Crypto Ponzi Mastermind Convicted

The update

A federal jury has convicted Brent Kovar, a Las Vegas businessman, of running a cryptocurrency Ponzi scheme that defrauded at least 400 investors out of $24 million. Kovar operated through his company Profit Connect, which claimed to use artificial intelligence software on a supercomputer to mine cryptocurrency and verify transactions. He promised investors fixed returns of 15% to 30% annually, a full money-back guarantee, and falsely claimed the company was backed by hundreds of millions in crypto reserves. Kovar also misrepresented that investor funds were insured by the FDIC. The SEC shut down Profit Connect in 2021. Kovar was convicted on 11 counts of wire fraud, two of mail fraud, and two of money laundering. He faces a maximum sentence of 280 years and is scheduled for sentencing on November 30.

Why it matters

This case highlights how scammers exploit technological buzzwords like ‘AI’ and ‘supercomputer’ to create sophisticated Ponzi schemes that prey on investor enthusiasm for emerging technologies. The conviction sends a message about the consequences of such fraud in the cryptocurrency space and may influence how regulators approach similar schemes that combine multiple technological buzzwords.

What to watch

Watch for the sentencing outcome on November 30, which will determine the actual prison term Kovar receives. Also monitor whether this case leads to increased scrutiny on AI-powered crypto investment platforms and whether regulators implement additional safeguards to prevent similar schemes. The potential for investor recovery remains unclear.

Sources

• coindesk.com — conviction details and sentencing information
• decrypt.co — scheme details and investor information