The Commodity Futures Trading Commission hauled two different alleged bitcoin fraudsters into New York federal court on Thursday cases related to virtual currency scams.

Justin Slaughter, the former chief policy adviser and special counsel to CFTC Commissioner Sharon Y. Bowen, told MarketWatch, “Given that the CFTC announced that these enforcement actions were brought by a Virtual Currency Task Force within the CFTC, I suspect these enforcement actions will be the beginning of many more involving virtual currencies.”

In September of last year, the CFTC also charged Nicholas Gelfman and his company Gelfman Blueprint, Inc. with fraud, misappropriation, and issuing false account statements in connection with solicited investments in bitcoin.

On Thursday the CFTC filed charges against Dillon Michael Dean of Longmont, Colorado, and his company The Entrepreneurs Headquarters Limited, a UK-registered company, for an alleged fraudulent scheme to collect bitcoin BTCUSD, -2.43% from members of the public, telling them their coin would be pooled and invested in products including binary options. Instead they allegedly made Ponzi-style payments to the commodity pool participants from other participants’ funds, and misappropriated pool participants’ funds. The defendant and his firm also never registered with the CFTC as an Associated Person of a Commodity Pool Operator and as a CPO.

In the second action, the CFTC charged on Thursday that Patrick K. McDonnell, of Staten Island, New York, and CabbageTech, Corp., which did business as Coin Drop Markets, committed fraud and misappropriated funds in connection with purchases and trading of bitcoin and litecoin.

CFTC Enforcement Director James McDonald and SEC Enforcement Co-Directors Stephanie Avakian and Steven Peikin, who have already notched their own actions related to virtual currencies and initial coin offerings or ICOs, made a joint statement regarding the virtual currency enforcement actions.

“When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or the like – the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws. The Divisions of Enforcement for the SEC and CFTC will continue to address violations and to bring actions to stop and prevent fraud in the offer and sale of digital instruments.”

Read:SEC, CFTC warn of risk of virtual currencies and initial coin offerings

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In the Entrepreneurs Headquarters Limited case, the CFTC’s McDonald said that the defendants tried to take advantage of public interest in virtual currencies by offering retail customers the chance to use bitcoin to invest in binary options, when in reality they were only buying into a Ponzi scheme.

Binary options are a type of options contract in which the payout will depend entirely on the outcome of a yes/no proposition, one that typically relates to whether the price of a particular asset that underlies the binary option, in this case bitcoin, will rise above or fall below a specified amount.

From April 2017 until now, the defendants, solicited at least $1.1 million worth ofbBitcoin from more than 600 members of the public and allegedly promised to convert this bitcoin into fiat currency to invest on the customers’ behalf in a pooled investment vehicle for trading commodity interests, including trading binary options on an online exchange designated as a contract market by the CFTC.

However, the defendants allegedly never traded on behalf of their customers. All trading profits were allegedly fake. The stopped making payments to their customers after allegedly redirecting over $1 million in customers’ funds to themselves.

Dean launched another similar trading venture under the name Real Trade Profits, using a website to solicit customers to deposit bitcoin for a pooled investment in binary options trading and promising high rates of return.

In the case against McDonnell and CabbageTech, McDonald said the defendants “preyed on customers interested in bitcoin and litecoin, promising them the opportunity to get the inside scoop on the next new thing and to benefit from the trading acumen of a supposed expert. In reality, as alleged, customers only bought into the Defendants’ fraudulent scheme.”

McDonnell has ever been registered with the CFTC in any capacity, the regulator said.

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