich are charged with the prosecution.

The counts in the indictment are charges only and the accused is presumed innocent until proven guilty.


[1] As the introductory sentence indicates, the entire text of the Indictment and the description of the Indictment set forth therein are allegations only, and each fact described is to be treated as an allegation. .