CFTC Goes After New York Trader for Operating a Bitcoin Ponzi Scheme
The US Commodity Futures Trading Commission (CFTC) is charging a US trader with running a Bitcoin-based Ponzi scheme after fraudulently soliciting US $600,000 from 80 clients.
CFTC Takes Action Against Alleged Bitcoin Ponzi Scheme
New York trader, Nick Gelfman, and his company Gelfman Blueprint Inc. (GBI) are being pursued by the CFTC for operating a Ponzi scheme.
The Ponzi scheme centered around cryptocurrency trading, Bitcoin in particular, in which investors gave money to Gelfman for placement in a pooled commodity fund.
Allegedly, Gelfman and his company produced fraudulent income statements to create the illusion of stability and maintain investor confidence.
According to the complaint filed by the CFTC, they also told investors that they were making steady gains by trading cryptocurrency, despite their trading account records revealing only infrequent and unprofitable trades
Additionally, Gelfman is being accused of embezzling all remaining pool money after he and his associates paid themselves thousands of dollars in fees.
To cover it up and prevent arousing suspicion from clients, Gelfman staged a fake computer hack to conceal the illegal act.
Gelfman may be sentenced to 20 years in prison if convicted of the charges filed against him.
CFTC Says it’s Committed to Facilitating Fintech Innovation
The CFTC has asked the court to provide full restitution to defrauded pool participants and pay the appropriate civil monetary penalties.
In addition to fiscal claims, the agency seeks permanent registration and trading bans and a permanent injunction from future violations of federal commodities laws.
Interestingly, in the CFTC’s statement on the situation they claimed to be committed to fintech innovation — saying that part of their
commitment is to pursue bad actors and root out fraud.
Furthermore, as it has been alleged that the defendants in this case have preyed on traders interested in cryptocurrency — purposefully trying to benefit at the expense of others — the CFTC will continue with the case as a means of carrying out that commitment.
What do you think of the suspected Bitcoin ponzi scheme? What do you think of the CFTC’s response? Let us know in the comments below.
Images Via CFTC, Tradingsim.com, bostonmagazine.com