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CFTC Files For Default Judgment Against Director of $147 Million Bitcoin Scam

cryptopotato.com 07 July 2020 09:11, UTC
Reading time: ~2 m

The Commodity Futures Trading Commission (CFTC) has submitted a document to the New York Southern District Court to secure a default judgment against Benjamin Reynolds, the director of alleged fraudulent cryptocurrency scheme Control-Finance.

According to reports from Finance Feeds, Reynolds failed to plead or defend the CFTC’s action, thus forcing the regulator to obtain a Certificate of Default against the defendant.

The commission initially filed a lawsuit against Control-Finance and its director in June 2019 for illegally obtaining and mismanaging investors’ cryptocurrencies worth millions of dollars.

$147 Million Worth Of Bitcoin Lost

Control-Finance was a Bitcoin investment scheme based in the United Kingdom. The company promised investors high returns on crypto trading of up to 1.5% daily and 45% monthly profits. The defendants also told investors that their Bitcoin deposits were protected via several risk diversification methods.

As per the CFTC complaint, Control-Finance and Reynolds conducted their fraudulent operations from around May 2017 to October 2017. The regulator alleged that the scheme exploited more than 1,000 investors and generated at least 22,858.822 BTC worth around $147 million at that time.

No Single Trade Made

The commission further stated in the lawsuit that the company never conducted a single trade with customers’ deposits, and investors only saw fake balances on their accounts. The scheme also published reports with false data to keep up with the lie.

Aside from claiming it engages in crypto trading, Control-Finance was also a pyramid scheme. The company used its “Affiliate Program” to offer commissions to customers who invite new members to invest in the company.

All of these were done through the defendants’ website and social media accounts, including Facebook, Twitter, and Youtube.

By September 2017, Control-Finance website was no longer accessible, and all advertisements about the company on social media were deleted. Additionally, the defendants stopped paying investors and Affiliate Program members.

CFTC Seeks Penalties

The CFTC accused Benjamin Reynolds and his company of laundering millions of dollars in “misappropriated Bitcoin through thousands of circuitous blockchain transactions.”

The defendants may face monetary penalties and ancillary relief, including but not limited to permanent trading and registration bans, restitution, and disgorgement.

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