CFTC seeks preliminary injunction against binary options fraudsters who ran $4.8m scheme

Maria Nikolova

The CFTC has asked the Illinois Northern District Court to issue a preliminary injunction against Arie Bos, Berkley Capital Management, LLC (BCM), BBOT 1, LP and Berkley II, LP.

Less than a month after the United States Commodity Futures Trading Commission (CFTC) launched an action at the Illinois Northern District Court targeting a raft of entities responsible for a $4.8 million fraudulent binary options scheme, the regulator is now seeking a preliminary injunction against Arie Bos, Berkley Capital Management, LLC (BCM), BBOT 1, LP and Berkley II, LP.

The relevant motion was submitted at the Court on Tuesday, May 28, 2019.

The CFTC notes that none of the defendants appeared at the hearing on May 22, 2019, with the exception of Caniff with whom the CFTC has entered into a Consent Preliminary Injunction. According to the regulator, a preliminary injunction is proper in this case to preserve the status quo, prevent the withdrawal, transfer, removal, dissipation, or disposal of assets; prevent the destruction, alteration, or disposal of books and records and other documents; protect members of the public from loss and damage; and enable the CFTC to fulfill its statutory duties.

If the Court grants the Commission’s request, the Order shall remain in full force and effect until further order of the Court, and the Court shall retain jurisdiction over this action to ensure compliance with this Order and for all other purposes related to this action. The Order would supersede the Statutory Restraining Order entered on May 1, 2019 as it relates to defendants Bos, BCM, BBOT and Berkley II.

According to the CFTC Complaint, from at least January 2016 and continuing through the present, William Thomas Caniff, Arie Bos, Berkley Capital Management, LLC (BCM), BBOT 1, LP and Berkley II, LP, engaged in a scheme whereby they fraudulently solicited and accepted at least $4.8 million from at least 62 commodity pool participants for the purpose of trading binary options on or subject to the rules of a designated contract market in pool accounts to be managed by BCM.

The CFTC alleges that all of the defendants committed options fraud, whereas Caniff is said to also have made a false statement to a registered entity.

In January 2016, Caniff and Bos formed BCM and began to offer individual participants the opportunity to trade binary options with pools of other participants, first through the BBOT pool and later through the Berkley II pool. Caniff used a small portion of participants’ funds to trade binary options through an account he set up at the binary options trading firm, the North American Derivatives Exchange, Inc. (NADEX), which is a designated contract market headquartered in Chicago, Illinois.

Caniff sent Bos fabricated statements reflecting incredible results of his trading for these pools. In turn, Bos ignored numerous red flags and recklessly accepted Caniff’s reports of profitable trading without verifying the results in any way and used them to both solicit participants with claims of past profitable trading and generate false statements that he sent to participants showing grossly-inflated, non-existent, profits for their accounts.

The CFTC Complaint alleges that Caniff misappropriated a substantial portion of the participants’ funds, paying Bos and himself between $1.1 million to $1.2 million each as “fees based on non-existent profits. Caniff also misappropriated funds to pay some participants a total of $2.3 million in a manner akin to a Ponzi scheme. Overall, the defrauded participants have experienced a shortfall of approximately $2.5 million.

Read this next

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

Digital Assets

Sui Spikes in Weekly DEX Volume, Joins Top 10 of All Blockchains

March DEX volume on Sui stands at over $2.88B – up more than 49% from February – with decentralized exchange Cetus and wholesale liquidity layer DeepBook leading.

Digital Assets

Prisma Finance suffers $10 million crypto exploit, attack ongoing

Liquid staking protocol Prisma Finance fell victim to a security exploit on March 28, resulting in nearly $10 million in Prisma mkUSD and wrapped stETH being stolen by hackers.

Digital Assets

Masa and LayerZero: Bridging Blockchains for Data Sovereignty

Masa Network is poised to revolutionize the personal data landscape with its upcoming launch as a cross-chain platform, making it accessible on a variety of blockchains right from the start.

<