U.S. prosecutors have charged the head of a bitcoin escrow company with defrauding investors for $7 million.

The U.S. Attorney’s Office of the Southern District of New York, part of the Department of Justice (DOJ), brought two counts each of commodity and wire fraud against Jon Barry Thompson, principal of Volatnis Escrow Platform LLC. In a complaint unsealed Thursday, he is accused of making misleading statements about investment risks and false representations of his custody and control of digital assets.

U.S. Attorney Geoffrey S. Berman said in a statement:

“As his clients soon realized, however, Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies.”

Thompson “preyed” on his clients’ lack of information regarding the emerging asset class, prosecutors said. In promotional materials and communication with clients, he allegedly presented himself as a competent investor, custodian, or financier.

The two companies Thompson allegedly defrauded sent him multi-million-dollar wires hoping to receive bitcoin in exchange. Prosecutors alleged that Thompson told one client, “cash is with me, coin is with me,” though he had sent their $3 million to a third-party exchange, skimming thousands off the top for personal use, without first obtaining any bitcoin.

The DOJ did not identify either alleged victim. According to a Forbes article published in January, Volantis negotiated a deal to transfer 6,600 bitcoin to Symphony, a crypto investments firm, but “the transaction never closed.”

Thompson, who was arrested Thursday in Pennsylvania, faces a maximum sentence of 40 years.

DOJ image via Shutterstock