A $24 million crypto Ponzi scheme, masked with AI buzzwords and false guarantees, has unraveled, exposing over 400 investors to massive losses.
The case, brought by the U.S. Attorney’s Office for the District of Nevada, shows growing concerns about fraudulent crypto schemes disguised under cutting-edge technology like AI.
The Alleged Scheme: AI, Crypto Mining, and Fake Guarantees
The accused, Brent Kovar, allegedly ran his fraudulent operation between 2017 and July 2021 under the guise of his investment company, Profit Connect. He lured investors by claiming his company used AI-driven algorithms to mine cryptocurrency and verify transactions, offering fixed annual returns of 15% to 30%.
According to prosecutors, Kovar also falsely reassured investors that their funds were insured by the Federal Deposit Insurance Corporation (FDIC) and that their principal investments were risk-free.
However, investigators revealed that no actual AI-powered crypto mining operation existed. Instead, Kovar misused investor funds to:
- Finance a lavish lifestyle
- Purchase personal property, including a house
- Buy expensive gifts for employees
- Pay earlier investors to create the illusion of profit
These activities align with a classic Ponzi scheme, where returns for earlier investors are paid using funds from new victims rather than legitimate profits.
Legal Charges and Potential Sentencing
Kovar now faces:
- 12 counts of wire fraud
- 3 counts of mail fraud
- 3 counts of money laundering
If convicted on all counts, he could receive a maximum sentence of 330 years in prison and fines of up to $4.5 million.
The case serves as yet another warning about AI-driven crypto fraud, a sector that is increasingly attracting regulatory scrutiny.
FBI and Law Enforcement Crackdowns on Crypto Fraud
Kovar’s case is part of a broader trend of law enforcement tightening its grip on crypto-related Ponzi schemes.
On Jan. 27, 2025, authorities sentenced Antonia Perez Hernandez, a promoter of the Forcount crypto Ponzi scheme, to over two years in prison after she pleaded guilty to conspiracy to commit wire fraud.
Similarly, in October 2024, an 86-year-old former California attorney was sentenced to five years probation and ordered to pay $14 million in restitution for his role in a crypto Ponzi scheme.
Meanwhile, the FBI’s “Operation Level Up” has reportedly prevented $285 million in potential losses from crypto fraud between January 2024 and January 2025.
The Growing Threat of AI-Powered Crypto Scams
Kovar’s alleged fraud highlights a concerning intersection between AI and crypto in financial scams.
Many scammers are now leveraging AI-generated content, deepfake videos, and automated trading bots to appear more credible. YouTube videos, flashy websites, and well-crafted PowerPoint presentations—all tools Kovar allegedly used—are now common elements of modern crypto fraud.
As crypto adoption grows, so does the sophistication of fraudulent schemes. Investors should be cautious of:
- Guaranteed returns – No legitimate crypto investment offers fixed high returns.
- Unregulated platforms – Ensure any investment firm is registered with financial authorities.
- Unverifiable technology claims – Always verify if a company’s claims about AI, blockchain, or crypto mining are backed by legitimate third-party audits.
Final Thoughts
The Kovar case is a stark reminder of the dangers of unchecked hype in the crypto industry. As AI and blockchain continue evolving, regulators, investors, and law enforcement agencies must remain vigilant against fraudsters who exploit these technologies for personal gain.
With the FBI and SEC increasing crackdowns on crypto fraud, Kovar’s case is unlikely to be the last, but it serves as a critical lesson for investors navigating the digital asset space.
