US Regulator register three Companies for Cryptocurrency Fraud
Jan 22, 2018 Posted / 10911 Views
The US CFTC has issued a statement that it is vigilant on the trading and utilization of cryptocurrencies and subsequently afterwards the Commodity Futures Trading Commission registered separate charges against three companies involved in schemes offering for cryptocurrencies. The cases involve fraud and misappropriation of bitcoin and litecoin.
On Thursday, the U.S. Commodity Futures Trading Commission (CFTC) registered civil enforcement actions in a New York District Court against three separate cryptocurrency operators for purportedly defrauding customers and divulging the commodity trading rules. The agency proceeded to post elaborate details of two of the cases on its website on Friday.
The initial case involves Colorado resident Dillon Michael Dean and his UK-registered company, the Entrepreneurs Headquarters Ltd. They requested $1.1 million worth of bitcoin from over 600 members of the public from April 2017 to the present, assuring to convert them into fiat currency and invest in a joint investment mechanism such as binary options. Dean professes of having “strong skills” in options trading and customers were guaranteed high rates of return, the CFTC detailed.
Nonetheless, the derivatives watchdog asserts that the defendants did not trade on account of their customers however misappropriated over $1 million in customers’ funds. Dean also began another similar trading venture termed as Real Trade Profits.
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Mentioning that the offenders failed to enrol with the Commission as a Commodity Pool Operator (CPO) and Associated Person of a CPO, the agency remarked:
"The CFTC Complaint charges the defendants with engaging in a fraudulent scheme to solicit bitcoin from members of the public, misrepresenting that customers’ funds would be pooled and invested in products including binary options, making Ponzi-style payments to commodity pool participants from other participants’ funds, [and] misappropriating pool participants’ funds."
The next case was involved with Patrick K. Mcdonnell and his company Cabbage Tech. Corp., doing business as Coin Drop Markets (CDM). The CFTC is “charging them with fraud and misappropriation in connection with purchases and trading of bitcoin and litecoin.” The agency mentioned that neither Mcdonnell nor his company has ever been registered with the agency in any capacity and the regulator appended:
"The CFTC Complaint alleges that from approximately January 2017 to the present, Mcdonnell and CDM engaged in a deceptive and fraudulent virtual currency scheme to induce customers to send money and virtual currencies to CDM, purportedly in exchange for real-time virtual currency trading advice and for virtual currency purchasing and trading on behalf of the customers under Mcdonnell’s direction."
The Commission affirmed that “the supposedly expert, real-time virtual currency advice was never provided,” supplementing that customers never witnessed the funds they transferred to Mcdonnell or CDM again. Moreover, the agency affirmed that the defendants “removed the website and social media materials from the Internet and ceased communicating with CDM Customers, who lost most if not all of their invested funds due to [the] defendants’ fraud and misappropriation.”
As described by Reuters the third case, nonetheless, “remained under seal," and the case has been not yet disclosed by CFTC.
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