Cypress man indicted in crypto scheme after investors were misled with $100T gun box claim, docs say

CYPRESS, Texas (KTRK) -- A cryptocurrency executive from Cypress has been indicted for his alleged role in a scheme to defraud investors.

Brian Fontenot II, who serves as the Chief Technology Officer of XUSD, is jailed in Galveston County awaiting extradition to Georgia, where he's facing 90 criminal charges related to the operation.

In May, Fontenot and seven others, including XUSD founder James Nelson, were indicted in Baker County, Georgia, following a multi-year FBI investigation that was then handed over to local authorities.

Investigators say that during a meeting in Georgia in 2021, representatives for XUSD told prospective investors that XUSD coins were backed with precious mineral mines as well as a Chinese imperial gun box worth $100 trillion.

"Those types of numbers, I'm not even sure Apple's got that kind of money," said Houston attorney Geoff Berg, who's represented cryptocurrency scam victims in other cases. "I'm not sure the planet earth has that kind of money."

Prosecutors say Fontenot and his partners raised more than $3 million in 2021, which they then transferred to themselves and to side ventures.

Despite the indictment, XUSD appears to still be in business.

In March, the company inked a naming rights deal with Indoor Football League team the Quad City Steamwheelers.

Prosecutors point to a YouTube video shot during halftime at a Steamwheelers game during which Fontenot claims XUSD "is the most powerful stable coin in the world and it's stabilized by an asset pool of $414 trillion in physical assets."

For reference, that's more than 14 times the size of the entire U.S. economy.

The court documents Eyewitness News reviewed don't specify who invested in the cryptocurrency or whether any are from the Houston area.

"In a case where the flag is as red as a $100 trillion Chinese gun box, what you would expect to see is that victims are elderly, some with impaired mental faculties, people with dementia," said Berg.

The Harris County Precinct 5 Constable's Office executed a search warrant at Fontenot's Cypress home last week, where they searched for evidence linking him to the company.

He was arrested in Galveston County the same day and has filed paperwork indicating he won't fight extradition to Georgia.

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