The complaint alleges that since April 2017, Dean and his firm solicited $1 million worth of bitcoin from more than 600 people. The CFTC Complaint charges the Defendants with engaging in a fraudulent scheme to solicit Bitcoin from members of the public, misrepresenting that customers' funds would be pooled and invested in products including binary options, making Ponzi-style payments to commodity pool participants from other participants' funds, misappropriating pool participants' funds, and failing to register with the CFTC as a Commodity Pool Operator (CPO) and Associated Person of a CPO, as required.
If that Bitcoin investment company's claims seem too good to be true, maybe they are. "As this case shows, the CFTC will continue to take swift action to stop such fraudulent schemes and to hold fraudsters accountable for their misconduct". DBA Coin Drop Markets (CDM), a NY corporation, charging them with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.
The move is the latest in a string of regulatory crackdowns against bitcoin and other cryptocurrencies elsewhere in the world. The company never provided the investment advice, the CFTC alleged. The CFTC noted that the British Columbia Securities Commission provided assistance with its investigation in this case. Both agencies have issued several investor warnings about the risks of crypto investment and its rapidly developing derivatives market. The SEC has jurisdiction over cryptocurrencies that are used as securities.
"When market participants engage in fraud under the guise of offering digital instruments - whether characterized as virtual currencies, coins, tokens, or the like - the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws", say Stephanie Avakian and Steven Peikin, co-directors of enforcement, SEC, and James McDonald, CFTC enforcement director, in the joint statement.
Coin Center, a cryptocurrency advocacy and research group, praised the regulators' efforts to police the market.