Published on: September 19, 2024, 01:30h.
Last updated on: September 19, 2024, 01:30h.
A man in Denver has been found guilty by a federal jury for operating an illegal gambling business that utilized a fake cryptocurrency to disguise the exchange of gambling credits for cash.
Jonathan Arvay, aged 38, was convicted of running an illegal gambling business and conspiring to conduct an illegal gambling business in connection with the Player One Arcade in Denver.
The Player One Arcade was among several businesses in Colorado that were raided by federal agents in February 2022, offering popular “fish-shooting”-style arcade games and other slots-style machines, according to court documents.
Obsidian Digital Asset Coin
Wagers at these businesses were made using a proprietary “cryptocurrency” called “Obsidian Digital Asset Coin (ODAC),” which could be bought and sold on the premises. The network of establishments was connected through the use of the ODAC cryptocurrency and through common management and ownership, as per prosecutors.
Two other individuals, Nathan Sugar and Jovan Walker, are also facing similar charges related to their involvement in the network, with Sugar facing additional counts of money laundering.
Casino-style gambling in Colorado is limited to three Rocky Mountain gambling towns, Black Hawk, Central City, and Cripple Creek, along with two Native American casinos in the Four Corners region.
The defendants argued that the use of ODAC legitimized the businesses due to a 2018 Colorado law prohibiting gaming machines from awarding cash prizes. However, ODAC could be exchanged for cash at a cryptocurrency teller machine inside the arcade.
Veneer of Legitimacy
Acting United States Attorney for the District of Colorado, Matt Kirsch, remarked, “These gambling dens were disguised as arcades with a semblance of legitimacy. I am thankful to law enforcement for uncovering the truth behind these establishments that were causing real harm in our communities.”
Mark Michalek, FBI Denver Special Agent in Charge, added, “These defendants established a large, intricate illegal gambling operation, both online and in person in Pueblo, Colorado Springs, Lakewood, Denver, Aurora, and Greeley. Their illicit gains resulted in crimes involving money laundering and fraud against the U.S. government, among other offenses.”
Arvay is set to be sentenced on December 12 and could face up to five years in prison and a $250K fine with Walker. Sugar, due to the money laundering charges, may face a sentence exceeding 20 years.