Two Arizona men have been accused of perpetuating a massive cryptocurrency Ponzi scheme, according to a criminal complaint filed in federal court. Among the pair's victims are former Major League Baseball players and their families.
Caruso, who went by the moniker “Kryp+0 K!ng,” is a career criminal with an “extensive criminal history regarding fraud and financial crimes” in California and Florida for charges including false identification, extortion, fraud, theft and forgery.
A probation violation report from Maricopa County described Caruso as “a young man born into a criminally oriented family steeped in tradition of enrichment through illegal means” and that he “appears to believe that his is endowed with superior intelligence.” The report then went on to say that “his activities in jail ... provided glimpses of a criminal mastermind at work.”
To legitimize the Ponzi scheme, Caruso used the company name “Zima Digital Assets” and created a website that boasted “ZDA is a trusted authority in digiital assets and blockchain based investments.” The website itself was very short on details and provided no contact names, phone numbers or email addresses.
Zachary Salter, the second defendant listed in the complaint, was discovered through an open source search of the company. Investigators found Salter's Instagram account where he is listed as the “co-founder of Zima Digital Assets.” His profile included several photos of the Salter and Caruso together living the type of lifestyle generally associated with investment managers, including “riding together on private jets” and “standing on or near numerous luxury vehicles.”
The report also cites open-source evidence collected from other social media sites, including LinkedIn, where a profile page set up for the company included misleading facts about the history of the company and the number of employees.
Through a search warrant served to Facebook for Salter's Instagram profile, investigators learned that the potential victims were recruited through direct messages. “I mean walking out your front door is risky if you don't know how to walk! But Iv [sic] got a team of 7 analyst and 2 executive traders managing my crypto hedgefund, you wanna [sic] make some money let me know I gotchu [sic] brother,” Salter wrote to one potential victim.
According to the court documents, the pair of fraudsters stole over $7.5 million from their victims in total. Not one penny of that money ended up being invested in cryptocurrency or anything other investment vehicle. The money was instead squandered on private planes, luxury cars, vacations, mansions and gambling in Las Vegas casinos.
Investigators said that victims of the scheme included former Major League Baseball players and their families, though none of the players are identified in the complaint. Senior citizens were also listed as victims of the pair.
Read the entire criminal complaint below.
🚨Drain the Swamp 🚨Scam artists in Scottsdale, Arizona - Zach Salter & John Caruso charged with a Ponzi Scheme - ripping off the clients millions of dollars from young business professionals, the elderly, to Former MLB players and their families. #ZimaDigitalAssetsFraud pic.twitter.com/tJ8VGinobT— Exposed (@Exposed23412475) February 7, 2020
Social Media ConMen, John Michael Caruso 28 aka "Krypto King" and Zachary Salter 27, Arrested in Connection with Cryptocurrency Investment Fund https://t.co/8MINT3jBR5#GuruDown #btc #eth #crypto #PonziScheme pic.twitter.com/QoAwCny34X— GuruLeaks (@Guruleaks1) February 7, 2020
Crypto Ponzi scheme run by John Caruso aka "KryptoKing" and Zachary Salter took Major League Baseball players and their families for millions https://t.co/jLhuN7i2VG— GuruLeaks (@Guruleaks1) February 7, 2020