'Crypto king' associate operated parallel Ponzi scheme while living lavish lifestyle, court documents allege
An associate of Ontario’s self-described “crypto king” was operating his own fraud scam parallel to the multi-million dollar Ponzi scheme, court documents allege.
Colin Murphy, 26, is being accused of operating a Ponzi scheme within a Ponzi scheme after an Oshawa, Ont. resident launched a civil lawsuit against him in December to recover $270,000 in investments.
Murphy was allegedly working with Aiden Pleterski, who allegedly owes at least $35 million to investors.
According to bankruptcy proceedings, Pleterski utilized Murphy to raise money for his cryptocurrency and foreign exchange trading company.
“What is alleged is that Murphy was operating his own investment program parallel to what Pleterski was operating,” Norman Groot, a fraud recovery lawyer representing the investor, told CTV News Toronto.
Beginning in June 2021, Groot’s client said he started transferring Murphy money for Pleterski to invest, which Murphy claimed grew to $878,444.60 at its height, according to a notice of action filed in December.
At the onset, Murphy showed the investor his Porsche and Lamborghini as evidence of his returns on investments, which he made through Pleterski’s trades, the legal notice says. Largely through word of mouth, Pleterski was gaining a reputation for the “significant returns” he was making on investments.
Murphy also stored “boxes of cash” in his grandfather’s house, which he claimed were returns stored for other investors, according to legal documents.
After almost a year of investing with Murphy, Groot’s client wanted to cash in. In WhatsApp messages included in an affidavit, the investor told Murphy the money he had transferred was his life’s savings.
At that point, Murphy began to reduce his communications with the investor, the documents allege.
Colin Murphy takes a photo at Upper Canada Mall in Newmarket, Ont. (Instagram).
In texts included in the affidavit, Pleterski messaged the investor in June 2022: “Colin took money in from so many individuals that I never ended up seeing. Colin has over 2M in assets he can liquidate but he isn't.”
Court documents allege there is no evidence that the investor’s funds were ever transferred to Pleterski. “Murphy had engaged in a fraud on investors - parallel but distinct from the Pleterski Ponzi scheme,” a notice of action says.
Murphy's lawyer, Sukanta Saha, said it would be inappropriate for his client to speak with CTV News Toronto because the matter is before the court, but that Murphy “denies all allegations that have been put forward.”
“My client, Mr. Murphy, takes the position that he is just as much a victim of Mr. Pleterski's misdeeds as anyone else and this will be shown in the robust defence that will be put forward by Mr. Murphy in due course.”
Pleterski’s lawyer did not respond to requests from CTV News Toronto, but has previously stated that his client disputed much of what has been alleged in court and called the financial claims made by investors “wildly exaggerated.”
A LAVISH LIFESTYLE
An Ontario Superior Court froze Murphy’s assets in September 2022, after a separate investor came forward with similar allegations to Groot’s client.
Murphy’s social media posts, which are chronicled in court documents, continued to depict a lavish lifestyle – driving a Lamborghini in Las Vegas, accelerating to 250 km/h in a Mercedes Benz on unplowed roads, posing on a jet ski in Nassau and shooting a handgun at a range in Orono, Ont.
Yet Murphy simultaneously told the investor that he did not have any funds to pay them back – “a fact inconsistent with his lifestyle,” legal documents allege.
“Clearly there are assets that are not accounted for,” Groot said.
Colin Murphy driving a Lamborghini Huracan on Oct. 4, 2022 (Instagram).
“The next available process to attempt to preserve assets and to attempt to preserve evidence, most importantly in the form of data, is to apply for a private search order.”
Groot obtained a civil search warrant from Justice H.K. O’Connell on Jan. 12, 2023 for the residence Murphy was staying at in Whitby, Ont., court documents show.
Investigators executed the warrant a couple days later and found Murphy refused to surrender an iPhone 13. Digital forensic experts concluded that he had deleted data off of the device, which he later justified as “resetting” the phone because there were “intimate photos” on it.
As a result, Murphy was found in contempt of court, a subject that will be addressed at an upcoming sentencing. He’s also been ordered to turn over financial records dating back to 2020, including money received and transferred to Pleterski.
As the case progresses, Groot said he’s working to preserve all of the data and assets that he can trace along with connecting with other investors involved. “Anyone who has had dealings with Murphy, we certainly are interested in hearing from them,” Groot said.
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