Published: January 18, 2025 at 1:36 pm
Updated on January 18, 2025 at 1:36 pm
Man, the crypto world has a side we rarely see. This story about crime and corruption, involving a crypto mogul and a dirty deputy, is a reminder of how deep things can go. Let’s break down what happened and what it means for the future of digital assets. It’s about to get dark.
Here we have Adam Iza, who calls himself the “crypto godfather.” The guy founded Zort, a crypto trading platform that seemed to be doing well. But behind the scenes? He was running a show of intimidation, extortion, and fraud. Eric Chase Saavedra, a former deputy with the LASD and a task force officer, ended up being his accomplice, using his law enforcement connections to cover up Iza’s shady operations.
Court documents reveal that Iza was using off-duty deputies to intimidate business rivals and anyone he thought posed a threat. Saavedra, who had access to sensitive law enforcement databases, ended up digging his own grave when he used his badge to support Iza’s vendettas.
In one instance, Iza was after a laptop he thought held more than $100 million in cryptocurrency. The prosecutors allege that in January 2022, Saavedra managed to secure a search warrant using false pretenses, claiming the target was involved in a gun investigation. He gave the victim’s location to Iza, who sent armed men to break into the victim’s house. Naturally, the victim fired a warning shot, and then Iza reportedly sent them a video of the botched robbery.
The lengths to which Saavedra went to help Iza are a real eye-opener for the crypto trading world. He didn’t just secure fake warrants, but also used his badge to intimidate victims. This misuse of power not only enabled Iza’s illegal activities but also caused serious damage to law enforcement’s reputation.
Things escalated. In August 2021, deputies allegedly held someone at gunpoint at Iza’s place, forcing a bank transfer of $25,000. A month later, Iza himself coerced another victim into transferring $127,000 at gunpoint. Oh, and Saavedra even had a private security firm that paid deputies, making $100,000 a month for round-the-clock security between 2021 and 2024.
But that’s not all; Iza was also involved in financial fraud. He is accused of conning Meta Platforms Inc. out of over $37 million by accessing business accounts and their associated credit lines. Both he and Saavedra also owned up to federal tax crimes. Iza allegedly dodged $6.7 million in 2021, while Saavedra didn’t report $373,146 in income.
The fallout from this crime is something the crypto trading platforms can’t ignore. When law enforcement resources are misused and a rogue deputy is involved, it erodes trust in the crypto business. Users and investors have to be careful about where they put their money.
Non-compliant crypto exchanges are already known to be havens for money laundering and other shady stuff, and this situation just adds fuel to the fire. The collapse of platforms like BTC-e and the penalties on BitMEX show that authorities won’t stand for non-compliance. The risks for firms that don’t follow the rules are huge, not just for their business but also for their customers.
To regain trust in the crypto trading industry, platforms need to strictly comply with regulations. Anti-money laundering (AML) and know-your-customer (KYC) rules are important to root out any illicit activities. Platforms must also have robust security to keep fraud and cyberattacks at bay.
AI can help in preventing fraud and unethical behavior in crypto trading. AI can analyze large amounts of transaction data in real-time, and pinpoint any suspicious patterns or anomalies. Machine learning can adapt and improve over time, making it often better than humans at spotting fraud. This adaptability minimizes false positives, ensuring legitimate transactions go smoothly.
Yet, we can’t ignore the challenges that AI brings. Privacy concerns, algorithm opacity, and data quality are all issues that need to be addressed for AI systems to work effectively. A mix of automated and human oversight is necessary to catch compliance issues or to question AI’s assessments.
The story of Adam Iza and Eric Chase Saavedra reminds us of the vulnerabilities within the crypto trading industry. Misusing law enforcement resources and the involvement of a rogue deputy in criminal activities not only undermines the credibility of trading platforms but paints a grim picture for the future of crypto. To rebuild trust, platforms must adhere to regulatory frameworks and ethical practices while ensuring the ethical development of AI in crypto trading.
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