NY Court tells binary options, virtual currency scammers Blue Bit Banc, Blake Kantor to take websites down

Maria Nikolova

The CFTC has secured a preliminary injunction against a number of individuals and firms engaged in a fraudulent scheme involving binary options and virtual currencies.

Judge Sandra J. Feuerstein of the New York Eastern District Court on Wednesday signed an order for a preliminary injunction against Blake Kantor, Nathan Mullins, Blue Bit Banc, Blue Bit Analytics, Ltd., G. Thomas Client Services, and Blue Wolf Sales Consultants, thus agreeing with the Commodity Futures Trading Commission (CFTC) to impose certain restraints on the defendants’ access to financial assets and documents.

The defendants are accused of having solicited potential customers through emails, phone calls, and a website to purchase illegal off-exchange binary options via companies such as Blue Bit Banc. The defendants sought to cover up their misappropriation by inviting customers to transfer their binary options account balances into a virtual currency known as ATM Coin. The scam allegedly started in April 2014.

In granting the CFTC’s motion for a preliminary injunction, the Court found that the regulator had demonstrated that the defendants had violated the Commodity Exchange Act and Regulations by offering binary options to customers who were not ECPs and by entering into swaps transactions with customers using the instrumentalities of interstate commerce, which were not executed on any registered exchange. The Court also found that there was reasonable likelihood that the defendants used manipulative devices, schemes, and artifices to defraud.

The Court orders that within ten days after entry of the order from May 2, 2018, the defendants

“shall do whatever is necessary to insure that all internet websites used by them to advertise, market, promote or offer for sale any transactions involving “commodity interests” and related services be deleted and made inaccessible to the public, and that the registration for all domain names for such websites be withdrawn, including, but not limited to, any websites promoting binary options or virtual currency investments and the website identified as: www.bluebitbanc.com.”

The defendants and persons associated with them are also are prohibited from refusing to permit authorized representatives of the CFTC to inspect and copy, when and as reasonably requested, any books, records, or other documents of the defendants. In addition, they are prohibited from destroying, mutilating, concealing, altering, or disposing of, in any manner, any books, records, or other documents of the defendants.

The defendants and each firm, corporation, or other person or entity with notice that holds any accounts, funds, assets, or other property of the defendants is prohibited from directly or indirectly withdrawing, transferring, removing, dissipating, concealing, assigning, pledging, encumbering, disbursing, converting, selling, or otherwise disposing of, in any manner, any funds, assets, or other property of the defendants. The assets affected by this paragraph include both existing assets and income and assets acquired after the effective date of the Order.

Kantor also faces criminal charges. The criminal action against him was taken by the Department of Justice on April 16, 2018. The indictment charged Kantor with conspiracy to commit wire fraud, obstruction of an official proceeding and making false statements to Special Agents of the Federal Bureau of Investigation.

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