Crypto Fraud Watch: A Las Vegas Ponzi Verdict, $388 Million in Crypto ATM Losses, and Seoul Claws Back a Bithumb Windfall

The past two days' crypto news came mostly out of courtrooms and agency filings: a Ponzi conviction in Nevada, a CFTC warning on crypto kiosks, a new sanctions authority aimed at Iran, and a Seoul ruling on who owns coins an exchange sent by mistake.

A Las Vegas Jury Convicts the "AI Supercomputer" Ponzi Operator

Brent Kovar was convicted on August 25 of eleven counts of wire fraud, two of mail fraud and two of money laundering after a nine-day trial in the District of Nevada. Prosecutors said his company, Profit Connect, took about $24 million from at least 400 investors between 2017 and 2021 on the promise of 20% to 30% annual returns, compounded monthly, produced by an AI-driven crypto mining supercomputer. The money went to Ponzi-style payouts and a house for Kovar. Sentencing is November 30, with a statutory maximum of 280 years.

The SEC sued Kovar civilly in 2021, and that case did not end the exposure; a settlement rarely closes the door on an indictment. The tell here was never the crypto. It was the fixed, guaranteed, compounding return.

The CFTC Flags Crypto Kiosks as Losses Reach $388 Million

The CFTC published an advisory this week, "Pause Before You Pay," citing FBI IC3 data: 13,460 complaints tied to cryptocurrency kiosks in 2025 and roughly $388 million in reported losses, up 23% year over year. More than half came from people over 50, who reported losses above $302 million. The pattern is an impersonation call, an invented emergency, then instructions to withdraw cash and feed it into a specific kiosk using a QR code the caller provides.

The kiosk step is what makes recovery hard. Cash-in, crypto-out transactions bypass the banking system's chargeback machinery, so the question becomes whether the operator kept usable records and whether funds can be frozen fast enough to matter.

Treasury Opens Iran's Crypto Sector to Blanket Sanctions

On August 25, OFAC issued a determination letting it sanction any person operating in Iran's cryptocurrency sector, regardless of location. Crypto was one of five sectors named under Operation Economic Outcast, alongside technology, gold, aviation and shipping, paired with nearly 60 designations. One was Ivan Obukhov, a UAE-based vessel broker Treasury alleges processed over $100 million in crypto payments since 2023 for IRGC-Qods Force oil sales.

This does not blacklist every Iranian crypto firm; it creates standing authority for future designations. Sanctions liability is strict, and the burden falls hardest on firms screening against named-entity lists rather than sectoral risk.

A Seoul Court Orders a Bithumb Windfall Returned

On August 27, Judge Kim Yu-seong of the Seoul Central District Court ordered a Bithumb user to return about 194 million won, roughly $145,000, in proceeds from selling bitcoin the exchange credited to him by mistake. It was Bithumb's second win in two days. The February 6 error, a promotional payout entered in bitcoin rather than won, sent roughly 620,000 BTC to about 695 accounts.

Korean courts are treating this as unjust enrichment, the doctrine applied to mistaken bank transfers, and the reasoning travels. Receiving an asset you were never entitled to does not make it yours, and because these users sold, they owe value measured against a much higher bitcoin price today.

How to Protect Yourself

Treat any guaranteed or fixed-percentage crypto return as disqualifying, and confirm registration before money moves. If a caller tells you to withdraw cash and deposit it into a crypto kiosk, hang up and call the institution back on a number you look up yourself. Never scan a payment QR code a stranger supplies. If you are hit, save the transaction ID, receiving wallet address, kiosk operator and timestamps. And if assets you did not earn appear in your account, do not spend them.

Recourse depends on speed. Claims for fraud, conversion and unjust enrichment can support asset freezes if you act before funds disperse, and criminal restitution is often the most realistic path for scheme victims. Reporting to IC3 and the CFTC preserves the record but is not a substitute for counsel.

At Coin Counsel, we work with individuals and businesses navigating the legal fallout of crypto fraud — whether you're a victim seeking recovery, a company facing regulatory scrutiny, or a project working to stay compliant in an increasingly complex legal landscape. The rules are evolving fast, and the cost of getting it wrong has never been higher. Contact us at coin-counsel.com to speak with a crypto-focused attorney today.

Disclaimer

This blog post is for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship between you and Coin Counsel or Franco Law PLLC. The legal landscape surrounding cryptocurrency is rapidly evolving and varies by jurisdiction. Do not act or refrain from acting based on information in this post without first consulting a qualified attorney. If you believe you have been the victim of crypto fraud, contact us at coin-counsel.com for a consultation.