CFTC seeks imposition of $1.85m monetary penalty on Bitcoin Ponzi scheme
The proposed default judgment against Gelfman Blueprint also includes a restitution payment of $554,734.
A civil action brought by the United States Commodity Futures Trading Commission (CFTC) against Nicholas Gelfman, of Brooklyn, New York, and Bitcoin Ponzi scheme Gelfman Blueprint, Inc. (GBI), appears to be near its conclusion, as the US regulator has just filed a set of documents with the New York Southern District Court. The documents, seen by FinanceFeeds, include a proposed order for final judgment by default against GBI and a consent order against Nicholas Gelfman.
According to the CFTC findings, the defendants solicited and received more than $600,000 from at least eighty GBI customers, who invested amounts ranging from a few hundred dollars to tens of thousands of dollars, for the purpose of entering into contracts of sale of Bitcoin, a virtual currency, through electronic web-based Bitcoin trading platforms based in various states and countries.
GBI’s website touted the high investment performance of an algorithmic trading computer program (or “bot”) named Jigsaw. In particular, GBI’s website claimed that this strategy generated monthly profits and protected against risk. These statements were false and misleading representations and omissions of material facts.
Between approximately January 2014 and December 2015, Gelfman and GBI received more than $600,000 from more than 80 GBI customers. The defendants misappropriated almost all of these funds for improper and unauthorized uses, such as to pay GBI business expenses and to wrongfully enrich Gelfman.
The proposed default judgment against GBI includes a permanent injunction, as well as restitution of $554,734.48. On top of that, the entity will have to pay a civil monetary penalty of $1.85 million, which is equal to approximately triple the gain that the defendants generated via the fraudulent scheme (more than $618,000).
In a separate consent order against Gelfman, he agrees to restitution of $492,064, as well as to a civil monetary penalty of $177,501, and to a permanent injunction.
This case may mark another important win for the CFTC in its fight against cryptocurrency scams.