CFTC pushes for entry of default against virtual currency scheme Q3 and its founder

Maria Nikolova

The regulator requests a clerk’s certificate of default against Q3 and its founder Michael Ackerman.

The United States Commodity Futures Trading Commission (CFTC) is pressing ahead with its action against Michael Ackerman and the entities he founded, Q3 Holdings, LLC and Q3 I, LP, accused of fraud.

On June 9, 2020, the regulator filed a set of motions with the New York Southern District Court requesting for a Clerk’s Certificate of Default against the defendants. The CFTC explains that the defendants have beeen properly served and that the time for the defendants to answer or otherwise move with respect to the Complaint has expired.

None of the defendants has answered or otherwise moved with respect to the Complaint, and the time for them to answer or otherwise move has not been extended.

As FinanceFeeds has reported, this action was launched in February 2020. According to the CFTC complaint, 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.

Read this next

Retail FX

eToro users now can trade underlying Italian stocks

Israeli social trading and multi-asset brokerage company eToro has expanded its service offering and trading products by incorporating new markets, namely Italian stocks listed at underlying exchanges.

Digital Assets

BlackRock bets on crypto bank Silvergate despite drastic fall

BlackRock, the world’s largest asset manager, has increased its stake in Silvergate Bank, a crypto-friendly lender that counts major crypto exchanges like Coinbase and Kraken as clients.

Opinion

A viewpoint from Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, on SEC regulation of the digital asset sector

The SEC’s latest episode comes across as more of a PR performance rather than an act of investor protection.

Digital Assets

Tether denies receiving any loans from Celsius, the opposite is true

World’s largest stablecoin issuer, Tether dismissed reports suggesting that it received a $2 billion loan from the bankrupt cryptocurrency lender Celsius.

Institutional FX

Cboe FX volume makes strong rebound in January

Cboe’s institutional spot FX platform today announced its trading volume for the month ending January 2023, which marks a mild rebound after a steep fall in December.

Uncategorized

XS.com appoints Exness alumni Mohamad Ibrahim as CEO

XS.com, the multi-regulated financial services provider, has appointed Mohamad Ibrahim as the group’s newest chief executive officer (CEO).

Technology

B2Broker Integrates Match-Trader Solution to Expands Its White Label Liquidity Offering

A global provider of technology and liquidity for the FX and cryptocurrency markets, B2Broker recently announced the extension of its white label liquidity offering by merging with Match-Trader.

Digital Assets

UK launches open consultation to regulate crypto exchanges, custody, and lending

The government’s proposed measures have been informed by recent market events – including the failure of FTX – which reinforce the case for effective regulation and sector engagement.

Institutional FX

ViewTrade celebrates record growth with launch of carrying broker services offering

“We have been at the center of the empowerment of the retail investor for decades, supplying the technology to facilitate cross-border access to U.S. markets. Our demonstrated ability to provide a full-service, end-to-end solution to a diverse global customer base continues to prove its value every day.”

<