Brent Kovar was convicted on August 24 of running a $24 million cryptocurrency Ponzi scheme, a verdict that comes as the digital-asset industry faces record illicit activity and continued pressure to prevent fraud from eroding investor confidence.

The Las Vegas businessman operated Profit Connect, a company that claimed to be an artificial-intelligence firm mining cryptocurrency on a supercomputer. That technology did not exist.

Although the case is small relative to the broader industry, it arrives at a sensitive moment. TRM Labs estimates that the illegal crypto market attracted a record $158 billion in 2025, up nearly 145% from the previous year. Chainalysis separately found that at least $14 billion was received on-chain by crypto scams in 2025, a figure that could rise above $17 billion as more illicit addresses are identified.

How Profit Connect used AI language to mask the scheme

From late 2017 until July 2021, Kovar told investors that Profit Connect’s software could run on a supercomputer that mined cryptocurrency and verified transactions, according to the U.S. Attorney’s Office for the District of Nevada. He also promised guaranteed returns of 15% to 30%, along with a full refund guarantee.

Guaranteed high returns presented as risk-free are among the classic warning signs that securities regulators highlight in investor alerts about Ponzi schemes, alongside promises of unusually consistent returns and unlicensed sellers.

Prosecutors said the company had no profits or reserves to support those promises. Instead, Kovar used investor money to operate the business, buy gifts for employees, and purchase his home.

Earlier investors were paid with proceeds from later investors, which is the core structure of a Ponzi scheme. At least 400 investors contributed more than $24 million.

False FDIC protection claims

Kovar also claimed that depositor funds were protected by the Federal Deposit Insurance Corporation (FDIC) and that Profit Connect held crypto reserves worth hundreds of millions of dollars. Both claims were false.

FDIC insurance covers cash deposits at insured banks — generally up to $250,000 per depositor, per bank, for each account ownership category — and does not extend to securities, crypto assets, or investments offered by non-bank companies. The agency has repeatedly warned consumers about false claims of FDIC coverage and has moved against companies that invoke its name, including a 2022 cease-and-desist demand to crypto lender Voyager Digital over statements that customer funds were federally insured.

Ryan Korner, the FDIC Office of Inspector General special agent who worked the case, said:

“Mr. Kovar defrauded investors to enrich himself, luring victims with false claims that his investment was insured by the FDIC”

FBI Las Vegas special agent Christopher Delzotto said the victims “thought they were engaged in revolutionary technological advancement” when the operation was “merely a deception.” First Assistant U.S. Attorney Sigal Chattah said that “financial fraud undermines the foundational trust of our economic system.”

After a nine-day trial, Kovar was found guilty of 11 counts of wire fraud, two counts of mail fraud, and two counts of money laundering.

Regulators had already moved against Profit Connect

Regulators took action against Profit Connect years before the conviction. In July 2021, the U.S. Securities and Exchange Commission (SEC) obtained an emergency asset freeze order against the company, as well as against Kovar and his mother, Joy Kovar, who was described as a control person.

The SEC said Profit Connect had raised more than $12 million from over 277 retail investors, with more than 90% of the money coming from investors rather than trading activity. Regulators also said the company encouraged people to withdraw money from retirement savings and home equity, and targeted individuals saving for their children’s education.

A federal indictment followed on February 14, 2025.

Kovar’s sentencing is scheduled for November 30, 2026. While the law allows for a maximum sentence of 280 years, the final term will be determined by the judge under federal guidelines and other requirements. In federal fraud cases, courts also commonly address restitution for victims and forfeiture of proceeds at sentencing, determinations that will accompany the resolution of the criminal case.

Why the case matters beyond Las Vegas

The Profit Connect case reflects a broader pattern in crypto crime, where AI and digital-asset terminology are used to make fraud appear technologically sophisticated.

In March 2026, INTERPOL warned about the “industrialization of fraud,” saying that AI-boosted schemes generated 4.5 times more money per fraud than scams that did not involve AI vendors. In July, the Financial Action Task Force said organized crime groups are exploiting regulatory gaps to move illicit profits through virtual assets.

The issue is especially relevant as crypto becomes more embedded in mainstream finance. A January 2026 Coinbase and EY-Parthenon survey of 351 institutional investors found that 66% identified an uncertain regulatory environment as their top concern when investing in digital assets.

Profit Connect illustrates that concern. It also underscores the role of enforcement, since broader adoption depends not only on access to crypto markets but also on whether investors believe fraud disguised as innovation will be detected and punished.