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Nov 10, 2020 by |

California and San Francisco Whistleblower Attorneys: CFTC Orders Broker To Pay $7.4 Million Restitution For Bitcoin Fraud

ATTORNEY NEWSLETTER

Commodity Futures Trading Commission Polices Bitcoin Trading

Enforcement Action Charges Broker With False Representations 

Customers Lose $7.4 Million In Bitcoin Investments

On October 2, 2020, the U.S. Commodity Futures Trading Commission (CFTC) ordered a broker to pay $7.4 million[1] in restitution to two investors for making fraudulent representations to them inducing them to purchase Bitcoin in the amount of over $ 7 million.[2]  According to the CFTC, the broker represented that he had the Bitcoin in hand and the customers’ money would be safeguarded.  In fact, according to the CFTC the defendant never made any Bitcoin purchases. If you have credible information of any sort of commodity trading fraud including fradudlent trading schemes in Bitcoin or other virtual currency, call the CFTC whistleblower attorneys at Evans Law Firm, Inc. today at (415)441-8669 or toll free at (888)503-8267.

Alleged Fraudulent Scheme

In the reported case, the CFTC found that that after the broker took the customers’ money and failed to provide any Bitcoin, he then lied to the customers about the location of the Bitcoin, the reasons the transaction was not completed, and the status of the customers’ money. “Fraudulent schemes, such as this, harm market participants and subvert the public’s confidence in the safety of new and innovative commodity markets,” said Division of Enforcement Director James McDonald. “The CFTC will continue working to protect our markets, including the burgeoning markets for digital assets such as Bitcoin, from fraudulent schemes, and will work in parallel with our criminal law enforcement colleagues where appropriate.”  The order requires the broker to pay $7,431,728 in restitution to the two customers, and permanently bans him from registering with the CFTC, from trading any commodity interests, and from trading Bitcoin for any account in which he has a direct or indirect interest.  A separate, criminal case is also pending against the broker in federal court.

Victims Can be Whistleblowers

Victims or other persons who provide information that leads to CFTC enforcement actions may be eligible for a reward. See 17 C.F.R. § 165 et seq. (CFTC whistleblower rules).  The CFTC posts Notices of Covered Actions for each Commission enforcement action where a final judgment or order results in monetary sanctions exceeding $1 million.  Individuals who voluntarily provide the Commission with information that leads to the successful enforcement of a Covered Action are eligible to claim a whistleblower award.

Contact Us

If you have credible information on any kind of commodities trading or virtual currency trading fraud, call Ingrid M. Evans and the other CFTC whistleblower attorneys at the Evans Law Firm at (415) 441-8669, or toll free at (888)503-8267 or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Ingrid also represents whistleblowers in cases involving offshore tax avoidance schemes or other tax fraud before the Internal Revenue Service, bank fraud under the Financial Reform, Recovery, and Enforcement Act (FIRREA/FIAFEA), False Claims Act cases, the FINRA Whistleblower Office, and the California False Claims Act.  .

[1] Evans Law Firm, Inc. was not involved in the case in any way.

[2] The fraud was limited to the broker’s actions, and did not implicate Bitcoin.

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