3 February 2021
John DeMarr, 55, was charged with participation in a coordinated cryptocurrency and securities fraud scheme that used purported digital currency platforms and foreign-based financial accounts. DeMarr lured unsuspecting investors with fraudulent promises of large returns of 8000% in the cryptocurrency market. He diverted millions of dollars for his own personal use and never made any investment. His elaborate cryptocurrency scheme, complete with high profile endorsements and incredibly large returns that proved to be a mirage costing investors millions.
He misappropriated $11.4 million of investments made in his companies, “Start Options” and “B2G,” based on false and misleading representations. He offered securities in the form of investment contracts to U.S. and international investors through the Start Options website. Investments were accepted in Bitcoin, U.S. dollars, or Euros. DeMarr and others and used the investment funds for various personal expenditures, including the purchase of a Porsche, jewelry, and renovations to DeMarr’s home in California. Start Options also purported to feature celebrity endorsements of an athlete to promote its securities offerings without the consent of the athlete.
In or about late January 2018, instead of permitting Start Options investors to withdraw money from their accounts after the requisite time period, DeMarr and others required investors to roll over their accounts into an unregistered “initial coin offering,” or ICO, of B2G, the second of the two fraudulent companies in which DeMarr was involved. Among other fraudulent misrepresentations, DeMarr and others falsely told investors that the ICO would raise capital for the company to build an “ecosystem” that would allow users to trade B2G tokens, provide digital wallet staking, and trading. Investors never received any digital tokens and funds from the offering were not used to develop the B2G platform.
At some point in time DeMarr staged his own disappearance to avoid facing disgruntled B2G investors. He instructed his accomplices to tell a story that he went missing in Montenegro while he was hiding in California all along.
Source: Department of Justice, Office of Public Affairs.