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CFTC Lawsuit Alleges $147 Million in Bitcoin Defrauded from Trading Scheme Investors

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The Commodity Futures Trading Commission (CFTC) announced the filing of a civil enforcement action against Control-Finance Limited, a purported Bitcoin trading and investment company, and its founder, Benjamin Reynolds, of the United Kingdom.

The complaint charges the defendants misappropriated at least 22,858.822 bitcoin—worth at least $147 million at the time—from more than 1,000 customers through a pyramid scheme called the Control-Finance “Affiliate Program.”

According to the documents, from May 1 through October 31, 2017, Reynolds exploited public enthusiasm for Bitcoin by fraudulently soliciting customers to purchase and transfer bitcoin to Control-Finance. He alleged his expert virtual currency traders earned up to 45% trading returns per month, and used risk diversification methods to create a “safe haven” from crypto market risks and protect customers’ Bitcoin deposits.

“In reality, the defendants made no trades on customers’ behalf, earned no trading profits for them, and misappropriated their Bitcoin deposits,” write the CFTC in a statement.

Reynolds also enticed his clients to invite family and friends to the platform through promises of “affiliate” bonuses.

The misappropriation scheme relied on creating unique single-use wallet addresses to receive customers’ Bitcoin deposits, which would then be routed to other, pooled wallet addresses held by virtual currency payment processors and exchanges in North America, Europe, and Asia. CFTC authorities allege these uneconomical and confusing blockchain transactions were executed solely to conceal misappropriation.

Additionally, when customers requested account withdrawals, Reynolds would illegally divert funds from other customer’s to make the payments.

Reynold’s concealed the fraud by providing customers with sham account balances and profit figures that falsely reflected trading profits that did not exist. Weekly “Trade Reports,” which identified illusory profitable trades were also fabricated.

In its continuing litigation, the CFTC 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, as charged.

The complaint was lodged in the U.S. District Court for the Southern District of New York.

Pyramid photo via ShutterStock

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Major Coins Trading Sideways With Moderate Losses, Bitcoin Near $10,400

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Sunday, July 21 — Major coins are mostly trading sideways, remaining relatively quiet with moderate losses over the past 24 hours, according to data from Coin360.

Market visualization from Coin360

Market visualization from Coin360

The leading cryptocurrency Bitcoin (BTC) broke the $11,000 threshold earlier yesterday, but could not hold its position and dipped to its current price point of $10,406, down by 1.86% on the day. In terms of its weekly performance, BTC has lost 2.20%.

Bitcoin 24-hour price chart. Source: Coin360

Bitcoin 24-hour price chart. Source: Coin360

The second-largest crypto, Ether (ETH), has taken a downturn as well and is trading at $221.26 at press time, down by 1.34% on the day. ETH began the day at $233.61, hitting its highest mark at $236.05 in the middle of the day before reaching its current price.

Ether 7-day price chart. Source: Coin360

Ether 7-day price chart. Source: Coin360

Ripple (XRP) has also experienced slight losses over the last 24 hours, down 1.78% to trade at $0.323 at press time. The altcoin’s weekly chart is showing its price increase by 2.91%, with its lowest price mark of $0.293 on July 16.

Ripple 7-day price chart. Source: Coin360

Ripple 7-day price chart. Source: Coin360

On the top-20 digital currencies list, only Tether (USDT), EOS (EOS), UNUS SED LEO (LEO), Cosmos (ATOM), and Tezos (XTZ) are reporting gains, wherein XTZ is up by 9.37%.

Total market capitalization of all coins is over $288 billion at press time, which is its lowest point on the day. The daily trading volume of all cryptocurrencies is around $59.4 billion.

As reported earlier today, BTC outflows on major cryptocurrency exchange BitMEX notably exceeded the inflows after the firm was reported to be a subject in a regulatory investigation. Over the past 24 hours, BitMEX reportedly saw an outflow of $83 million worth of Bitcoin, while only $12 million came in.

Keep track of top crypto markets in real time here





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Bitcoin Retakes $11,000 Following Turbulent Week in Crypto

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Charts Courtesy of Coin360.com

Charts Courtesy of Coin360.com

July 20 — Bitcoin (BTC) has retaken the $11,000 price point on the heels of a turbulent week. 

Charts Courtesy of Coin360.com

Charts Courtesy of Coin360.com

After a bull market at the end of June brought the price of BTC to almost $14,000, the coin had largely been maintaining between $10,000 and $13,000 for most of the past month, briefly cracking $11,000 on July 15 before slipping below the $10,000 price point on July 16. For the past three days, BTC has been in the $10,000 range, but had faltered at the $11,000 resistance until now.

Charts Courtesy of Coin360.com

Charts Courtesy of Coin360.com

The past week has seen some major hurdles for cryptocurrency at large, particularly within the United States. On July 11, President Donald Trump voiced his opposition to cryptocurrencies, particularly BTC and Facebook’s planned Libra, in a series of tweets, saying:

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.” 

Trump’s tweets came days before hearings on Facebook’s Libra before the US Senate Banking Committee on Tuesday, July 16 and the House Financial Services Committee Wednesday, July 17. The two hearings left little doubt as to Congress’s attitude toward Libra, which was overwhelmingly negative. Representative Madeleine Dean commented:

“It’s tough to trust when the collection, storage and misuse of the information of your customers generated a $5 billion fine.”

While Libra’s outlook may be bleak, the significance of the hearings for Bitcoin — with a market cap of $196,266,374,749 as of press time, the largest cryptocurrency — has remained unclear. 

Today’s price rally may mean that the storm has passed for BTC.





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Coinbase CEO Wants Firm to Move Beyond Trading in Next 5 Years

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Brian Armstrong, CEO of major American crypto exchange and wallet service Coinbase,  believes that the firm will be less about trading and more about adoption five years from now.

Armstrong wants the firm to connect people in crypto industry

 In an AMA session on July 19, Armstrong presented his vision of the company in five years, claiming that he sees Coinbase as not just a crypto trading service provider, but rather a more universal entity driving adoption to crypto.

Armstrong pointed out Coinbase’s mission to help grow the global crypto economy by connecting people in the market and expanding crypto community to help people use cryptocurrencies for more than just buying and selling. In this regard, Armstrong cited some recent Coinbase developments, such as incentivized crypto educational program Coinbase Earn, as well as preparations to soon enable crypto lending and margin trading on Coinbase. Armstrong explained:

“In five years I hope that we’ll have it even further beyond that. There’ll be thousands of companies that’ll be crypto-first.”

Armstrong supports people who left Coinbase to run their own crypto projects

As a part of Coinbase’s crypto adoption driver mission, Armstrong has also expressed his positive stance to former Coinbase employees who decided to leave the company to launch a new successful crypto project. Coinbase CEO noted the existing term of Coinbase mafia, recalling roughly ten people who have quit Coinbase to run successful crypto companies.

Armstrong appeared to encourage these former employees, claiming that he really wants people to learn from Coinbase and spread their knowledge to bring more adoption. “We‘re just gonna keep doing more and more of that,” Armstrong said, still adding that Coinbase is a multi product company.

On July 12, Armstrong said that a recent anti-Bitcoin (BTC) tweet by United States President Donald Trump unlocked another achievement for crypto industry, indicating that crypto industry is independent of global powers and that those powers cannot shut crypto down.





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