CFTC settles charges against crypto trading firm J Squared
The CFTC alleged Mr. Gherman made false and misleading statements regarding the likelihood of profit and the risk of loss. Customers suffered losses totaling over $247,000.
The Commodity Futures Trading Commission has settled charges against Jozef Gherman and J Squared LLC – of which he was the co-founder, CEO, and owner – for false and misleading statements while soliciting more than $300,000 from over 40 individuals to invest in digital assets.
Mr. Gherman and J Squared will pay a $150,000 civil monetary penalty and $247,110 in restitution and addition to being banned from trading or other activity on any CFTC-registered entity for 10 years.
Vincent McGonagle, Acting Director of Enforcement at CFTC, said: “The CFTC will continue to work to protect participants from false and misleading solicitation practices and hold those engaging in such practices, including individuals, accountable.”
The CFTC found that, from at least June 2017 through at least June 2018, Mr. Gherman and J Squared solicited and accepted funds in the form of digital currency and fiat cash from over 40 customers to trade virtual currencies, including Bitcoin, Bitcoin Cash, Ether and other alternative coins.
Mr. Gherman induced individuals to invest with J Squared using false and misleading statements regarding the firm’s growth and success as a company, its expanding clientele, and its ability to be selective in acquiring customers.
The CFTC also alleged Mr. Gherman made false and misleading statements regarding the likelihood of profit and the risk of loss. Customers suffered losses totaling over $247,000.
The financial watchdog has recently settled charges with Glenn Olson for his role in a binary options fraud. The order requires Olson to disgorge all of his ill-gotten gains, totaling $241,070.
The CFTC found Mr. Olson sold binary options to customers for Blue Bit using alias names between 2014 and 2018. The defendant admitted that, as part of the scheme, he and others misrepresented the profitability of trading, manipulated or fabricated purported trades in their customers’ accounts to the customers’ disadvantage, prevented customers from withdrawing funds, and misappropriated customer funds.
Mr. Olson admitted he took other actions to defraud customers while receiving disbursements totaling $241,070.30 and led customers to convert their Blue Bit account holdings into ATM Coin, a worthless cryptocurrency.
According to the order, at least 27 customers lost a total of $846,405 as a result of the fraudulent scheme. Mr. Olson and other defendants were ordered to pay that sum in restitution, but victims were cautioned that they might never recover the money lost because wrongdoers may not have sufficient funds or assets.