During a hearing held over video conference on Feb. 4, U.S district Judge Edgardo Ramos ordered Volantis Market Making founder John Barry Thompson of Pennsylvania to repay the $3.25 million to New York-based investment manager, Iterative OTC, and sentenced him to three years of supervised release. Thompson pleaded guilty in October 2020.
According to legal publication Law 360, Judge Ramos took into account Thompson’s lack of ill-intent and the fact he had been victim of fraud himself, stating:
“Mr. Thompson engaged in serious felonious conduct [but] we have to put that in context. This was an unusual fraud.”
Judge Ramos was also willing to grant Thompson some leeway due to concerns regarding Covid-19’s impact on the overcrowded U.S prison system. With the risk of contracting the virus being very high and a lack of readily available vaccinations in prisons, Ramos noted the U.S judicial system needed to “relieve as much pressure as we can from the correctional facilities.”
In 2018, Thompson’s escrow firm Volantis was sent $3.25 million by Iterative OTC to purchase 500 Bitcoin on their behalf. However, while attempting to purchase the BTC from a third party, Thompson found himself at a loss when the sellers allegedly took Iterative’s $3.25 million without providing any Bitcoin in return.
The two sellers, disbarred attorney Phillip Reichenthal and fugitive Randy Craig Levine, are now facing fraud charges in an ongoing court case before Manhattan U.S District Judge Lewis A. Kaplan.
Despite having lost the funds, Thompson lied to Iterative for days about the unsuccessful trade and falsified account statements to show a balance for the BTC that was never purchased.
In July 2018, Thompson again falsified documents after a second client transferred Volantis $4 million to purchase BTC that was never acquired. Judge Ramos ordered Thompson to repay the $4 million.
Thompson assured the judge that he would keep a clean slate moving forward, stressing that while he was guilty of deceiving his clients, his intention had been for the deals to succeed.
“I can promise your honor … I will not be in trouble with the law again,” he said.