DOJ Alleges Fraudulent Use of Blockchain Tech in Multi-Million Dollar Scam
Federal prosecutors have charged the founder of Amalgam, a supposed blockchain-based fintech firm, with stealing over $1 million from investors through a fraudulent cryptocurrency project. According to the U.S. Department of Justice (DOJ), the accused allegedly used a “sham blockchain platform” to mislead backers and siphon funds for personal use.
“This case highlights how bad actors are misusing blockchain buzzwords to perpetrate age-old financial crimes,” said a DOJ spokesperson.
How the Alleged Crypto Scam Worked
The suspect, whose identity has been confirmed as Jacob King, founder and CEO of Amalgam Technologies, promised investors a revolutionary blockchain infrastructure platform capable of transforming digital finance. The company marketed itself as a “next-gen DeFi protocol” and claimed to offer high returns through exclusive token offerings and decentralized applications.
However, prosecutors allege that the blockchain technology either didn’t exist or was grossly misrepresented. Instead of building the advertised platform, King allegedly diverted the funds to cover personal expenses, including luxury travel, cars, and real estate.
“The blockchain platform was merely a front to give the illusion of innovation and credibility,” the court documents state.
Investor Losses and Legal Ramifications
Over a dozen investors are believed to have been affected, with collective losses exceeding $1 million, as outlined in the indictment filed in New York federal court. The charges include:
- Wire fraud
- Securities fraud
- Money laundering
If convicted, King faces up to 20 years in prison for each of the major charges.
Regulatory Crackdown on Crypto Fraud Intensifies
This case is part of a larger effort by U.S. regulators and law enforcement to crack down on crypto-related fraud. The Securities and Exchange Commission (SEC) has also launched a parallel investigation into Amalgam’s unregistered token sales and misleading promotional tactics.
“There is no excuse for using emerging technology to exploit unsuspecting investors,” said SEC Enforcement Director Gurbir Grewal.
The case follows a string of high-profile crypto fraud charges in 2024 and 2025, suggesting that U.S. authorities are stepping up scrutiny of blockchain startups and token launches.
Cautionary Tale for the Crypto Industry
The Amalgam case serves as a warning to both investors and blockchain startups. For investors, it’s a reminder to do thorough due diligence and beware of projects that overpromise and underdeliver. For legitimate startups, it underscores the importance of transparency, regulatory compliance, and clear communication with stakeholders.
Conclusion
The Amalgam founder’s arrest sends a strong message: blockchain can no longer be used as a smokescreen for fraud. As regulatory oversight tightens, only those crypto projects with real utility, transparency, and integrity will survive in this evolving financial landscape.