Brazilian Federal Judge Vinicius Costa Vidor found Joel Ferreira de Souza, the alleged mastermind of the scheme, guilty of operating an unlicensed financial institution and laundering millions through shell companies and unregulated crypto wallets. According to local media sources, de Souza was accused of laundering millions of dollars.

How Long Are the Sentences?

De Souza received the highest sentence: 128 years in prison. Two other defendants, Gesana Rayane Silva and Victor Veronez, were sentenced to 27 and 15 years in prison, respectively, for managing cash and facilitating transactions in the scheme.

This ruling follows accusations by Brazil’s Federal Prosecutor’s Office (MPF) that five individuals orchestrated a pyramid scheme, raising R$1.11 billion (about $190 million) from approximately 20,000 investors.

Braiscompany promised high returns through crypto trading but allegedly ran a parallel financial system using informal transfers and high-commission operations.

The court also ordered the seizure of R$36 million (around $6.5 million). However, it remains unclear how much the victims will recover. Many of the affected victims’ lawyer, Artêmio Picanço, stated that they need to file civil claims soon before the funds are absorbed by the state.

Two defendants were acquitted due to lack of evidence. The court ruled that the remaining defendants “acted to disguise the illicit origin” of the money, running operations that mimicked legitimate investment practices but actually served to enrich insiders.

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U.S. regulators have charged Brent Kovar, a Las Vegas resident, with defrauding over 400 investors through an AI-powered cryptocurrency mining scheme. Kovar is alleged to have run a Ponzi scheme worth $24 million, offering investors high returns and a 100% money-back guarantee.

Lured Investors with False Promises

According to a statement from the U.S. District Attorney for the Nevada region, Kovar made misleading statements about his investment firm and convinced some investors that their investments were insured by the FDIC.

From late 2017 to July 2021, Kovar allegedly promised investors fixed returns between 15% and 30% annually and assured them that their investments were fully secured. However, evidence suggests that Kovar used the funds to finance his lavish lifestyle, buy gifts for employees, and pay off earlier investors in the Ponzi scheme.

Luxury Living Under the Guise of Crypto Investments

Prosecutors noted that Kovar used a website, YouTube videos, and PowerPoint presentations to persuade investors. Kovar faces charges of 12 counts of wire fraud, 3 counts of mail fraud, and 3 counts of money laundering. If convicted, he could face up to 330 years in prison and fines up to $4.5 million.

FBI’s Crackdown on Crypto Fraud

In recent years, there has been a significant rise in crypto-linked Ponzi schemes. The FBI’s “Operation Level Up” is credited with preventing approximately $285 million in potential losses from the beginning of 2024 to early 2025.

For example, in January 2025, Antonia Perez Hernandez, who promoted the Forcount crypto Ponzi scheme, pled guilty to fraud charges and was sentenced to over two years in prison. In October 2024, a former lawyer in California confessed to running a multi-million-dollar crypto Ponzi scheme and was sentenced to five years of supervised release along with a $14 million restitution fine.

The increase in crypto-related fraud cases has led regulators and law enforcement agencies to impose stricter oversight on the sector. Brent Kovar’s case is one of the latest significant interventions in this area.

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The U.S. Commodity Futures Trading Commission (CFTC) has accused a pastor of promoting a $6 million crypto Ponzi scheme to 1,500 people, including those who attended his church in Washington state.

On December 10, the CFTC announced that it had filed a complaint against Francier Obando Pinillo for fraud and misappropriation, as part of what it described as a multi-level marketing scheme.

In a complaint filed on December 9 with a federal court in Spokane, the CFTC alleged that Pinillo, a pastor at a Spanish church in Pasco, Washington, operated a trading platform through which he claimed to reward users with “high-performance” crypto trading, targeting his congregation and others via social media.

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The regulator stated that between November 1, 2021, and December 31, 2023, Pinillo claimed to be the CEO of Solanofi, Solano Partners Ltd., and Solano Capital Investments. Pinillo allegedly stated that these companies had developed a “Solano ecosystem” in which they traded Bitcoin, Ether, Tether, and other cryptocurrencies on behalf of clients.

The CFTC also claimed that Pinillo promised customers up to 34.9% monthly profits through Solanofi and that the platform used bots and other software for crypto trading.

According to the complaint, a service known as Solanofi 2.0 offered staking services for Bitcoin, Ether, Solana, USDT, and Dogecoin, promising “guaranteed profits” to customers. The CFTC’s allegations also included claims that users were shown fake account statements on an online dashboard and offered a 15% referral fee to encourage others to join.

The CFTC’s complaint stated, “These representations and account statements were false.”

“There was no automated computer trading program, there were no customer accounts, there was no trading taking place or profits generated, and the defendant was misappropriating all digital and fiat assets customers transferred,” it added.

The CFTC alleged that “unsophisticated customers,” with little to no experience in digital asset transactions, commodity trading, or staking digital assets, were targeted.

The regulator noted, “The defendant’s solicitations were almost exclusively in Spanish, which permitted him to abuse his position of trust as a pastor.”

The CFTC is seeking restitution for defrauded customers, forfeiture of all funds generated through the scheme, a trading ban, and a permanent injunction. Information on Pinillo’s lawyers was not immediately available.

Pinillo did not respond to a request for comment sent via social media.

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Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois said in a ruling released on Monday but publicized by the CFTC on Wednesday that Sam Ikkurty of Oregon and his company Jafia, LLC made “material misrepresentations.” According to the CFTC, Ikkurty’s company neglected registration and committed fraud.

Judge Rules on Crypto Commodities: OHM and Klima

Judge Rowland notably also declared that cryptocurrencies OHM and Klima were commodities in the hierarchy.

“The order finds not only Bitcoin and Ethereum commodities within the CFTC’s jurisdiction, but also ‘OHM and Klima, two non-Bitcoin virtual currencies… qualify as commodities, noting those virtual currencies fall in the same general class as Bitcoin, on which there is regulated futures trading,” the CFTC said in a statement.

Comparatively to bitcoin, ether, or dogecoin, OHM and Klima are lesser cryptocurrencies. Still up for contention, though, is whether certain assets—within the jurisdiction of the U.S. Securities and Exchange Commission—are securities or commodities, which would then come under the CFTC. While SEC Chair Gary Gensler has indicated most cryptocurrencies are securities and has been less clear on ether’s categorization, CFTC Chair Rostin Behnam has stated ether, for example, is a commodity.

Beyond proving the CFTC’s authority over the matter, Judge Rowland’s decision to classify OHM and Klima as commodities may not have much weight at all.

James Brady, a Katten Muchin Rosenman LLP partner, remarked in an interview, “I don’t think it’s a big deal… I believe it was more in reaction to the defendant attempting to simply assert that the CFTC lacks jurisdiction.”

Brady said the SEC might still classify both as securities later on.

Charges brought by the CFTC in 2022 against Ikkurty and Ravishankar Avadhanam over claims of fraud and failing to register with the agency cover The order states that Avadhanam’s lawsuit was dropped in 2023 per an arrangement with the CFTC.

Using a website and YouTube videos to then hold and trade digital assets, derivatives, swaps, and futures contracts, the CFTC alleged the two engaged in a “Ponzi”-like scheme in soliciting nearly $44 million from at least 170 investors.

Designed for consumers, Jafia LLC created a crypto savings note claiming 18% annual interest. According to the order, Ikkurty instead put those note funds into cryptocurrencies like OHM and Klima; at one point, he allegedly utilized monies supposedly acquired for an investment to pay out early scheme participants in what the court refers to as “a classic Ponzi move.”

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Dalpour was arrested yesterday morning and is scheduled to appear in Manhattan federal court before U.S. Magistrate Judge Barbara Moses later in the day.

“Idin Dalpour told investors that they could reap huge returns by investing through him in a purported Las Vegas hospitality business and a crypto trading operation,” said Damian Williams, U.S. Attorney for the SDNY.

“As alleged, Dalpour’s promises were a mirage, and he was running a classic Ponzi scheme by paying investors purported returns with other investors’ money,” he continued, adding: “Instead of using investors’ funds as promised, Dalpour spent lavishly on himself, which included racking up gambling losses of approximately $1.7 million and paying for his children’s private school tuition. Now, Dalpour’s gamble has him facing federal criminal charges for his alleged crimes.”

Dalpour is alleged to have run a Ponzi scheme from roughly 2022 through April of this year, targeting investors located in the U.S. and overseas. Instead of using investors funds as claimed — to support a Las Vegas hospitality enterprise and a crypto trading business — he allegedly misappropriated funds and paid out early investors with contributions from later investors.

In approximately November of last year, Dalpour reportedly stated — when confronted by a group of their Ponzi scheme’s apparent victims — that “what you already have, you have, you can put me in jail now. Like right now.”

Dalpour faces a maximum sentence of 20 years in prison on one count of wire fraud.

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The report stated, “Despite the investor’s exposure to DeFi being generally small, there are serious risks to investor protection due to the highly speculative nature of many DeFi regulations, significant operational and security exposures, and the absence of a clearly defined responsible party”.

An independent EU official cautioned that DeFi operates without trustworthy intermediaries and this could “otherwise reduce risks related to financial stability and investor protection”.

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Risks of DeFi

The report warned against the “rule is law” principle which it claimed prevailed in current DeFi governance.

The regulator stated, “Smart contracts continue to be an unregulated phenomenon, exemplified by the accepted principle’s concept of ‘code is law’”. It added that adherence to this principle creates a tendency to accept results of smart contracts “regardless of any moral or legal matters”.

The study concedes that DeFi’s automatic, immutable functions pose less risk. However, it highlighted that the developer’s pseudonym could facilitate the proliferation of illegal smart contracts.

The article added, “The pseudonyms of developers implementing smart contracts and their lack of accountability, support the rise of ‘illegal’ smart contracts like Ponzi schemes”.

The regulator said that the flexibility of smart contracts could lead to system failures.

It added in the article, “The flexibility feature of smart contracts, which allows DeFi protocols to be built on top of each other and provide various services for users, also leads to contagion risks by creating dependencies between the protocols”.

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