A complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) against a crypto platform and its CEO has resulted in the Federal Court ordering the business to pay over $2.5 million in restitution.
The world is an expensive place, which is why some of us look at different ways to grow our wealth whether it be taking a second job or looking for investment opportunities. Over the course of two years, this is probably what duped investors were thinking when they signed up with New York-based Gelfman Blueprint, Inc (GBI).
According to a Commodity Futures Trading Commission (CFTC) press release, GBI under its CEO, Nicholas Gelfman, operated a Bitcoin Ponzi scheme between 2014 and 2016. Through 80 investors, the platform received over $600,000. As with any scheme of this nature, the company’s employees recruited victims and got them to put their money in a pooled fund that would supposedly be used for trading.
House of Cards Collapses
Payouts received by scammed investors were actually funds put in from the fellow victims and all reports showing positive growth were fake. In fact, further investigation showed that the platform was performing miserably through “infrequent and unprofitable trading”. As the walls began to close in, Gelfman orchestrated a fake security hack that conveniently wiped out all of the funds.
The CFTC filed the complaint in September last year with final judgment being passed on the 16th of October 2018. The CFTC’s Director of Enforcement, James McDonald, explained what the verdict means for the commission:
This case marks yet another victory for the Commission in the virtual currency enforcement arena. As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable. I’m grateful to the members of Enforcement’s Virtual Currency Task Force for their tireless work on these matters.
CFTC Serious About Cracking Down
The verdict comes with a hefty price tag for GBI and Gelman. The platform is liable to pay $554,734.48 while Gelman himself has been ordered to pay $492,064.53 to their swindled clients. In addition, the company and its CEO is due to pay $1,854,000 and $177,501 respectively for civil monetary penalties. The two entities are also banned from trading.
Live Bitcoin News recently reported on another case that the CFTC is working on, showing that the commission is working hard to eradicate fraud in the industry. Even McDonald’s comments show that they are focused on making the environment safer for consumers and not simply wanting to remove the crypto market as a whole.
Another initiative showing this is the U.S. Securities and Exchange Commission’s development of its FinHub, which aims to be, among other things, a public platform for advice and discussions on innovative ideas and the regulation that goes along with it.
Do you support the creation of clearer regulations in the industry? Why or why not? Let us know in the comments below!
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