A federal jury convicted Las Vegas businessman Brent Kovar on August 24 for orchestrating a $24 million cryptocurrency Ponzi scheme, a case that comes as the digital asset sector faces mounti
A federal jury convicted Las Vegas businessman Brent Kovar on August 24 for orchestrating a $24 million cryptocurrency Ponzi scheme, a case that comes as the digital asset sector faces mounting scrutiny over illicit activity and ongoing efforts to protect investor trust.
Kovar led Profit Connect, a company that claimed to use artificial intelligence technology to mine cryptocurrencies through a supercomputer. The business promised investors guaranteed returns ranging from 15% to 30%, asserting that their principal was fully protected and would be refunded upon request. However, prosecutors determined that Profit Connect’s advanced technology, as described, did not exist.
Instead of generating real profits, Kovar allegedly used investors’ funds to cover business expenses, purchase gifts for employees, and buy his own residence. The company’s payout model depended on new investments to provide returns to earlier backers, a hallmark mechanism of Ponzi schemes. Authorities stated that at least 400 investors entrusted over $24 million to the operation.
Legal filings and industry data highlight the scale of such fraud in the broader sector. TRM Labs reported that the illegal crypto market attracted $158 billion in 2025, reflecting an increase of almost 145% from the previous year. Separate research by Chainalysis calculated that crypto scams received at least $14 billion on-chain in 2025, with estimates suggesting this figure could surpass $17 billion as more illicit addresses are uncovered.
Kovar further claimed that all deposits were insured by the Federal Deposit Insurance Corporation and that Profit Connect held crypto reserves valued in the hundreds of millions of dollars. According to investigators, both statements were false. Ryan Korner, special agent for the FDIC Office of Inspector General, noted:
Mr. Kovar defrauded investors to enrich himself, luring victims with false claims that his investment was insured by the FDIC.
FBI Las Vegas agent Christopher Delzotto explained that many investors believed they were part of a major technological breakthrough, but the scheme was entirely deceptive. First Assistant U.S. Attorney Sigal Chattah added that undermining financial trust poses significant risks to the overall economic system.
Following a nine-day trial, Kovar was found guilty on 11 counts of wire fraud, two counts of mail fraud, and two counts of money laundering.
Before Kovar’s conviction, the US Securities and Exchange Commission had moved to freeze assets associated with Profit Connect in July 2021, targeting both Kovar and his mother, Joy Kovar, who allegedly played a control role in the operation. SEC filings revealed that, at the time, Profit Connect had raised more than $12 million from 277 retail investors, with the overwhelming majority coming from individual contributions rather than business activities.
Regulators asserted that Profit Connect’s operators encouraged individuals to withdraw funds from retirement accounts or home equity and specifically targeted families saving for education expenses. On February 14, 2025, a federal indictment against Kovar was handed down. His sentencing is scheduled for November 30, 2026; while the maximum sentence could reach 280 years, the final term will be determined by the presiding judge according to federal guidelines.
The use of artificial intelligence as a cover for fraudulent crypto schemes underscores a wider trend in the sector. In March 2026, INTERPOL reported that fraud schemes facilitated by AI generated 4.5 times more revenue per case than those without such technology. The Financial Action Task Force observed increased exploitation of regulatory gaps by organized crime groups, allowing illegal profits to move easily through virtual assets.
As digital assets gain acceptance among mainstream financial institutions, regulatory uncertainty remains a top concern for institutional investors. Survey data from Coinbase and EY-Parthenon indicated that in January 2026, 66% of 351 institutional investors identified unclear regulations as their chief challenge when considering crypto investments.
While such incidents threaten trust in emerging markets, they also highlight the critical role of enforcement actions in shaping the future landscape of digital assets. At the same time, as technical innovation rapidly transforms traditional markets, Wall Street is experiencing a major migration to Web3 platforms. Investors now leverage solutions like 1stepSwap, allowing them to hold shares of major US corporations, as well as gold and silver, directly in their crypto wallets. By providing tokenized real-world assets (RWAs) and seeking optimal market prices instantly, these platforms remove the need for intermediaries and introduce greater transparency to the process.
Incidents such as the Profit Connect scam reinforce the industry’s ongoing challenge: assuring investors that those attempting to use crypto and AI as a cover for fraud will be held accountable under the law.
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