Tag Archives: fraud

Brazil’s Odebrecht Continues Corrupting the Judicial Process to Evade Restitution

29 Oct

Norberto Odebrecht was founded in Brazil in 1944, and gradually expanded to become an international civil engineering giant. Then, in 2016, it signed a global leniency agreement in Brazil and pled guilty in the U.S. federal court to systemic bribery committed between 2001-16 and paid billions in criminal fines. In 2006, Odebrecht had institutionalized their bribing operations by running them through a new Division of Structured Operations. During the years investigated, Odebrecht had paid around $788 million in verified bribes to secure more than 100 large-scale projects across 12 countries, including the 2016 Olympic Games projects in Brazil, pipelines, and transit.

A year after Odebrecht pled guilty, in 2017, a civil lawsuit was filed in the Southern District of New York by claiming to be securities defrauded investor Washington State Investment Board (WSIB) over its $100 million loss in bonds. It faced an obstacle in 2020, when Judge Paul G. Gardephe dismissed a part of WSIB’s initial complaint because WSIB had not provided details on which financial statements were distorted by bribe amounts. In 2021, a second major civil lawsuit that had been brought by investor DoubleLine was obstructed by the granting of an order shielding Odebrecht’s communications from private investigators, seemingly to protect active foreign investigations. Then, in a 2023, amended complaint, WSIB fixed the glitch that previously derailed them by linking $280 million in bribes to specific distorted corporate assets: this finally convinced Judge Gardephe to lift his discovery stay and to allow WSIB to demand corporate records. Then, WSIB attempted to ask for a summary judgement based on the criminal finding of fraud, but Magistrate Judge Barbara Moses rejected this idea and asked them to litigate the case anew civilly. While the court had allowed litigants to begin asking for discovery years earlier, Odebrecht had not been complying with these requests, and in September 2026, it attempted to formally block all discovery by claiming Brazil’s Supreme Court had dismissed their leniency agreement due to prosecutorial misconduct.

In the latest development in WSIB v. Odebrecht S.A., Judge Moses ruled against Odebrecht, arguing Brazilian squabbles cannot be employed to prevent American civil discovery. The court is now deciding if the parties will proceed by Odebrecht actually opening themselves to discovery scrutiny, or if they will begin settlement negotiations.

It has been a decade since Odebrecht confessed and opened their files to Brazilian prosecutors, and yet after a decade of attempts from investors to be compensated they have not been able to begin a case because the “details” of how Odebrecht was defrauding them is hidden in he files Odebrecht is refusing to turn over. Without access to the evidence, the prosecutors cannot prove the thing they know the evidence would logically state, based on what the criminal pleading indicates.

Only now is the U.S. court even beginning to rule on the irrationality of Odebrecht’s objections: Brazilian law cannot bar them from disclosing the facts of their briberies. Their leniency agreement was designed to protect the criminal Brazilian investigators, not the books that prove the corruption of executives, operators or investors of Odebrecht. The change that prompted this sudden renewal of litigation activities is that the Brazilian Operation Carwash has concluded back in 2021 (after 278 convictions and the recovery of $800 million), and these investigators have made public the facts in the accounts recording the briberies, and their depositions about them (released back in 2017). Thus, records are now public, even if Odebrecht continues refusing to surrender these records. The reason for a decade-long stall is partially clarified by the finding of illegal collusion between Chief Judge Sergio Moro and the prosecutors in Operation Carwash in Brazil, which have led to the Brazilian Supreme Court’s annulling of most of this operations convictions and fines due to misconduct. These absurdly stumbling trials are themselves evidence of Odebrecht’s ongoing successes at corrupting the criminal and civil judicial processes. Odebrecht is still an active company, with annual revenues that have dropped to around a billion from a peak of $30 billion pre-scandal. It is the vulture investors who anticipated Odebrecht’s “sudden” or artificially orchestrated legal collapse in 2016 who made a lot of money, and it might be their accounts that Odebrecht has been fighting to protect from implication. They also made a windfall when the Supreme Court refunded Odebrecht’s apparently temporary corruption fines.

This case proves that following-the-money is not possible without hacks when the sued party corrupts the system into blocking the legal opening of their books. And in such cases of billions-worth-in-corruption, there are no good guys. Even the 2019 Intercept uncovering of messages between Carwash prosecutors and Judge Moro showing a coordination of strategies served to reverse the criminal findings, instead of bringing new charges against the exposed judge and prosecutors. Perhaps, anti-corruption investigations are doomed to be corrupted? Who can resist bribes with billions on-offer? Across the decades the bribery and the failed lawsuits have been happening the Workers’ Party has been mostly in charge. Luiz da Silva, who just won a fourth term in October 2026, was the president between 2003-10, followed by Workers’ Party’s Dilma Rousseff (2011-6), before Rousseff was impeached and removed from office. Operation Carwash’s prosecutors had argued that the Workers’ Party was running the pay-to-play ring that Odebrecht was merely a player in. There was a claim that Lula secretly owned a house that Odebrecht and another construction company had spent over $200,000 remodeling, among other “gifts”. These accusations convinced Judge Moro to convict Lula of corruption and money laundering, for which he spent 580 days in federal prison. The 2019 Intercept leak found evidence against Judge Moro and annulled Lula’s conviction. This is why Lula could run for office yet again, and has just won. And Lula has been crushing his opponents through the courts, including convicting Jair Bolsonaro of attempting a coup d’etat for plotting a violent overthrow to overturn his failed 2022 election run. And immediately after Senator Flavio Bolsonaro lost the most recent 2026 election Lula targeted him with multiple criminal investigations over money laundering (via links to a sports-betting corporation), raising money from a financier for a film about his father, and securing campaign financing from U.S. conservative donors. And now Flavio has illegally (despite his passport being seized in Brazil) escaped into the U.S., where he has been granted visas by Trump. There are no good guys in this story, but it is a dramatic and captivating saga.

Suggested Citation:
Faktorovich, Anna. “Brazil’s Odebrecht Continues Corrupting the Judicial Process to Evade Restitution.” Anaphora’s Law Review (October 29, 2026).

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No Surprises Invites Doctors to Sue en Masse for Higher Payments

28 Oct

Since the bipartisan No Surprises Act (NSA) went into effect on January 1, 2022, there has been a flood of lawsuits by providers over insurance underpayments. NSA bans surprise out-of-network bills for patients, including by out-of-network providers working at in-network hospitals. It also caps patient costs to standard in-network cost-sharing amounts (copay, coinsurance, and deductibles). And NSA shifts responsibility over disputes from patients to a negotiation between insurance and medical providers working through independent arbitrators. The element cluttering the courts now (with hundreds of thousands of cases filed by providers against insurers) is that NSA does not include a “private right of action” that would allow doctors to sue insurers in federal court over skipped payments. Without this wording, federal courts have been dismissing an avalanche of filed direct federal enforcement suits.

Without this right, insurers have been taking defensive actions such as not paying the fair amount even after the federal Independent Dispute Resolution (IDR) votes against them. Instead of pursuing a losing strategy, providers such as Dr. Jonathan Nissanoff have been finding loopholes such as California’s quantum meruit and Unfair Competition Law (UCL).

Nissanoff v. Blue Shield of California (2026) began when Dr. Nissanoff performed an emergency orthopedic service to a Blue Shield enrollee. After submitting this case to the insurer, Nissanoff determined Blue Shield’s initial payment was “substantially below the reasonable and customary value” for such procedures. Dr. Nissanoff filed an IDR complaint under NSA and it determined on September 17, 2024 in favor of Dr. Nissanoff, ordering Blue Shield to pay an adjustment amount of $56,623.40 for the services. Blue Shield refused to pay this full sum, so this case moved forward in a state court to force Blue Shield to cover to award. Only the equitable and California UCL pars of the lawsuit survived, while the claims under NSA (impossible to enforce decisions of IDR), Knox-Keene Act (does not apply to private parties), common law contracts and ERISA (failure to plead administrative exhaustion) were dismissed.

Doctors never have time to check insurance before an emergency procedure, so testing the law in this case is relevant for many similar cases. And Dr. Nissanoff’s claim specifies that this is not an isolated case, but rather that in his experience Blue Shield has demonstrated a pattern of “lowballing initial payments, forcing IDR, and refusing to honor the results.” It is absurd that the current law forces an arbitration process, but lacks a firm recourse for the winners of this process to enforce what the process decides.   Insurers are succeeding in avoiding following a bipartisan decision for them to bill fairly by unfairly refusing to grant sums judged to be fair. An Act of Congress can made the decisions of IDR legally enforceable with an amendment to NSA by adding wording specifically granting a private right of action or a streamlined confirmation process. Though according to the Center on Health Insurance Reforms, there have been 2.6 million IDR disputes filed by providers in 2025 alone (77% increase). Providers win in around 90% of cases. If all of these wins are enforceable, insurers might have to drastically raise their rates. Are doctors really asking for the fair rate, or are they asking for as much as possible? Since America’s medical industry is already costing Americans more than twice the second-highest paying country (Switzerland), if these costs climb still higher because of a law that tips the scale in favor of doctors pressuring for maximum payouts, the public might end up losing. The rational solution to keeping costs low is for arbitrators to enforce a qualifying payment amount (QPA) or a median per-procedure in each geographic region to keep costs steady. But following these median rates has been prevented by litigations against this barrier.

Suggested Citation:
Faktorovich, Anna. “No Surprises Invites Doctors to Sue en Masse for Higher Payments.” Anaphora’s Law Review (October 28, 2026).

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Squabbles Over “Genuine” Signatures vs Stopping Israel-U.S. War Profiteering

28 Oct

In Alan H. Peres and Piergiorgio Uslenghi v. The Municipal Officers Electoral Board for the Village of Oak Park, et al. (2026), the Illinois Appellate Court affirmed that a public referendum petition substantially complied with the Illinois Election Code, rendering it valid despite an accidental omission of the explicit statutory phrase certifying that the signatures “are genuine.”

The proponents are Caren Van Slyke and Jesse Simon Bauer, who circulated a petition to this village’s residents to put a question before their voters in the upcoming November 3, 2026 ballot: “[s]hould the State of Illinois repeal laws that ban state investment in businesses that boycott the State of Israel?” This petition obtained 3,504 signatures from undisputed registered voters. But then Alan H. Peres and Piergiorgio Uslenghi filed an objection to this petition at the Oak Park Electoral Board to prevent this question from appearing on the ballot by arguing the certification statements on these petition sheets were defective by failing to specify these signatures were “genuine”. The words of the certifying statement is a paraphrase of the standard language, which specifies the person signing is a “qualified elector”, but does note specifically the signatures were not forgeries. The court ruled that this deviation was insubstantial, or that the wording that was included met the intent of the requirement to include this certifying language.

Justice Pucinski delivered the judgement, arguing the statement served the intended purpose of validating the identity of the signers. Denying the rights of the signors on this technicality would have unjustly denied their voting rights. Justice Hyman dissented, arguing the allowance of a substitution of “presence” for “genuineness” changes this legislative mandate, inviting more creative rewordings in the future.

The distance this miswording has gone in the courts almost suggests somebody intentionally inserted this mistake to attempt to disqualify this referendum if it succeeded in finding enough signatures. And the investment in covering court fees by the filers indicates they were overly interested in reversing what so many in their village wanted to vote on. And wasn’t there a bigger problem in the wording of the referendum question itself: why would it be logical to ban investments in the businesses operated in Israel, as opposed to banning investments in its government? Isn’t it directly antisemitic to boycott all Israeli businessmen? Though blocking the businesses of countries with whose leaders American politicians disagree is a standard, as seen in the ongoing blockade of Cuba.

Boycotting countries is typically within the federal jurisdiction. Some city councils or state legislative bills have handled such boycott requests. There has been a unique movement to divest from Israel via local ballots, like the one that passed in Somerville, Massachusetts and Providence, Rhode Island. The latter referendum referred to foreign countries engaged in severe violations of human rights, as opposed to Israel specifically. There have not been any statewide referendums to boycott Israel. States have moved in the opposite direction, with 37 states passing binding anti-BDS laws or executive orders that have penalized or banned contracting with businesses that are publicly boycotting Israel.

The movement to boycott Israel is not entirely strange, as during Apartheid in the 1970-80s dozens of U.S. cities, universities and state legislatures voted to divest public funds or pensions from companies doing business in South Africa. On the federal level, the Sudan Accountability and Divestment Act of 2007, authorized state and local governments to divest from companies operating in Sudan’s power, mineral or oil sectors. And the U.S. Office of Foreign Assets Control (OFAC) orchestrates economic embargos or business-blocking for countries on the Department of State’s “State Sponsors of Terrorism” blacklist, which includes Cuba, Iran and North Korea. Since the start of the war after the terrorist attack in October 2023, Israel’s economy has been surging (by 130% in the Tel Aviv stock market), despite a drop in its labor force due to the mobilization of reservists and a leveling of tourism and construction (due to fears related to the war). The major economic hit has been the $114 billion in debt Israel’s government has taken on to wage this war. The U.S. has spent around $33 billion on this conflict. Thus, if Americans believe this war can be ended by draining Israel’s military budget, U.S. would logically stop spending money on this war on the U.S. end and would stop giving military aid to Israel. But the U.S. has instigated wars with Iran, Iraq, Afghanistan, and other countries in the Middle East, so it is not merely aiding Israel but rather is pushing Israel into perpetual conflict. The problem is perpetual warmongering: wars are too profitable for the companies selling the tools of war for them to allow federal blockades. And the U.S. might have to label itself as a terrorist state, if it puts Israel on this list, given their joint operations that have put Israel on international human rights violation lists.

Suggested Citation:
Faktorovich, Anna. “Squabbles Over “Genuine” Signatures vs Stopping Israel-U.S. War Profiteering.” Anaphora’s Law Review (October 30, 2026).

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Remunerating Doctors to Buy Blood Clot Treating Devices: Illegal?

27 Oct

On September 22, 2026, U.S. District Judge Gregory H. Woods dismissed a class-action securities fraud case: Michiana Area Electrical Workers’ Pension Fund v. Inari Medical Inc., et al. (2026). The investors had failed to prove with sufficient specificity that the company had engaged in an illegal doctor-kickback scheme or deliberately misled shareholders to inflate its stock price.

The evidence confirmed that Inari was providing up to $50,000 in corporate dinners, junkets a vacation destinations and NASCAR race tickets in exchange for doctors ordering Inari’s products. But such spending was found to be standard in this industry (according to the AdvaMed Code of Ethics on Interactions with Healthcare Professionals), as opposed to amounting to illegal kickbacks. The filers attempted to argue AdvaMed does specify a “per individual limit of $3,000 for gifts and promotional materials.” While one salesperson spent $50,000 on physician dinners over a three-month period, and another $5,000, each physician was not receiving over $3,000.

Inari is a manufacturer of technologies that treat and remove blood clots. The case was filed against Inari’s three former administrators: CEO, COO and CFO. They had operated a successful doctor-buttering scheme between 2021-4, before, on February 28, 2024, revealing to investors that they had received a civil investigative demand from the Department of Justice (DOJ), which was investigating if Inari’s practices were violating the Anti-Kickback Statute and the False Claims Act. This revelation led to a single-day 21% drop in Inari’s stock price, at a loss of $700 million in market capitalization.

Since this meant three invested pension funds had lost a lot of money, in May to June 2024, they filed a joint complaint over securities fraud and racketeering. One of the pension funds’ objections was that the administrators had collected $155.5 million in profits during the three years when the DOJ probe was active, but was not publicly disclosed by Inari.

The pension funds lost partly because DOJ’s probe failed to uncover evidence the gifts to physicians were illegal, and this meant the civil lawsuit lacked evidence underlying crimes had occurred. The administrators were allowed to delay disclosure until the date when they revealed it: they did not break the law by their delay. And they were acting in the best interests of shareholders by not disclosing earlier, since the stock would have plummeted earlier, and too soon before the DOJ had to report they had not found any prosecutable law-breaking. The filers might have assumed DOJ records would have what apparently failed to surface in discovery: they had no specific names of a doctor, date, or venue where a provably illegal transaction had taken place. All records proved was that Inari had spent a lot of money on sales and marketing.

The funds might have attached erroneous assumptions by the finding in the Purdue Pharma fraud case. It seems on the surface that Inari spending 68% of its revenue on sales and administration to cultivate customers was as illegal as what Purdue was doing. But in Purdue, the feds were able to prove systemic quid pro quo financial bribery in paying fraudulent “speaker fees” and consulting retainers well over the $3,000 limit to serve as pushers of prescriptions that they were fraudulently selling as safe when they were deadly addictive. There was nothing proven to be fraudulent with Inari’s core devices. Most small businesses wish it was illegal for giant corporations to spend such enormous sums on convincing people to buy their products. But his is how capitalism works: not the best products but the most effective sales campaigns win market share. The legality of Inari’s actions should have been apparent through brisk disclosures without a years-long DOJ audit. If DOJ had dropped their case upon failing to find wrongdoing, investors would not have lost millions in a panic sell-off. The public is too trusting in government actions: when the government declares it is auditing somebody, the public assumes the entity is guilty before the test results come in.

Suggested Citation:
Faktorovich, Anna. “Remunerating Doctors to Buy Blood Clot Treating Devices: Illegal?” Anaphora’s Law Review (October 27, 2026).

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Attempt to “Solve” LA Homelessness by Blocking Federal Funding

25 Oct

In LAHSA v. Donald Trump, et al, Los Angeles Homeless Services Authority (LAHSA) and the Los Angeles Continuum of Care (LA CoC) filed a lawsuit against the federal government, naming President Donald J. Trump and the U.S. Department of Housing and Urban Development (HUD) as defendants. This suit is in response to the June 11, 2026 abrupt order from HUD that had suspended LAHSA’s mandated role as the collaborative applicant that had been managing the region’s federal homelessness grant applications. HUD explained this defunding by pointing to a two-decade history of “obvious fraud”, gross financial mismanagement, undisclosed conflicts of interest, and a severe failure to pay local shelter providers $69 million (according to the overdue balance specified in LA County Auditor-Controller’s review in 2026). The latter has meant that many shelters were already on the brink of bankruptcy before HUD blocked LAHSA’s funds.

The recent appeal is primarily objecting that the defunding occurred after LAHSA had already been funded by HUD for the 2024-6 period. The sudden withdrawal means the Los Angeles region anticipated receiving $239 million federal funding that will no longer be accessible, leading to a looming crisis among LA shelters. The first filing was successful in convincing the California U.S. District Court to issue a preliminary injunction o force HUD to reinstate LAHSA’s role and to disburse the promised $239 million. However, the latest September 2026 ruling in the U.S. Court of Appeals for the Ninth Circuit denied the motion to remove LAHSA (because it was too abrupt, given that HUD knew about corruption in LAHSA across the past decades), but upheld HUD’s right to block paying the $239 million (because HUD had invited shelters to apply directly with them, instead of using LAHSA as a corrupted gatekeeper). Though the latter excuse is problematic because HUD has admitted it had not received any successful direct applications through its special portal from shelters that now cannot apply through LAHSA: these small entities have not hired any grant writers after decades of allowing LAHSA to handle this work for them.

Back in the 2007 HUD audit, regulators found that LAHSA failed to conduct onsite fiscal monitoring of project sponsors, lacked required documentation, paid for ineligible expenses, and had poor cash management controls. Then in the 2022 HUD audit, it found that LAHSA had allowed $3.5 million in Continuum of Care (CoC) grant awards expire unused, missed performance deadlines, and lacked documentation for over $870,000 in internal payroll and rent costs. Fraud allegations against LAHSA accuse it of over-requesting funding from HUD and inappropriately shifting cash balances between different grants to mask deficits. And a 2026 review found that LAHSA had undisclosed conflicts of interest in direct personal ties between LAHSA’s CEO and awardees.

While LAHSA is a notoriously corrupt example, HUD has filed similar funding blocks against many other agencies and states that have no such records of corruption. In response, the attorneys general of states including Washington, New York California and Rhode Island have successfully sued HUD to block their attempts to rapidly change funding rules. These successful lawsuits have explained that HUD has attempted to decrease funding by 90% while implementing pre-conditions on homelessness aid (i.e., mandatory job training or drug treatments). Federal judges have blocked these rule-changes nationwide.

There have been a few failed attempts to stop corruption at LAHSA, such as the LA City Council’s 2023 issue of restrictions when it learned LAHSA was not tracking when homeless people left hotel housing, and thus was receiving public funds for empty hotel rooms. And in 2025, the LA County Board of Supervisors voted to defund LAHSA starting on July 1, 2026 because it was routinely late in paying shelters (the source of the $69 million figure), which had caused 284 layoffs. HUD’s attempts to suddenly withdraw funding has been met with expected blocks by courts because they threaten to leave thousands of homeless people stranded. It seems as if HUD’s organizers are deliberately attempting to prove corruption investigations or funding withdrawals from mismanaging entities is impossible by applying a maximally irrational approach in their ironic attempt. The LA homelessness funding system is indeed in need of an overhaul as the homeless are being blocked access to resources that are being eaten up by corrupt middlemen. But switching middlemen by instead forcing the homeless or the minor homelessness agencies to apply directly through a far more inefficient and likely more corrupt federal portal is obviously the wrong approach. There must be some way to disburse assistance systematically. There should be buildings that just provide housing to those who can meet minimum requirements to prove they need it. Homelessness is solved by providing homes, not by wasting most of the funding for this problem on self-dealing administrators.

Suggested Citation:
Faktorovich, Anna. “Attempt to ‘Solve’ LA Homelessness by Blocking Federal Funding.” Anaphora’s Law Review (October 25, 2026).

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Another Crypto Founder Charged with Fraud, While the Giants Remain Unscathed

25 Oct

Back in 2022, Arshad Assofi et al v. Donald Basile e al was filed in the U.S. District Court in California. After an arbitrator issued a $42.5 million damages award in 2025, GIBF filed a new appealing lawsuit in Delaware: GIBF GP, Inc. v. Arshad Assofi, where Judge Maryellen Noreika has just confirmed the California decision to issue the award.

The lawsuit was first filed by investor Arshad Assofi against the founder of Bitcoin Latinum token (LTNM) Donald Basile and GIBF GP, Inc., alleging this operation was a worthless scam. Assofi argued that Basile convinced him to invest based on false information about the other backers, such as receiving $20 million from the producers of Star Trek (denied by Paramount). Basile had suggested this association by naming this currency after “latinum”, a fictional currency employed by the Ferengi in Star Trek. Basile had also falsely claimed that the coin was backed by an asset trust and insured for up to $1 billion.

Assofi had invested $15 million by purchasing simple agreements for future tokens (SAFTs). But Basile had misappropriated these funds on personal real estate and luxury items such as a $160,000 horse. When he realized Basile was not building this coin and that it would remain worthless, he asked for a refund that Basile refused, leading to this battle.

SEC also filed a civil fraud lawsuit against Basile, GIBF GP, Inc. and Monsoon Blockchain Corporation on April 17, 2026 in New York. SEC’s case mirrors Assofi’s filings, while aiming to apply new penalties, including banning Basile from serving as an officer of a public company.

Bitcoin Latinum saw a peak token price of around $190 during the 2021 crypto boom, but has dropped to around $.41. KuCoin shows an all-time high as $9,322, but this was a brief glitch at which the public would not have been able to trade this coin. The coin’s website is defunct, but the business has not yet officially filed for bankruptcy protection.

While the case names hundreds of defrauded investors, it seems there was only $16 million invested, with most being from Assofi. Other investors have filed in Michigan against a promoter who had convinced them to purchase Latinum.

The most recent appeal filing claimed the arbitration award was manipulated “by corruption, fraud, or undue means” with “evident partiality or corruption in the arbitrators”, specifically Daniel B. Garrie, Esq., who were “guilty of misconduct in refusing to postpone the hearing” and by “refusing to hear evidence pertinent… to the controversy”.

From Basile’s perspective, he claimed Assofi’s purchase of the tokens was made with no binding investment relationship. Basile argued that the sudden 95% drop in the token’s price coincided by the crypto market’s crash, as opposed to any deception on his part. Basile initially attempted to threaten a $1 billion countersuit that accused Assofi of filing fabricated fraud charges in an extortion scheme. Basile has not yet surrendered any money or assets in response to the arbitration decision. And if SEC wins their case before Basile pays Assofi, SEC might empty Basile’s coffers before Assofi digs in.

There have been several similar lawsuits over crypto currency owners defrauding investors: the crypto owners have lost most of these. FTX’s Sam Bankman-Fried diverted $8 billion in customer deposits and is now serving a 25-year federal prison sentence with a looming $11 billion forfeiture order. Terraform Labs’ Do Kwon was found guilty of operating a $40 billion fraud, now serving a 15-year prison sentence, and owns $19 million in forfeiture. The one escape-hatch has been Changpeng Zhao securing a pardon from Trump and negotiating a settlement with the Department of Justice by paying a $4.3 billion penalty for Binance.

Is the difference then between crypto fraud and legality in if it is operated or protected by the president? If not being too cynical, there are provable frauds in these convicted crypto entities, as in the Latinum case: false claims of insurance protection and backers, and a lack of a finance platform on a recognized public blockchain. As long as World Liberty Financial (WLF) is disclosing that it is paying out millions in tokens to the Trump family, it is not defrauding other buyers. Though WLF has recently been civilly sued over constitutional and corporate violations, such as corruptly accepting billions from foreign governments (especially UAE).

All but the top major multi-billion crypto businesses have been sued by U.S. regulators (SEC, CFTC, DOJ) over fraud or unregistered security offerings. Largely because of Trump’s personal profiteering from crypto, he has put leadership in place at SEC that has lowered its crypto laws by 60%. The biggest still operating crypto companies, such as Binance and Crypto.com have only been hit with regulatory lawsuits, as opposed to criminal fraud charges. The reason the top crypto company in the world, Bitcoin ($1.62 trillion), has not been sued by a U.S. regulator is because it is a decentralized, open-source software protocol without any corporate founder who might have been accused of fraud. Though it is very suspicious that the second largest business, Ethereum ($286 billion), has never been sued despite it having a founder, Vitalik Buterin. It is logical to assume that the companies at the top have been knocking out their competition by encouraging federal prosecutions against their competitors over fraud charges. Otherwise, there would not be exceptions of top companies that are committing the same securities violations, but are skipped over. For example, the third largest company, Tether ($182 billion), has faced multiple lawsuits, such as about its corporate statements that each 1 USDT token was backed 1:1 with cash, when it was merely backed by unsecured commercial debt and commingled corporate funds. It is improbable that Ethereum or Bitcoin have billions or trillions in cash in their vaults, and yet they have not faced the same scrutiny.

The winners in the crypto game seem to be hackers who can create the illusion of their non-involvement and thus prevent being vulnerable to personal fraud charges. The biggest fraudsters are those who can escape liability even beyond the protections offered to corporations.

And why are coin founders being accused of pocketing millions from investors for “personal gain” when all American corporate CEOs are pocketing millions in salaries and bonuses? Is the distinction that the crypto businesses are collapsing too soon after this pocketing? The lack of profitability is normal, as around 13% of biotech and AI startup companies in the Nasdaq have no revenue, and half are unprofitable. Investors who bet on unprofitable ventures are being defrauded through false advertising that promises they are going to become ultra-profitable in the future. There must be many exaggerations in unprofitable companies’ marketing that have cast this false confidence over the public. The point of fraud cases against crypto founders seems to have been to discourage small startups in this sphere for the giants to monopolize it. Crypto as a concept is a fraud: it is a fictional currency that can be manipulated by hackers who pretend a system is functioning because it is being fairly “mined”. Then again, state-issued currencies that are not backed by gold are also frauds: because there is no 1:1 backing for trillions in fictional bucks being printed. In an ideal world, nobody could speculate on currency, as there would be some international monetary unit that does not change in value and has no “creator”. People would just trade goods and services at standard exchange rates, without needing to worry about their local currency being devalued. But with trillions to be made on intervening in this utopia as middleman pocketing a share of all transactions, we are going to continue to see litigation until this sector is a monopoly.

Suggested Citation:
Faktorovich, Anna. “Another Crypto Founder Charged with Fraud, While the Giants Remain Unscathed.” Anaphora’s Law Review (October 25, 2026).

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