CFTC Launches Action against U.K. Firm for Laundering More than 22,800 Bitcoin (BTC)
CFTC Launches Action against U.K. Firm for Laundering More than 22,800 Bitcoin (BTC)
According to a report by Finance Feeds published on June 18, 2019, the U.S. Commodity Futures Trading Commission (CFTC) has filed a complaint against a U.K.-based firm named Control-Finance Ltd. and its sole Director Benjamin Reynolds.
The regulator reported that they stole more 22,800 bitcoin (approx. $147 million) from customers by guaranteeing them healthy profits on their investments.
Investors Duped of $147 Million Worth of BTC
Per sources close to the matter, the U.S. watchdog filed a complaint with the New York Southern District Court against Control-Finance Ltd. alleging that it defrauded roughly 1,000 customers to launder more than 22,800 bitcoin. The watchdog accused Control-Finance of soliciting investments from customers to fund a Ponzi scheme.
In its complaint, the CFTC said that Reynolds and his company ran a fraud scheme which asked customers to buy their bitcoin with cash and then deposit it with the firm. The alleged scammers promised customers that their “employed professional cryptocurrency traders” would make them daily profits through day trading. To keep customers in the dark, these alleged conmen often sent part of new customers’ BTC deposits under the disguise of trading profits to existing customers’ crypto wallets.
To further convince customers about the legitimacy of the business, Reynolds and his associates provided them with sham account documents. Concurrently, the company used to transfer their BTC deposits to its cryptocurrency wallets in Canada, South Korea, Switzerland, and Seychelles.
The official complaint with the court states that Control-Finance Ltd and Reynolds “exploited public enthusiasm for bitcoin” from May 1, 2017, to October 30, 2017. The CFTC has requested the court to impose civil monetary penalties and put a permanent trading and registration ban on the firm.
Speaking to law news website Law360, James McDonald, the CFTC’s enforcement director said:
“The CFTC will continue to vigorously police the bitcoin markets, including fraudulent trading activity as alleged in this complaint.”
Adding:
“Fraud in these markets not only harms customers but if left unchecked, it could also hinder innovation. We caution potential virtual currency customers, once again, that they should engage in appropriate diligence before purchasing or trading virtual currencies.”
Need for Better Regulations
A similar incident surfaced last year in September when the CFTC filed charges against a crypto firm named 1pool Ltd for allegedly selling unregistered security-based swaps to U.S. residents.
The continual occurrence of frauds related to digital assets not only dupe investors of their hard-earned money but also give cryptocurrencies a bad rep among lawmakers and regulatory bodies.
As reported by BTCManager on March 20, 2019, former CFTC Chairman Timothy Massad had called for increased cooperation between the CFTC and the U.S. Securities and Exchange Commission (SEC) to better regulate crypto-assets.
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Aisshwarya Tiwari, Khareem Sudlow