A crypto trader who referred to himself as 'Coin Signals' was slapped with a 42 month prison sentence for defrauding 170 people

• Jeremy Spence, a crypto trader called "Coin Signals," has been sentenced to 42 months in prison.
• Spence was convicted of defrauding 170 people of more than $5 million.

A 25-year-old Rhode Island cryptocurrency trader known by the nickname "Coin Signals" has been sentenced to 42 months in prison for defrauding 170 people of more than $5 million.

Jeremy Spence was hit with the prison term this week for a crypto scam that he ran from November 2017 to April 2019. According to a Justice Department press release, Spence managed various crypto investment pools, then solicited money from eager investors, claiming that his trades were far more profitable than they were.

The three funds — the Coin Signals Bitmex Fund, the Coin Signals Alternative Fund, and the Coin Signals Long Term Fund, were all created and operated by Spence. Investors would then transfer crypto coins like bitcoin and ethereum to Spence to make investments.

The catch, however, was that Spence falsely claimed that the trades were generating high returns, leading interested investors to transfer additional funds, per a court filing. The filing accused Spence of soliciting cryptocurrency worth more than $5.37 million at the time from more than 170 individual investors.

To cover up net losses from these investors, Spence tried to deceive them with fictitious account balances to keep raising money. Spence also used the new funds obtained from fresh crops of investors to cover up losses and pay out cash to old investors to keep the ruse going.

The DOJ further added that Spence, rather than accurately reporting his losses, continued to falsify account balances for investors, making them think that they were continuously making money when they weren't.

Spence pleaded guilty to the crypto scam last November.

Spence will have three years of supervised release and will have to pay restitution of $2,847,743 after his release.

Spence's sentencing is the latest in a series of high-profile crypto crimes that have come to light. This February, rapper Heather Morgan and her husband Ilya Lichtenstein were accused of laundering $4.5 billion in stolen bitcoin. The duo was arrested on February 8 at their apartment in New York City on charges related to the 2016 hack of the cryptocurrency exchange Bitfinex.