An Austrian court has sentenced five individuals linked to the EXW-Token scam to prison, in one of the largest cryptocurrency fraud trials in the country’s history.

According to a report from local media, the sentencing followed a year-long trial and 60 days of hearings where several individuals were found guilty of orchestrating a fraudulent scheme involving the EXW crypto token and the EXW Wallet.

The accused allegedly promised victims high returns on investments in the fraudulent token that did not exist, while also promoting other ventures under the EXW brand including a real-estate business and a car rental service.

Meanwhile, the EXW wallet, launched in 2019, was an elaborate MLM crypto Ponzi scheme that managed to dupe at least 40,000 investors out of 20 million euros (roughly $21.6 million.) The scheme promised returns of 0.1% to 0.32% per day.

The scam eventually collapsed in 2020 but was allegedly rebooted and rebranded as Exchange World.

The funds accrued by the bad actors were used to support an extravagant lifestyle which the report labelled as akin to something “straight out of a Hollywood movie.” 

The defendants indulged in luxury cars, private jets, and lavish parties in high-end clubs in Dubai, and even decorated their homes with opulent items, including a villa with a shark tank and shoeboxes full of cash.

The operation was based in Dubai and the accused allegedly moved some of the stolen cash to Austria.

Based on their roles in the scheme, the Klagenfurt Regional Court has sentenced two of the defendants to five years in prison, while two others received sentences of 30 months, with 21 months suspended for a probationary period of three years. Another defendant was handed an 18-month suspended sentence.

The defendants claimed they intended to run legitimate investment projects, but things got out of hand. The court, however, dismissed this, stating that the fraud was planned from the start, with no real profits intended.

Benjamin Herzog and Pirmin Troger, two of the EXW wallet co-founders, had previously pleaded guilty to fraud in September 2023 and were each sentenced to five years in prison. Meanwhile, Manuel Batista, the third co-founder, remains in hiding.

Crypto frauds on the rise

Cases of investment fraud using cryptocurrencies have become quite prevalent, with scammers exploiting the allure of high returns and the complexity of blockchain technology to deceive investors. Such schemes often involve fake projects, Ponzi-like structures, or misleading token offerings.

Regulatory authorities worldwide are increasingly cracking down on such fraudulent activities to protect investors and maintain trust in the cryptocurrency market.

On Oct. 22, a fraud trial was initiated in France targeting 20 individuals allegedly involved in a crypto scam that duped investors out of $30 million in the name of crypto investments. Just days before, an Indian national was sentenced to five years behind bars for stealing over $20 million from investors by spoofing crypto exchange Coinbase.

In a separate case, a U.S. District Court ordered a promoter of the Forcount Ponzi scheme to pay over $3.6 million in restitution and serve a 240-month prison sentence.

Despite the severity of these punishments, scammers show no signs of slowing down. According to an FBI report, frauds and scams involving cryptocurrencies and digital assets led to over $5.6 billion in losses in 2023 alone, marking a 45% hike from the year before.

Elsewhere, the Irish national police force reported in August that over 45% of investment fraud cases in the country centered around cryptocurrencies.