Austria’s largest fraud trial sees five sentenced in connection to $21.6m crypto scam

An Austrian court has sentenced five people linked to the EXW-Token scam to prison in one of the largest cryptocurrency fraud cases in the country’s history.

The sentence came after a year-long trial and 60 days of hearings in which several individuals were found guilty of orchestrating a fraud scheme involving the EXW crypto token and EXW Wallet, according to a local media report.

The defendant allegedly promised victims high returns on investments in non-existent fake tokens and also promoted other ventures under the EXW brand, including a real estate business and a car rental service.

Meanwhile, the EXW wallet launched in 2019 was an elaborate MLM crypto Ponzi scheme that managed to dupe at least 40,000 investors out of 20 million euros (about $21.6 million). The plan promised returns of 0.1% to 0.32% per day.

The scam eventually collapsed in 2020 but was allegedly restarted and rebranded as Exchange World.

Funds obtained from bad actors were used to support an extravagant lifestyle that the report described as “straight out of a Hollywood movie.”

The defendants drove luxury cars, private jets and attended lavish parties at luxury clubs in Dubai and even decorated their homes with ostentatious items, including a villa with a shark tank and shoeboxes full of cash.

The operation was headquartered in Dubai and the defendant allegedly transported some of the stolen money to Austria.

The Klagenfurt Regional Court sentenced two of the defendants to five years in prison for their role in the plan, while the other two defendants were sentenced to 30 months in prison; 21 months of which were postponed for a three-year trial period. Another defendant was given a suspended prison sentence of 18 months.

The defendants claimed they intended to pursue legitimate investment projects, but things got out of control. However, the court rejected this request, stating that the fraud was planned from the beginning and without any real profit motive.

EXW wallet co-founders Benjamin Herzog and Pirmin Troger previously pleaded guilty to fraud in September 2023 and were each sentenced to five years in prison. Meanwhile, the third co-founder, Manuel Batista, is still in hiding.

Crypto scams are on the rise

Cases of investment fraud using cryptocurrencies have become quite common; Scammers are taking advantage of the allure of high returns and the sophistication of blockchain technology to deceive investors. Such schemes often involve fake projects, Ponzi-like structures, or misleading token offerings.

Regulatory authorities around the world are increasingly intervening in such fraudulent activities to protect investors and maintain confidence in the cryptocurrency market.

On October 22, a fraud case was launched in France targeting 20 people who were allegedly involved in a crypto scam that cheated investors out of $30 million in the name of crypto investments. Just a few days ago, an Indian citizen was sentenced to five years in prison for stealing more than $20 million from investors by impersonating crypto exchange Coinbase.

In a separate case, the U.S. District Court ordered the organizer of the Forcount Ponzi scheme to pay over $3.6 million in damages and be sentenced to 240 months in prison.

Despite the severity of these penalties, fraudsters show no signs of slowing down. According to an FBI report, fraud and fraud involving cryptocurrencies and digital assets led to over $5.6 billion in losses in 2023 alone; This represents an increase of 45% compared to the previous year.

Ireland’s national police force reported in August that more than 45 percent of investment fraud cases in the country centered around cryptocurrencies.