In what appears to be the second largest Bitcoin-Ponzi scheme since the now infamous Bitconnect, the United States Commodity and Futures Trading Commission (CFTC) today announced civil enforcement action against a U.K resident Benjamin Reynolds and his business, Control-Finance Limited.
The regulatory body in its filing submitted with the U.S. District Court for the Southern District of New York alleged that Benjamin had taken advantage of growing consumer interest in Bitcoin to set a Ponzi scheme that made away with some 22,858.822 BTC (appr. $147 million) at that time.
Between May 1 through October 2017, the CFTC claimed that Benjamin had lured at least 1000 investors into believing that his company, Control-Finance Limited had virtual currency trading experts that could produce at least 45% in profits monthly.
He also set up an affiliate program which purportedly rewarded investors with money for bringing in new people while in reality, he was using Bitcoins contributed by some investors to pay off new ones.
To hide the fraudulent frauds, Benjamin allegedly used separate Bitcoin wallets to receive an investors’ Bitcoins before obfuscating it with others as a pooled fund using different cryptocurrency trading platforms and exchanges in North America, Asia, and Europe.
“In reality, the defendants made no trades on customers’ behalf, earned no trading profits for them, and misappropriated their Bitcoin deposits,” the CFTC wrote in its statement.
Benjamin also allegedly showed customers falsified earning reports regarding profitable trades which the CFTC claims was never made.
As punishment for the offenses the CFTC reportedly seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and permanent injunctions against further violations of the federal commodity laws.
In a similar report, we noted last month that Russia’s Ministry of Internal Affairs (MOI) closely worked with authorities in Kazakhstan to arrest the founder of a cryptocurrency-related Ponzi scheme that defrauded at least 300 investors.