CFTC catches another Ponzi FX scam, worth over $543,000

Rick Steves

He was able to persuade these investors by claiming his companies had historically made large profits, between 8 to 25% per month.

The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Eshaq M. Nawabi and his companies Nawabi Enterprise and Hyperion Consulting Inc. for fraud and misappropriation related to an off-exchange Forex trading scheme.

The defendants have allegedly solicited funds totaling at least $543,000 from at least seven investors as part of the FX scam, according to the financial watchdog that oversees the foreign exchange space in the United States.

Since October 2019, Eshaq M. Nawabi solicited and pooled hundreds of thousands of dollars from at least seven pool participants for the purported purpose of trading forex.

Scam claimed profits between 8% and 25% per month

He was able to persuade these investors by claiming his companies had historically made large profits, between 8 to 25% per month, for themselves and pool participants from trading forex. In addition to such high-profit rates, the FX scheme said investors would be exposed to minimal risk and could withdraw their funds at any time.

Instead of trading pool participant funds as promised, the defendants misappropriated their money for Nawabi’s own personal benefit and paid other pool participants

In a classic Ponzi-like scheme, funds were misappropriated for Nawabi’s own personal benefit and to pay pool participants trading returns that did not exist as defendants created and issued false account statements, said the CFTC.

When clients requested to withdraw funds, Eshaq M. Nawabi would either ignore or provide bogus promises and excuses, or engaged in conduct designed to delay payouts, the complaint alleged.

Chief District Judge Kimberly J. Mueller entered a Statutory Restraining Order against the defendants, freezing their assets and permitting the CFTC immediate access to their books and records.

The CFTC seeks full restitution to the defrauded pool participants, disgorgement of any ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against the defendants.

Casper Mikkelsen and Abner Tinoco recently charged for Ponzi scams

In April, a New York court permanently banned Casper Mikkelsen from trading commodity interests and ordered him to pay $1,191,286 in restitution and a $3,573,860 penalty for a Forex fraud brought to court by the Commodity Futures Trading Commission.

The Danish citizen will have to pay triple the profits he made committing the scam, in he promised clients he would use his discretion to trade forex on their behalf through his firm, GNTFX.

In turn, his clients invested at least $1,536,782.47, but rather than using those funds for forex trading, Casper Mikkelsen misappropriated the funds in a typical Ponzi scheme, by paying purported forex trading profits to clients.

In late March, a US court ordered Abner Alejandro Tinoco and his company Kikit & Mess Investments, LLC, in another case of an FX and Crypto Ponzi scheme. The defendants fraudulently solicited at least $7.2 million from at least 322 clients, who intended to trade forex or cryptocurrency in managed accounts.

Not only he used the funds to pay bogus “investment profits” to clients in a manner akin to a Ponzi scheme, but Tinoco also used the monies to charter a private jet, purchase of a luxury mansion and another real estate, and purchase or lease luxury automobiles.

Read this next

Retail FX

Malaysia regulator exposes OctaFX clone, shady FB profiles

Malaysia’s financial regulator today warned online investors about the risks of following investment tips made on social-media platforms.

Digital Assets

Crypto trading volume spikes at Swiss bourse amid FTX collapse

The shockwaves from the historic collapse of Sam Bankman-Fried’s crypto empire are still being felt across the industry, but some trading venues are actually doing better because of it.

Executive Moves

CMC Markets adds Camilla Boldracchi to institutional sales

UK’s biggest spread better, CMC Markets has promoted Camilla Boldracchi to take on an expanded role within its institutional sales desk.

Institutional FX

FXSpotStream reports $1.48 trillion in monthly volume for November

FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, reported its operational metrics for November 2022, which moved higher on a yearly basis but reflected weak performance across executed trade volumes when weighed against the figures of the prior month.

Retail FX

Interactive Brokers’ client activity drops 30% YoY

Interactive Brokers LLC (NASDAQ:IBKR) saw 1.95 million daily average revenue trades, or DARTS, in November 2022 compared to 1.96 million transactions in the prior month.

Digital Assets

The rise of Crypto ETPs in traditional exchanges as crypto winter deepens

Institutional investors are increasingly looking at traditional regulated exchanges as their first route into digital assets amid market turmoil caused by the crypto winter and the collapse of several big names within the space, including FTX. Acuiti and Eurex surveyed 191 buy and sell-side firms on their views of the digital assets markets in order […]

Digital Assets

TP ICAP’s crypto arm receives FCA’s go-ahead

UK interdealer broker TP ICAP has received a regulatory go-ahead to launch its cryptocurrency services in the UK. The bid shows that the recent collapse of FTX exchange has done little to damp the interest of big names in running their own crypto business.

Industry News

Coin Signals founder to pay $2,847,743 after prison sentence over crypto Ponzi scam

The U. S. District Court for the Southern District of New York has ordered Jeremy Spence, founder of Coin Signals, to pay $2,847,743 in restitution to victims of a fraudulent virtual currency scheme.

Digital Assets

CME Group goes DeFi: Reference rates and real-time indices of Aave, Curve, Synthetix

“These rates are designed to provide traders, institutions and other users transparency and price discovery across a much broader range of tokens, allowing them to confidently and more accurately value cryptocurrency sector specific portfolios and manage price risk around various blockchain-based projects.”

<