CFTC Sues 5 Individuals for Bitcoin Trading Services Fraud

CFTC Sues 5 Individuals for Bitcoin Trading Services Fraud – The Commodities Futures Trading Commission (CFTC) has initiated legal action against five individuals who are accused of engaging in deceptive practices to promote bitcoin and cryptocurrency trading services, resulting in the exploitation of unsuspecting investors. The CFTC alleges that the majority of victims affected by this scheme were from Spanish-speaking communities.

According to the CFTC, the defendants named in the lawsuit—David Carmona, Juan Arellano Para, Moses Valdez, David Brend, and Marco A. Ruiz Ochoa—sought funds from customers under the pretense of assisting them in trading bitcoin and other cryptocurrencies. However, instead of utilizing these funds as intended, they misappropriated them for their own benefit.

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Operating under the name Icomtech, the defendants operated a business purportedly engaged in cryptocurrency trading. The CFTC claims that during the period from 2018 to 2019, Icomtech advertised daily returns ranging from 0.9% to 2.8% to its customers, supposedly generated through crypto trading. Additionally, the fraudulent scheme made assurances of doubling customers’ investments within a span of four to eight months.

Nevertheless, the regulatory authority alleges that neither Icomtech nor the defendants fulfilled their commitment of utilizing the received funds for bitcoin or cryptocurrency trading. Furthermore, the scheme failed to deliver on the aforementioned promises, as asserted by the CFTC. Additionally, as per the CFTC, agents affiliated with Icomtech collected funds amounting to “hundreds of thousands of dollars” from more than 170 individuals residing in the United States and various other countries. 

Notably, the majority of these customers hailed from Spanish-speaking communities. In addition to the enforcement measures taken by the CFTC, the U.S. Attorney’s Office for the Southern District of New York (SDNY) pressed charges against the five defendants for wire fraud in October 2022. These charges were directly linked to their involvement in the fraudulent enterprise conducted under the name of Icomtech.

In a recent development, the CFTC has taken swift action in what is now considered its largest bitcoin fraud case, imposing a penalty fee of $3.4 billion. The case revolved around a South African CEO who operated an unregistered commodity pool to illicitly obtain bitcoin from individuals, while also misappropriating customers’ funds.

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Meanwhile, CFTC Commissioner Christy Goldsmith Romero recently expressed the challenges faced by the agency in monitoring the extensive fraud occurring within the cryptocurrency realm. She stated that the sheer volume of fraudulent activities in the space made it impossible to track them all. Remarkably, Romero revealed that approximately 20% of the agency’s portfolio consisted of crypto-related cases, including lawsuits involving industry giants like Binance and the bankrupt FTX.

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Furthermore, the CFTC Commissioner emphasized that the regulatory agency should not be perceived as a more lenient or accommodating authority toward the cryptocurrency sector when compared to the Securities and Exchange Commission (SEC). The SEC has taken a more assertive stance towards the industry in recent times, adopting a more aggressive regulatory approach.

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