The US CFTC charged Nicholas Gelfman and Gelfman Blueprint Inc with fraud, misappropriation and issuing false account statements. What else did the CFTC Bitcoin Ponzi scheme warning reveal?

22 September, AtoZForex – The US Commodity Futures Trading Commission (CFTC) has filed a case against Nicholas Gelfman head at Gelfman Blueprint Inc. (GBI) for operating a bitcoin Ponzi scheme. The commission believes that the company has solicited at least $600,000 from 80 investors between 2014 and 2016.

According to the CFTC, Investors gave money to Gelfman “for placement in a pooled commodity fund. The company purportedly employed a high-frequency and algorithmic trading strategy. To create the illusion of stability, the defendants allegedly prepared and distributed false account statements. As well as, telling investors that they made steady gains from trading the cryptocurrency, according to the complaint.

CFTC Bitcoin Ponzi Scheme warning

However, the defendants paid themselves several thousands of dollars in fees. While in fact, their trading account records reveal only infrequent and unprofitable trades. In addition, Gelfman embezzled the remaining pooled monies after he “staged a fake computer hack to conceal misappropriation. Nicholas may get 20 years in prison if convicted. However, the regulator has taken action against many schemes. Reported earlier, CFTC charges Binary options affiliates over $16m scheme.

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. James McDonald, the CFTC’s Director of Enforcement, commented: “Through its work across the Commission, and as exemplified by the work of LabCFTC.

Gelfman Blueprint preyed on Bitcoin investors

The CFTC has demonstrated its continued commitment to facilitating market-enhancing FinTech innovation. Part of that commitment includes acting aggressively and assertively to root out fraud and bad actors in these areas. As alleged, the Defendants here preyed on customers interested in virtual currency, promising them the opportunity to invest in Bitcoin when in reality they only bought into the Defendants’ Ponzi scheme. We will continue to work hard to identify and remove bad actors from these markets.

Since the transactions on bitcoin’s blockchain network are decentralized and anonymous. But the cryptocurrency provides an attractive option for criminals looking to conduct business outside of the country. In a related article previously, many bitcoin Ponzi operators were busted during regulators clampdown.

The Italian mafia has used bitcoin to launder money for its illicit activities. The notorious WannaCry hackers extorted over $140,000 worth of the cryptocurrency from their malware victims.

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