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The Commodities Futures Trading Commission (CFTC) has initiated legal action against five individuals for misleadingly advertising bitcoin and cryptocurrency trading services, thus defrauding unaware investors.
The individuals involved in the case, as stated by the CFTC, primarily focused on Spanish-speaking users.
Majority of Victims Were From Spanish-speaking Communities
The CFTC claimed that five individuals — David Carmona, Juan Arellano Para, Moses Valdez, David Brend, and Marco A. Ruiz Ochoa — solicited investments from clients to assist them in trading bitcoin and other cryptocurrencies but ultimately misused the funds of the users.
The defendants collectively operated a business named Icomtech, which was purportedly a cryptocurrency trading enterprise. According to the CFTC, between 2018 and 2019, Icomtech asserted that clients would earn daily returns ranging from 0.9% to 2.8% from crypto trading. The deceptive scheme also guaranteed to double clients’ investments within a timeframe of four to eight months.
However, the regulator contended that Icomtech, along with the aforementioned defendants, did not allocate the received funds for bitcoin or cryptocurrency trading, nor did the scheme fulfill the promised returns.
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Additionally, the CFTC indicated that the Icomtech representatives solicited investments totaling “hundreds of thousands of dollars” from over 170 individuals in the United States and other nations. Moreover, a significant portion of the clients originated from Spanish-speaking communities.
Alongside the CFTC enforcement action, the U.S. Attorney’s Office for the Southern District of New York (SDNY) also indicted the five defendants for wire fraud in October 2022 related to the Icomtech fraudulent operation.
CFTC not More Crypto-Friendly Than the SEC
This recent enforcement action follows shortly after the CFTC recorded its largest bitcoin fraud case, which involved a penalty of $3.4 billion. This case concerned a South African CEO who operated an unregistered commodity pool to solicit bitcoin from individuals and also misappropriated clients’ funds.
Meanwhile, CFTC Commissioner Christy Goldsmith Romero recently remarked that it was unfeasible to oversee all the fraudulent activities occurring in the cryptocurrency sector, as the volume was substantial. According to Romero, 20% of the agency’s portfolio consisted of crypto-related cases, including lawsuits against the crypto giant Binance and the insolvent FTX.
The CFTC Commissioner further noted that the regulatory body should not be perceived as a “friendlier regulator” towards the cryptocurrency industry compared to the Securities and Exchange Commission (SEC), which has taken a more assertive stance towards the sector in recent times.
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