Crypto Malfeasance: Law Enforcement Involved in Fraud Case
Background of the Crypto Malfeasance Case
A former Los Angeles County Sheriff’s deputy, Michael David Coberg, has pleaded guilty in federal court to charges tied to a large-scale crypto malfeasance case. Reporting via CryptoNews, Coberg admitted to conspiracy to commit extortion and conspiracy against rights in a federal court appearance on Monday, as announced by the U.S. Attorney’s Office for the Central District of California. Coberg, from Eastvale, served both as an active law enforcement officer and as an enforcer for Adam Iza—a self-described “Crypto Godfather” and operator of the now-defunct crypto trading platform Zort.
Iza’s fraudulent activities have led to his federal custody since September 2024. During the scheme, Coberg acted as Iza’s business partner and advisor, collecting over $20,000 monthly for his role. Prosecutors revealed Coberg used his authority to interrogate victims, facilitate false arrests, and help extort hundreds of thousands of dollars from targets. Their criminal plans even extended to discussions about starting an anabolic steroid business.
Details of Crimes and Broader Conspiracy
According to court filings, the malfeasance escalated in 2021 when Coberg and Iza conspired to intimidate and defraud victims. Incidents included forcing a businessman to transfer $127,000 at gunpoint and orchestrating a false arrest in Paramount, California. Coberg received significant monthly payments for enforcing Iza’s demands. The court documents allege these activities represented an egregious abuse of police power for personal and financial gain.
Expert Kadan Stadelmann, Chief Technology Officer of Komodo Platform, told Decrypt, “Police officers should not be able to exercise the badge in off-duty capacity, as it opens up opportunities for corruption and intimidation of citizens.” Stadelmann emphasized, “This fraud unlocked a next level of crypto malfeasance and is far beyond the typical crypto fraud or ICO schemes,” particularly because law enforcement officials played a role in the intimidation and extortion.
Sentencing and Market Reaction
Michael David Coberg is scheduled to be sentenced on February 17, 2026. He faces a statutory maximum of 20 years in federal prison for conspiracy to commit extortion and up to 10 years for conspiracy against rights. Other implicated officers include deputies Christopher Michael Cadman and David Anthony Rodriguez, both of whom have pleaded guilty and are awaiting sentencing in January and November 2026, respectively. Another former deputy, Eric Chase Saavedra, also admitted guilt earlier in the year.
The central figure, Adam Iza, allegedly accumulated $16 million in cryptocurrency through fraudulent means. Court documents indicate Iza spent about $10 million on luxury items with his ex-girlfriend, Iris Ramaya Au. Au pleaded guilty in March 2024 to failing to report $2.6 million in illicit proceeds related to the conspiracy.
What’s Next in Crypto Law Enforcement Oversight
This crypto malfeasance case raises concerns about oversight of law enforcement officers’ off-duty work, particularly in contexts connected to volatile financial markets. The “blurred public-private boundaries highlight weak oversight of off-duty work, in which corruption has no check,” said Stadelmann. As multiple law enforcement personnel face sentencing for collusion with Iza, federal prosecutors continue to stress the importance of preventing such abuses of state power in burgeoning digital asset markets.
For more on similar incidents and regulatory updates, visit the Vizi cryptocurrency news section.
