CFTC charges virtual currency scheme Q3 and its founder with fraud

Maria Nikolova

More than 150 individuals and entities deposited at least $33 million with Q3 but less than $10 million in Q3 customer funds was wired to virtual currency exchanges.

The United States Commodity Futures Trading Commission (CFTC) today filed a complaint against Michael Ackerman and the entities he founded, Q3 Holdings, LLC and Q3 I, LP, accusing the defendants of fraud.

According to the CFTC complaint, submitted at the New York Southern District Court and seen by FinanceFeeds, from at least August 2017 through December 2019, Ackerman and Q3 operated a fraudulent scheme in which they solicited and misappropriated funds to purportedly trade virtual currencies. Due to Ackerman’s and Q3’s fraudulent misrepresentations, more than 150 individuals and entities deposited at least $33 million with Q3 but less than $10 million of the $33 million in Q3 customer funds was wired to virtual currency exchanges.

The CFTC alleges that the defendants transferred more than $25 million of Q3 customers’ funds to personal bank accounts of Ackerman and the two other individuals with whom Ackerman founded Q3. Ackerman himself received more than $7 million of Q3 customers’ funds.

To entice potential Q3 customers to invest in their scheme, Defendants knowingly and falsely represented that they were profitably trading virtual currencies earning monthly returns of approximately 15%. The defendants did not trade virtual currencies successfully and most Q3 customers’ money was misappropriated or lost trading.

In an attempt to conceal their fraud, the defendants and the other Q3 founders provided Q3 customers with false accounting statements, newsletters containing false trading returns, and fictitious screenshots reflecting the amount of money under Q3’s management.

The CFTC alleges that the defendants were engaged, are engaging, or are about to engage in fraudulent acts and practices in violation of the Commodity Exchange Act, 7 U.S.C. §§ 1-26 (2018), and the Commission’s Regulations, 17 C.F.R. pts. 1-190 (2019), specifically, Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2018), and Regulation 180.1(a), 17 C.F.R. § 180.1(a)(2019).

In this action, the regulator seeks civil monetary penalties and remedial ancillary relief including, but not limited to, trading and registration bans, restitution, disgorgement, rescission, pre- and post-judgment interest, and such other relief as the Court may deem necessary and appropriate.

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