Austria: the court sentences five defendants for the massive EXW scam worth $21.6 million

The Regional Court of Klagenfurt has issued significant sentences against five individuals involved in the fraudulent scheme related to the EXW token and the EXW wallet, in what is considered one of the most important criminal proceedings for cryptocurrency fraud in Austrian history. After a twelve-month trial with sixty days of hearings, the court found the defendants guilty of orchestrating a sophisticated scam that caused damages of approximately 20 million euros, equivalent to 21.6 million dollars.

Details of the Fraudulent Scheme

The scheme had deep roots and a complex structure. The EXW wallet, launched in 2019, operated as a sophisticated cryptocurrency Ponzi scheme with MLM elements. The organizers promised potential investors daily returns ranging from 0.1% to 0.32%, leveraging the technological complexity of blockchain to confuse less experienced investors.

The scam strategy extended far beyond the simple token. The wrongdoers diversified their fraudulent activities by using the EXW brand to launch parallel ventures: a real estate agency and a car rental company, creating an illusion of business solidity and investment variety. Meanwhile, the EXW token itself held no real value or economic foundation.

Impressive Victim Numbers

The extent of the damage was devastating: at least 40,000 investors were scammed through this illegal scheme. Many of these savers genuinely believed they were investing in a legitimate cryptocurrency project, unaware of the purely predatory nature of the operation.

Collapse and Rebranding

The initial scheme collapsed in 2020, but the perpetrators did not abandon their illegal activities. On the contrary, they relaunched the same fraudulent operation under a new name: Exchange World, attempting to attract a new wave of victims unaware of the criminal history behind the new name.

The Lavish Lifestyle of the Scammers

The proceeds stolen from investors were used to finance a life characterized by luxury and exceptional opulence. The operational base of the scheme was located in Dubai, the epicenter of an international network of wrongdoers. The defendants surrounded themselves with prestigious assets: state-of-the-art luxury cars, access to private jets for intercontinental travel, and lavish celebrations in the exclusive nightclubs of the Emirati metropolis.

Their residences reflected the same predatory mentality: villas decorated with extraordinary valuables, including pools populated by live sharks, and large amounts of cash stored in shoeboxes scattered throughout their homes. A significant portion of the criminal funds was transferred to Austria, fueling this cycle of excessive consumption.

Sentences

Austrian judges differentiated the sentences based on individual responsibilities within the criminal structure. Two of the defendants received five-year prison sentences, reflecting their central role in designing and coordinating the scheme. The other two defendants were sentenced to thirty months in prison, with twenty-one months suspended subject to a three-year probation period. A fifth defendant received an eighteen-month suspended sentence.

During the trial, the defendants attempted to portray themselves as entrepreneurs who had lost control of legitimate operations. However, the court categorically rejected this narrative, establishing that the fraudulent nature of the scheme was planned from the outset, with no genuine intention to generate real profits for investors.

Co-founders and Ongoing Investigations

Benjamin Herzog and Pirmin Troger, identified as two of the main co-founders of the EXW wallet, had already pleaded guilty in September 2023, receiving identical five-year prison sentences. Pirmin Troger, along with Herzog, coordinated the technical and operational aspects of the scheme from its inception in 2019.

Manuel Batista, the third co-founder of the criminal structure, remains at large and is wanted by international authorities, representing an ongoing chapter of this investigation.

The Broader Phenomenon of Cryptocurrency Frauds

This Austrian case is not an isolated anomaly but a manifestation of a worrying global trend. Cryptocurrency investment scams have multiplied exponentially, with wrongdoers systematically exploiting the allure of extraordinary returns and the intrinsic complexity of blockchain technology to deceive savers.

Control authorities in numerous jurisdictions are significantly increasing efforts to combat these illegal activities, in hopes of protecting investors and maintaining some level of trust in digital markets.

Other Significant Convictions

In October, a criminal proceeding was initiated in France involving twenty individuals accused of plundering investors for thirty million dollars by posing as cryptocurrency investment promoters. A few days earlier, an Indian citizen was sentenced to five years in prison for stealing over twenty million dollars from investors through the falsification of a cryptocurrency exchange platform.

In a separate case in the United States, a district court ordered Ponzi scheme promoter Forcount to pay over 3.6 million dollars in compensation to victims and serve a twenty-four-year prison sentence.

Despite the increasing severity of punishments imposed by judicial systems, criminal actors continue to operate with determination. According to FBI data, frauds and scams related to cryptocurrencies and digital assets generated losses exceeding 5.6 billion dollars in 2023 alone, representing a 45% increase compared to the previous year.

In Ireland, the national police announced in August that over 45% of investment fraud cases in the country specifically involved cryptocurrencies, demonstrating the penetration of these schemes into developed Western economies.