The U.S. Commodity Futures Trading Commission (CFTC) keeps cracking down on scams and Ponzi schemes and is now seeking a whopping $572 million in penalty and restitution from Benjamin Reynolds, the mastermind behind the $140 million crypto Ponzi dubbed Control-Finance.
According to a report from media outlet FinanceFeeds, a proposed judgment filed by the CFTC with the New York District Court states that the sole director of Control-Finance would have to pay a penalty of $429 million and restitution fees of $143 million.
The report added that the CFTC had previously filed a complaint back in June 2019, looking for answers regarding the elaborate scheme. But Reynolds neither responded to the complaint nor did he appear in court.
The CFTC complaint alleges that Control-Finance launched a fraudulent Bitcoin trading scheme on May 1, 2017. Through this scheme Reynolds earned approximately 22,858.822 Bitcoins worth $147 million, defrauding around 1000 customers.
He also developed a Control-Finance ‘Affiliate Program’ and promoted it using different websites. Reynolds then attracted investors by promising trading returns of up to 45 percent every month, but this never happened.
Hence, the complaint states:
“In reality, the defendants made no trades on customers’ behalf, earned no trading profits for them, and misappropriated their Bitcoin deposits.”
Reynolds can’t be found
On April 3, the CFTC filed for a ruling of default after the CFTC failed to locate Reynolds. This came right after the SEC had requested additional time to locate Reynolds during an ongoing investigation in South Korea.
The CFTC tried reaching Reynolds at the only email address available for him and his company but soon discovered that the email was invalid.
The agency also tried to serve Reynolds at what was listed as his “service address” in the incorporation papers of Control Finance. Upon arriving at the address the process server discovered that the address doesn’t exist.
The regulator later learned from the victims of the scheme that Ulsan District Prosecutors’ Office in South Korea were also investigating the scheme, but had similarly failed to contact Reynolds.
As of now, per Thursday’s proposed default judgment, Reynolds will be permanently banned from trading bitcoin.