Two distinct digital asset fraud cases have led to federal court orders in the United States mandating that the offenders pay over $9.1 million in restitution to victims deceived in these schemes, as recently reported by the Commodity Futures Trading Commission (CFTC).
In the more significant of the two cases, a Florida resident was ordered to pay $7.6 million in restitution for managing a fraudulent virtual currency project named My Big Coin (MBC). This individual is currently serving an eight-year prison sentence for multiple charges, including wire fraud and operating an unauthorized money-transmitting business. The individual misled investors with exaggerated assertions regarding MBC’s value and a supposed gold backing, redirecting customer funds for personal indulgences that included fine art, real estate, and luxurious items.
More than simple misrepresentation was involved in this case. Court records disclosed that the offender utilized the misappropriated funds to indulge in a lavish lifestyle, acquiring various luxury possessions and real estate. The fraudulent operation involved other co-defendants, leading to a guilty conviction for multiple offenses related to fraud and the illegal handling of financial transactions.
In a different case, another fraudster was ordered to pay over $1.5 million in restitution for running a deceptive digital assets trading scheme. This individual solicited investments in cryptocurrencies like bitcoin and ether for an alleged proprietary trading fund from late 2020 to mid-2022. However, instead of using the investments as promised, customer assets were misused for personal expenditures and gambling.
This fraudster’s scheme exhibited characteristics similar to a Ponzi scheme, with new investments being utilized to pay off previous investors. Eventually, this scheme collapsed, resulting in a guilty plea on charges involving wire fraud and other related fraudulent activities. The judgment against this individual also included a permanent injunction that prohibits participation in CFTC-regulated markets.
Both cases highlight the CFTC’s ongoing battle against digital asset fraud and underline the serious consequences that can arise from such illegal schemes. In addition to restitution orders, one of the perpetrators is facing a permanent ban from trading for himself for an extended period, underscoring the severity of the penalties imposed.
Despite these restitution orders, the CFTC has advised potential victims that recovering lost funds may not be guaranteed, as the offenders may lack sufficient assets. This cautionary note serves as a reminder of the risks involved in engaging with such fraudulent investment schemes.
The CFTC’s recent actions reflect its commitment to regulating the digital asset market. Earlier in the year, a court in Florida mandated another trading firm to pay over $1 million in penalties and restitution for running a fraudulent trading scheme that targeted investors globally. Furthermore, a cryptocurrency exchange recently settled a lawsuit with the CFTC for $5 million, resolving allegations related to misleading regulatory information, which added to the growing list of enforcement actions in the digital asset sector.
In a previous case, five individuals associated with an organization faced a federal court order to pay more than $5 million in penalties due to their involvement in a fraudulent digital asset scheme affecting nearly 200 investors globally. These consistent legal actions and the resulting penalties highlight the ongoing efforts to protect investors in the digital asset market and hold wrongdoers accountable.