CFTC pushes for entry of default against director of fraudulent crypto scheme Control-Finance
Simultaneously, the regulator filed a notice of voluntary dismissal of its action against Control-Finance.
Several months after the New York Southern District Court allowed the Commodity Futures Trading Commission (CFTC) to use alternative service on Benjamin Reynolds, Director of fraudulent cryptocurrency scheme Control-Finance, the regulator has pushed for a entry of default against Reynolds.
According to documents filed by the CFTC on Friday, April 3, 2020, and seen by FinanceFeeds, Reynolds should be declared in default, as he has failed to respond to the CFTC’s complaint.
Simultaneously, the regulator filed a notice of voluntary dismissal of its action against Control-Finance. The dismissal is without prejudice.
The CFTC Complaint alleges that, since at least May 1, 2017, through the present, Control-Finance Limited and Reynolds exploited public enthusiasm for Bitcoin by operating a fraudulent scheme to misappropriate at least 22,858.822 Bitcoin, which reached a valuation of over $147 million, from more than 1,000 customers.
The defendants diverted portions of new customers’ Bitcoin deposits to other customers in the manner of a “Ponzi” scheme, falsely representing that these misappropriations were in fact profits generated from virtual currency trading.
Defendants used the Control-Finance website, as well as social media websites including Facebook, YouTube, and Twitter, to construct an elaborate pyramid scheme they called the Control-Finance “Affiliate Program.”
On or around September 10, 2017, the defendants suddenly terminated operations by removing the Control-Finance website from the Internet, halting payments to customers and Affiliate Program members, and deleting advertising content from the defendants’ Facebook, YouTube, and Twitter accounts.
The defendants, however, continued to claim, through email and Facebook that they would make all customers whole by returning their Bitcoin deposits, minus any prior payments, by late October or November 2017.
In reality, the defendants laundered nearly one hundred fifty million dollars in misappropriated Bitcoin through thousands of circuitous blockchain transactions. The defendants routed bulk of these transactions through wallet addresses that the defendants opened at CoinPayments of Vancouver, Canada.
In this action, the US regulator seeks civil monetary penalties and ancillary relief, including but not limited to permanent trading and registration bans, restitution, and disgorgement.