CFTC takes Fintech Investment Group and Compcoin to Court over $1.6m FX fraud
Alan Friedland and his companies solicited customers to purchase a digital asset in order to gain access to Fintech’s purported Forex trading algorithm.
The United States Commodity Futures Trading Commission (CFTC) today announces the filing of a complaint in the U.S. District Court for the Middle District of Florida againstAlan Friedland and his Florida-based companies, Fintech Investment Group, Inc. and Compcoin LLC. The complaint charges the defendants with fraudulent solicitation of more than $1.6 million from their customers in connection with a leveraged or margined off-exchange Forex scheme.
The complaint alleges that, starting in at least 2016 and proceeding through 2018, Friedland and his companies fraudulently solicited customers and prospective customers to purchase a digital asset known as Compcoin. The defendants falsely promised, among other things, that Compcoin would allow customers to gain access to Fintech’s proprietary forex trading algorithm known as ART, and falsely advertised that ART would deliver high rates of return.
According to the complaint, in marketing Compcoin, the defendants also falsely represented the use and function of Compcoin and that ART “was ready for release on the open market.” In reality, however, the defendants knew that the customers could not lawfully utilize ART until Fintech obtained approval from the National Futures Association (NFA), which never occurred. Thus, according to the complaint, the purchasers of Compcoin never gained access to ART as promised, and were left with a valueless asset.
In this case, the CFTC seeks civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged.
On March 30, 2020, the National Futures Association filed a member responsibility action against Fintech and an associated responsibility action against Friedland based on their failure to cooperate with the NFA in providing information related to some of the same activities that are alleged in the CFTC’s complaint. The action summarily suspended Fintech and Friedland from NFA membership and prohibits them from soliciting and accepting any customer funds related to Forex trading.