First Bitcoin Fraud Case Fines $2.5 Million to Ponzi Scheme Founder
According to the press release statements from the Commodity Futures Trading Commission (CTFC), they have filed a complaint against Gelfman Blueprint, Inc. (GBI), a New York investment firm for committing fraudulent activities. According to the reports, this is the first case that involves anti-fraud enforcement by the agency regarding bitcoin.
The details were released through the press release where CTFC alleged GBI’s CEO Nicholas Gelfman for taking part in fraud schemes and manipulating the unsuspecting customers. They were suspected of hiding their losses resulting from the trading and promising sizeable returns to their customers and promising them about the over-generous benefits in return of trading bitcoin.
When the public suspected that the company must have had profit in the recent time, reports were drawn up but with a different conclusion. It showed that there was no profit incurred by the company whatsoever, in fact, it only showed a trading loss and customer losses. It also claims that the Ponzi scheme by GBI potentially started back in 2014.
The firm was always the target when it comes to the company conducting fraud schemes to dupe their customers in believing that they are actually receiving profits and would, therefore, want them to trade with them too. Last September, CTFC also filed charges for the investment scam carried out by the Gelfman Blueprint Inc. It was suspected to carry out an operation for a community fund pooling that was hosting a high-profile trading strategy through computer program named ‘Jigsaw.’
James Mcdonald, CTFC director of Enforcement, said in the press release, “This case marks yet another victory for the Commission in the virtual currency enforcement arena. As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable. I’m grateful to the members of Enforcement’s Virtual Currency Task Force for their tireless work on these matters.”
According to the reports from CCN, the legal proceeding started in 2017, but the penalties were confirmed this week. The legal statement concerning the apparent fraud including the promises by GBI for customer profits are fake, and all its claims in the performance reports were false too. Similar to all the Ponzi schemes, these schemes were to lure in the innocent customers to trade their bitcoin in hopes of receiving great profits. The company suspected planned on profiting the customers through the losses of other customers’ funds.
The GBI will have to pay more than $550,000 back to their customers, and the Nicholas Gelfman will pay $492,000 himself. Moreover, the firm is also slapped with a $1.8 million fine accompanied by a permanent ban on trading and registration operations.
The CTFC concluded the press release statement by saying that the Gelfman tried to conceal their Ponzi scheme by staging a fake malware hack which would cause the loss from customers’ funds. The agency promises to fight back at such schemes and will protect the public and customers by ensuring that the wrongdoers are held accountable.
