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Sunday, July 3, 2022

John Barksdale Charged With Cryptocurrency Securities Fraud In Connection With Sale Of Ormeus Coin | USAO-SDNY

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Damian Williams, the United States Attorney for the Southern District of New York, and Ricky Patel, Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today that JOHN ALBERT LOAR BARKSDALE was arrested abroad on conspiracy, securities fraud, and wire fraud charges.  The charges arise from a scheme perpetrated by BARKSDALE to sell a cryptocurrency token called Ormeus Coin (asset symbol “ORME”) through false representations regarding the size, value, and purported profitability of Ormeus Coin’s cryptocurrency mining assets.  In particular, through a series of marketing materials designed to sell Ormeus Coin, BARKSDALE and others falsely represented, among other things, that Ormeus Coin was secured by a $250 million cryptocurrency mining operation, which would have been one of the largest such operations in the world, and that its mining revenues exceeded $5 million on a monthly basis.    


U.S. Attorney Damian Williams said:  “As alleged, John Barksdale perpetrated a scheme to sell the cryptocurrency Ormeus Coin to investors around the world through a web of lies, which he spread through in-person roadshows, social media, and even a jumbotron in Times Square.  Among other allegedly false statements he made, Barksdale lied that Ormeus Coin was secured by a $250 million cryptocurrency mining operation that had revenues exceeding $5 million per month, when in fact Ormeus’s mining operations never approached such a value or had such revenues.  Together with our law enforcement partners here and abroad, we will work tirelessly to prosecute those who commit frauds against the public in connection with the sale of cryptocurrencies.”

Acting HSI New York Special Agent in Charge Ricky J. Patel:  “As alleged, Barksdale operated like a traveling salesman and peddled lies, overstatements, and misrepresentations regarding a cryptocurrency called Ormeus Coin, which resulted in duping thousands of investors throughout the world and took in over $70 million.  The men and women of HSI will not allow fraudsters to sell dreams of inflated and unrealistic revenues to innocent investors with the goal of lining their own pockets.  By leveraging federal and international partnerships, Barksdale is now facing prosecution in the Southern District of New York for his alleged criminal acts.”


According to the Indictment unsealed in Manhattan federal court:[1]

From in or about 2017 through at least in or about October 2021, BARKSDALE and his relative (“CC-1”) perpetrated a scheme to sell Ormeus Coin, an ERC-20 compliant smart contract-based token on the Ethereum blockchain, through false representations.  Ormeus Coin was offered to investors throughout the world, including in the United States and the Southern District of New York, through enrollment packages sold by Ormeus Global, a multi-level marketing company controlled by BARKSDALE and CC-1, various digital currency exchanges, and directly from BARKSDALE and his associates.

Through a series of white papers, in-person roadshows, online webinars and videos, social media platforms, and other marketing materials approved by BARKSDALE and CC-1, BARKSDALE and CC-1 falsely represented, among other things, that Ormeus Coin was a digital money system secured by a $250 million cryptocurrency mining operation, which would have been one of the largest such operations in the world.  In order to backstop the false representations regarding the size and value of cryptocurrency mining assets that purportedly secured the value of Ormeus Coin, BARKSDALE, among other things: (i) approved marketing materials that falsely depicted photos of a purported Ormeus Coin mining facility; (ii) deceptively referenced an “Ormeus Reserve Vault” (“ORV”) that stored over 3,000 Bitcoin purportedly derived from Ormeus Coin’s mining operations, which was represented as securing the value of Ormeus Coin; and (iii) falsely stated that Ormeus Coin’s mining revenues exceeded $5 million on a monthly basis.  For example, on or about February 9, 2018, Ormeus Coin ran an advertisement on a jumbotron in Times Square in Manhattan, New York, which proclaimed, in a caption above a giant ORME symbol, “$250 Million Cryptocurrency Mining Farm Revealed in Legal Audit by Ormeus Coin.”  On or about February 12, 2018, a photograph of the Times Square advertisement was posted to Ormeus Global’s Twitter account with the caption “Live from New York City, Ormeus Coin Advertising its $250 million Cryptocurrency Mining Farm in Times Square, Manhattan!”  In truth, Ormeus’s mining operations never approached a value close to $250 million and never produced revenues exceeding one million dollars in any month, and the Bitcoin stored in the “Ormeus Reserve Vault” belonged to a third party.


Numerous investors purchased enrollment packages through Ormeus Global and purchased Ormeus Coin through digital currency exchanges or directly from BARKSDALE and his associates.  Investors made these purchases based at least in part on BARKSDALE’s false representations regarding the size, value, and purported profitability of the cryptocurrency mining assets controlled by Ormeus Global and Ormeus Coin, as well as the purported security that the ORV provided to the value of Ormeus Coin.  Through this scheme, from in or about June 2017 through at least in or about April 2018, Ormeus Global raised at least approximately $70 million from the sale of enrollment packages to more than 8,000 investors around the world.  From in or about June 2017 through at least in or about October 2021, Ormeus Coin was sold to at least approximately 12,000 investors, including at least 200 U.S.-based investors.  At its peak, Ormeus Coin had a market capitalization of approximately $52 million in or about January 2018.


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BARKSDALE, 40, is charged with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud, and one count of wire fraud.  Conspiracy to commit securities fraud carries a maximum sentence of five years in prison.  All other charges each carry a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Any individuals who believe they may have been the victim of the alleged crimes perpetrated in connection with Ormeus Global or Ormeus Coin can contact HSI at https://www.ice.gov/webform/ice-tip-form or ormeus@ice.dhs.gov.

Mr. Williams praised the outstanding investigative work of HSI and USPIS, and thanked the United States Securities and Exchange Commission, which today filed a parallel civil action, for its assistance.  Mr. Williams also thanked the U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division, the U.S. Department of State, and the U.S. Marshals Service, who all provided significant assistance in this investigation.  

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah Lai, Sagar Ravi, and Olga I. Zverovich are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.


[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.



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