CFTC seeks imposition of $1.85m monetary penalty on Bitcoin Ponzi scheme

Maria Nikolova

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.

Read this next

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.

Digital Assets

WunderTrading brings automated crypto trading to United States

“Among developed countries, Americans are the heaviest users of cryptocurrencies, with 13% having invested in cryptocurrencies over the past year.”

Retail FX

ACY Securities sponsors child safety and family welfare charity Barnardos Australia

Sponsoring Barnardos will give ACY Securities and its employees an opportunity to do volunteer work through different outreach programs.

<