Why South African crypto mogul was arrested in the United States

Riccardo “Fluffypony” Spagni’s arrest in the United States resulted from a series of administrative errors and misunderstandings over an extended period, his attorney Duncan Okes has stated.

Spagni was the lead maintainer of the privacy-focussed Monero cryptocurrency for five years. He stepped down in December 2019.

He launched a blockchain startup called Tari Labs in South Africa in 2018 that offered a free online university to aid open-source blockchain projects and train developers.

US law enforcement arrested Spagni in Nashville while the private jet he was travelling on stopped to refuel while flying from New York City to Los Cabos in Mexico.

“Our client was recently accused of allegedly failing to attend a court hearing, which he believed he was excused from, in that he was represented by an attorney on the day and was further resident in the USA, at the time, for business purposes,” said Okes.

“The purpose of the hearing in question was to schedule further court dates,” he said.

Even though Spagni’s attorney was present at the hearing, a warrant for his arrest was issued.

“In our view, and contrary to accepted practice and procedure and given the circumstances, the issue of the warrant of arrest was irregular and unwarranted,” stated Okes.

“In the circumstances, and howsoever it may be construed, our client was arrested for his alleged failure to appear in court, and nothing more.”

Okes’ statement follows media reports based on court filings which state that Spagni was arrested on allegations of fraud in South Africa.

Prosecutors for the United States government have applied to detain Spagni until his extradition hearing on the basis that he is a flight risk and that he has the financial means to flee.

Court documents show that the District Court for the Middle District of Tennessee issued a warrant for Spagni’s arrest on 20 July 2021. Law enforcement arrested Spagni that same day.

The warrant for Spagni’s arrest in the US was granted at the request of the South African government after the Magistrate Court of the District of Cape Town issued a warrant for his arrest on 19 April 2021.

According to the court documents, Spagni is accused of defrauding Cape Cookies to the tune of R1,453,561.47.

Spagni was employed by Cape Cookies from 1 October 2009 to 8 June 2011 and allegedly intercepted invoices between the company and IT supplier Ensync.

He is accused of fabricating invoices from Ensync to Cape Cookies, placing the bank account details and VAT number of his own company on the documents.

The court documents state that Spagni inflated the invoice amounts, and it was found that Ensync’s actual invoices were then paid at a later date.

Spagni also stands accused of generating false invoices for three different fictitious IT suppliers.

He pleaded not guilty to the charges, then travelled to the United States.

In their application to have Spagni held without bail, US law enforcement intimated that Spagni fled to the United States from South Africa and was on his way to Mexico when he was intercepted.

“Spagni is believed to have significant cryptocurrency assets that would enable him to flee,” the court documents state.

“He reportedly lectures worldwide on topics relating to cryptocurrency, [and] was the lead maintainer of Monero (a cryptocurrency project that aims to obfuscate the linkability of transactions),” it continued, adding that Spagni also reportedly has a watch valued at $800,000.

The court issued an order yesterday for a remote video hearing to be held on the motion asking that Spagni be detained until his extradition hearing.

Spagni’s extradition hearing was set for 17 September 2021, and the video hearing for his detainment was set for 5 August.

“This issue is currently being addressed with the authorities and what is sought is agreement between all parties as to further court dates for the hearing of the matter,” said Spagni’s attorney, Duncan Okes.

“What is further clear is that the matter is not ripe for hearing and certainly from the Cape Town’s Court’s point of view, the matter is not ‘trial ready’,” stated Okes.

“The process of achieving “trial readiness” will, as in the normal course, take some several months, if not more, to complete.”

Now read: E-rand for South Africa

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Why South African crypto mogul was arrested in the United States