Millions in Bitcoin allegedly Defrauded From Trading Scheme Investors: CFTC

Control-Finance Limited is a supposed Bitcoin trading and investment company, founded by the United Kingdom born Benjamin Reynolds. The filing of a civil enforcement action against Control-Finance Limited has been announced by The Commodity Futures Trading Commission (CFTC). The complaint was lodged in the U.S. District Court for the Southern District of New York.

From May 1 through October 31, 2017, documents had revealed that the public enthusiasm for Bitcoin was taken advantage of by Reynolds to fraudulently solicit purchases from customers. Consequently, customers had transferred bitcoin to Control-Finance. The defendant has now been charged with misappropriating at least $147 million the equivalent of 22,858.822 bitcoin at the time. A pyramid scheme called the Control-Finance “Affiliate Program.” initiated by the purported company has made them liable to more than 1,000 customers affected.

As claimed, Reynold’s expert virtual currency traders used risk diversification methods to create a “safe haven” from crypto market risks and protect customers’ Bitcoin deposits and they earned up to 45% trading returns per month. The CFTC in a statement against the defendant writes in this regard: “In reality, the defendants made no trades on customers’ behalf, earned no trading profits for them, and misappropriated their Bitcoin deposits,” as opposed to the claims of Reynolds. Also, “affiliate” bonuses were promised as an incentive for clients to invite family and friends to the platform.

According to reports, the scheme worked by creating unique single-use wallet addresses to receive customers’ Bitcoin deposits. These deposits would then be routed to other, pooled wallet addresses held by virtual currency payment processors and exchanges in North America, Europe, and Asia.

The CFTC authorities have alleged that the company concealed misappropriation solely by the “uneconomical and confusing” blockchain transactions. Amongst the allegations is that when customers requested account withdrawals Reynolds would illegally divert funds from other customer’s to make the payments, covering whatever tracks. There were also fabricated Weekly “Trade Reports,” which identified doctored profitable trades. The fraud was as well concealed by providing customers with fake account balances and profit figures which did not really exist.

As charged, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and permanent injunctions to continue its litigation, and work against further violations of the federal commodity laws.

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Credits – Daniel Kuhn

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