U.S. Authorities Bring Parallel Fraud Cases Against Coin Signals Trader

U.S. authorities opened parallel civil and criminal cases against cryptocurrency trader Jeremy Spence on January 26, 2021, putting an online, retail-facing investment operation called Coin Signals at the center of a federal commodities-fraud action.

The Commodity Futures Trading Commission filed a civil complaint in the U.S. District Court for the Southern District of New York. Separately, federal prosecutors unsealed a criminal complaint charging Spence with one count of commodities fraud and one count of wire fraud. The Justice Department said he was arrested in Rhode Island on January 26. Those facts are verified court and agency actions; the underlying conduct described below remained allegations at that point.

Two cases, one alleged scheme

The criminal complaint alleged that from November 2017 through April 2019 Spence solicited cryptocurrency worth more than approximately $5.37 million at the time of transfer from more than 170 individual investors. It said he managed the Coin Signals Bitmex Fund, Alternative Fund and Long Term Fund, and that most participants were retail customers.

Prosecutors alleged that Spence’s trading was consistently unprofitable, while the balances shown to investors indicated gains. They further alleged that he distributed cryptocurrency worth at least approximately $2 million to investors, substantially using assets previously deposited by other investors in what the complaint called a Ponzi-like pattern.

The CFTC’s civil complaint described more than approximately $5 million received from customers represented by approximately 175 user accounts. Those measurements should not be treated as perfectly interchangeable: one record counts individual investors, while the other counts user accounts, and both use approximate dollar values tied to cryptocurrency when it was received.

Returns displayed by a bot

According to the criminal complaint, Coin Signals used Twitter and invitation-only Discord groups to attract participants. Administrators entered the performance percentages supplied by Spence into a bot, which then calculated and displayed purported customer balances.

One allegation captured the gap regulators said they found between presentation and trading records. On January 28, 2018, Spence allegedly claimed in a Discord group that the preceding month had produced a return of more than 148%. The FBI complaint said the relevant trading accounts instead recorded a net loss over approximately the same month. It also alleged that in November 2018 videos and other materials appeared to show roughly 982 to 1,000 BTC across BitMEX accounts, while the combined balance did not exceed approximately 11 BTC at any point that month.

The CFTC complaint added that customers supplied bitcoin, ether and other virtual currencies for strategies that included futures, swaps and margin trading. It alleged false performance statements, overstated assets under management, misappropriation and payments to customers using other customers’ funds.

Why the enforcement mattered

The January 26 actions showed how an online crypto pool could trigger both criminal fraud statutes and the CFTC’s anti-fraud authority. The civil complaint treated bitcoin and ether as commodities in interstate commerce and tied the alleged deception to commodity sales, futures and swaps. The agency sought restitution, disgorgement, civil penalties, permanent trading and registration bans, and an injunction; none of that relief had been awarded on January 26.

The cases also exposed a practical market-structure risk: a polished chat-room community, automated balance display and apparent proof of funds were not substitutes for independently verifiable custody or trading records. That is interpretation drawn from the complaints, not a claim that every social-media trading group operated unlawfully.

What was unresolved on January 26

A complaint initiates a case; it does not establish guilt or civil liability. The criminal filing expressly said it was submitted to establish probable cause and did not contain every fact investigators had learned. The Justice Department likewise instructed that its description be treated as allegations. Any later plea, sentence, restitution order or final civil finding falls outside the event-day record and is not used here.