Compcoin’s Alan Friedland to pay $1.8 million for ICO scam
It was in 2017 that Compcoin announced its “$45 million initial coin offering (ICO)” consisting of 3 million Compcoin selling at $15 each, with an additional bonus for early investors.
Alan Friedland and his companies, Fintech Investment Group, Inc. (Fintech), and Compcoin LLC, without admitting or denying the allegations in the complaint, have settled charges against them regarding an FX and Crypto scam.
The defendants stood accused of fraudulently soliciting customers to purchase a digital asset they falsely promised would allow customers to gain access to a proprietary foreign currency (forex) trading algorithm.
Alan Friedland, Fintech, and Compcoin, are now banned permanently from operating CFTC-regulated activities and are required to pay $1,200,000 in restitution and a $600,000 civil monetary penalty.
ICO for access to failed forex algorithmic trading program
CFTC Acting Director of Enforcement Vincent McGonagle, said: “This matter demonstrates the CFTC will continue to focus on customer protection and vigorously litigate the cases it files to obtain appropriate relief. As required by the Commodity Exchange Act and CFTC regulations, commodity trading advisors must ensure they are providing accurate and complete information to potential customers so they can make informed decisions before entering into an advisory relationship.”
From approximately 2016 through 2018, Friedland and his companies have allegedly solicited customers and prospective customers to purchase a digital asset known as Compcoin. They have promised, among other things, that Compcoin would allow customers to gain access to what they described as Fintech’s proprietary forex algorithmic trading program known as ART.
They claimed ART was “complete in form and function,” and “ready for release on the open market” and that “ART’s high success rate at predicting…forex trades, coupled with the high rate of return from these trades, will stimulate demand among investors and forex traders to purchase and use Compcoin—specifically to gain access to ART.”
The order further states that the defendants knew that customers could not lawfully use ART until Fintech received approval of its disclosure documents from the National Futures Association (NFA). Still, they offered Compcoin prior to Fintech seeking NFA approval of its disclosure documents.
In addition, ART’s performance was based largely or entirely on hypothetical performance results and not real trading, and they were not forthright about it.
Ultimately, the NFA did not approve Fintech’s risk disclosure statements, and purchasers of Compcoin never gained access to the supposedly highly profitable forex trading algorithm as promised. Instead, purchasers of Compcoin were left with a worthless digital asset.
It was in 2017 that Compcoin announced its “$45 million initial coin offering (ICO)” consisting of 3 million Compcoin selling at $15 each, with an additional bonus for early investors.
“Compcoin is a new digital token focused on investing and growing capital. Investors may buy and hold Compcoin to leverage it as an alternative investment vehicle. However, the primary function of Compcoin is to grant investors access to ART – a proprietary, automated, algorithmic forex trading platform that has been successfully predicting US Dollar-to-Euro (USD/EUR) currency trades and delivering 10% quarterly returns during eight years of testing. After purchasing Compcoin, investors may begin forex trading via ART after creating and funding an account with one of the many supported brokerages and linking it to Compcoin platform”, said the announcement.
