Altcoin News: CFTC Filed a Lawsuit Against the Organizers of the Cryptocurrency Pyramid for $147 Million
The Commodity Futures Trading Commission (CFTC) announced the filing of a lawsuit against the trading and investment cryptocurrency company Control-Finance Limited from the UK and its founder.
The company and its founder, Benjamin Reynolds, are accused of misappropriating 22,858 BTC worth at least $147 million from more than 1,000 participants in the pyramid scheme Affiliate Program Control-Finance.
According to the documents, from May 1 to October 31, 2017, Reynolds used the public hype about BTC, fraudulently urging customers to buy and transfer Bitcoins in Control-Finance. He argued that his experienced cryptocurrency traders would receive up to 45% of their income per month for investors and would use risk diversification techniques to create a safe haven from the risks of the cryptocurrency market and protect customers’ deposits.
“In reality, the defendants made no trades on customers’ behalf, earned no trading profits for them, and misappropriated their Bitcoin deposits,” write the CFTC in a statement.
Reynolds also called on his clients to invite family and friends to the platform, promising “partner” bonuses. The misappropriation scheme was based on the creation of unique one-time wallet addresses to receive customer deposits at BTC, which were then redirected to other wallet addresses that are in payment cryptocurrency systems and exchanges in North America, Europe and Asia. The CFTC claims that these transfers were made for the sole purpose of hiding misappropriation of funds.
In addition, when customers requested withdrawals, Reynolds forwarded funds from other customers to make payments. The head of the company hid fraud, providing customers with fake account balances and profit figures, which reflected non-existent trading profits. The weekly “trading reports,” which identified illusory lucrative deals, were also fabricated.
As part of the legal process, the CFTC seeks the presentation of monetary penalties, the return of funds to investors, the payment of illegally obtained income, trade and registration bans and permanent judicial bans against further violations of federal laws on exchange goods.
In March, CFTC fined a startup for $990,000 for illegal Bitcoin operations, and in November last year, the Commission fined a cryptocurrency trader for $1.1 million for fraud.
Author: Marko Vidrih