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In a major crypto fraud case, Vincent Anthony Mazzotta Jr., a 36-year-old man from Arizona, has pleaded guilty to running a complex $13 million Ponzi scheme that misled investors through the use of fraudulent AI trading bots and a fake crypto recovery agency.
The plea, entered in a California federal court, marks the culmination of a years-long investigation into a multi-layered scam that operated between 2017 and 2023. Crypto Ponzi scheme operations are becoming increasingly sophisticated, luring investors with false promises of high returns.
Mazzotta, operating under aliases such as 'Director Vinchenzo' and 'Vincent Midnight,' ran shell companies like Mind Capital and Cloud9Capital. He, along with co-defendant David Gilbert Saffron, an Australian national, promised investors massive returns via non-existent artificial intelligence-powered trading bots.
Authorities uncovered a major Crypto Ponzi scheme involving AI bots and fabricated recovery services. The platforms claimed to automate crypto trading using advanced algorithms, luring victims with the promise of consistent and outsized gains.
However, instead of investing the funds, the conspirators diverted the money toward a lavish lifestyle, spending on private jet rentals, luxury homes in the Hollywood Hills, security services, and high-end vacations.
What makes this case particularly disturbing is the double scam orchestrated by Mazzotta and Saffron. After defrauding victims through fake investments, they created a bogus entity called the Federal Crypto Reserve, posing as a legitimate government agency designed to help victims recover lost crypto.
Victims were charged additional fees for supposed investigations into their cases, essentially paying the same fraudsters a second time under the illusion of getting their funds back. Experts call this secondary victimization, exploiting the emotional vulnerability and desperation of already scammed individuals.
The so-called AI Trading Bot Scam used manipulated performance data to mislead unsuspecting investors. Karan Pujara, founder of ScamBuzzer, noted, “The hope of recovering losses often blinds victims, making them susceptible to follow-up scams that play on guilt and urgency.”
Also Read: $190M Crypto Heist: Brazilian Ponzi Scheme Masterminds Get 171 Years Behind Bars
The Vincent Mazzotta fraud allegations include masterminding a network of fake services targeting the crypto community. Mazzotta has pleaded guilty to one count of money laundering and one count of conspiracy to obstruct justice. He is set to be sentenced on December 15, 2025, and could face a sentence of 15 years in prison.
A Fake Crypto Recovery Agency promised to help scam victims but instead charged fees without results. The Department of Justice highlighted the case as part of a growing trend of sophisticated crypto frauds, emphasizing the international scope and evolving tactics used by perpetrators.
The growing number of Cryptocurrency investment fraud cases highlights the need for better regulation and investor education. This situation highlights the importance of better investor education and regulation in the rapidly evolving digital asset space.
As the space and crypto scams become more layered and manipulative, experts are asking investors to stay alert. Invest only when you have researched the company or people offering you the 'AI-powered returns' or 'recovery' services to return your lost funds.
