The U.S. Commodity Futures Trading Commission (CFTC) has participated and dealt with several cryptocurrency cases up till now. Just like in the past, CTFC once again came out successful while pursuing a case against Gelfman Blueprint Inc. (GBI) and the CEO of the company, Nicholas Gelfman. CTFC filed the case in a New York federal court that ordered the company and the CEO of the company to pay $2.5 million for running a Bitcoin Ponzi scheme.
Events like these have dismayed people and caused many people to lose their funds. Kara Haas founded a firm that is devoted to CPAs and accountants who have their own blockchain technology clients, dealing with one cryptocurrency or other. BlockPublisher asked her if due to several cryptocurrency scams and frauds reported, people were righteous in regarding cryptocurrencies as scam. She replied:
No. I think some do not understand fraud, manipulation, and/or the technology. I do not think all crypto is a scam.
James McDonald, the CFTC’s Director of Enforcement, expressed satisfaction on the CTFC’s latest victory. He claimed that CTFC was determined to make the ‘bad actors’, who anticipated fraudulent activities in the crypto market, accountable for their schemes.
The court order states that GBI along with its CEO ran the Ponzi scheme for about two years, from 2014 to 2016, and collected funds of worth more than $600,00 from about 80 customers. The company claimed that funds from its customers were invested in a commodity pool that consisted of a high-frequency trading strategy. It further claimed that it used a program called Jigsaw to administer that strategy.
The court rebutted all the claims of the company by declaring the strategy and performance reports fake and false. The court found the CEO of the company liable for the illegal activities and violations by GBI. Apart from this, court orders also found the company to be involved in a conspiratorial activity in which a fake hack that caused loss of all customer funds was professed.
GBI and Gelfman are ordered to pay in restitution of the customers and in civil monetary penalties a sum that totals up to about $2.5 million. The orders from the court, besides imposing fines for restoring the customers, ban both GBI and its CEO from all trading activities in the future.