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Two firms involved in Crypto Scam Fined $15 million by the CFTC

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The crypto industry was born with the invention of Bitcoin over a decade ago. The crypto market has been responsible for thousands of success stories where traders and investors went from rags-to-riches, but it has also seen scammers prey on the unaware and drain them of their funds.

The unclear regulations that have always been a drawback for the crypto industry have also been acting as an opportunity for scammers and fraudsters to prey on the unaware. The number of hacks across the crypto industry is rising every day and new investors are hesitant about putting their money on the line.

These fraudulent cases have gone to such an extent that crypto scammers are even targeting people on Tinder, the popular online dating app. As a result, regulators have started cracking down on these illicit activities and have constantly curbed the use of crypto, thus hampering adoption.

$15 million scam

Recently, The Commodity Futures Trading Commission (CFTC) has charged two firms that duped investors of $15 million in a scam involving cryptocurrencies and Binary options.

According to court documents filed on May 5, the executives of an American firm and another Israeli firm have been charged. The scams involved digital assets such as Bitcoin and Ethereum, and another involving a binary options scheme.

The scams were in operation between October 2013 and August 2018, and October 2013 and November 2016 respectively.

The Israel-based Tal Valariola and Itay Barak of Digital Platinum Limited were charged by the CFTC, for helping the United States-based firm All In Publishing (AIP) produce and promote investment schemes that promised profits to investors in the U.S. and outside.

With the aid of the misleading marketing campaigns, the scammers were able to scam more than 50,000 people in the binary options scheme where users deposited a total of nearly $13 million. Around 8,403 people opened crypto trading accounts and deposited more than $2 million.

Rags-to-riches Stories

AIP forged fake trader success stories that displayed lavish lifestyles of traders investing on its partner platforms. As per an email recovered by the CFTC, AIP had spent close to $50,000 to create the videos for the marketing campaigns for the scams.

Furthermore, the companies were also using five email autoresponders, with each having a database of approximately 200,000 emails. Daniel Fingerhut, the mastermind behind the scam, supervised at least four individuals in Florida and one in Israel, to write the emails and push them in bulk using the autoresponders.

As of now, the CFTC is charging the accused on counts of fraud and CTA fraud as well as various injunctions banning them from commodities business-related activities. The commission has also asked the court to order financial disgorgement.

CFTC continues to crackdown on Crypto scams

As previously reported by The Daily Chain, back in February, the CFTC has charged a Colorado native with an accusation of fraud. Denver local Breonna Clark, along with Colorado-based Venture Capital Investments Ltd., face civil action from the CFTC for defrauding investors.

Recently in April, another company named Fintech Investment Group, Inc and Compcoin LLC, was charged by the CFTC for duping victims of more than $1.6 million. According to the complaint, the defendant had published “untrue and materially misleading” press materials for the digital asset Compcoin and claimed that holders of Compcoin would have access to ART, an algorithm that promises high returns in foreign exchange trading.

Anna Larsen
Anna Larsen has been a Crypto enthusiast since 2016. Fascinated by the technology and its usecases she decided to pursue a career in content creation related to this space. The journey has been exciting ever since.

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