“SLOWWW Blockchain…” – CFTC takes action against Bitcoin, binary options fraudulent scheme

Maria Nikolova

“SLOWWW blockchain…” was the last thing customers of The Entrepreneurs Headquarters Limited heard from the company when they tried to withdraw their investments.

Lies about hacked websites, misappropriation of more than $1 million of customer investments and blatant excuses for freezing withdrawals – these are some of the findings made by the United States Commodity Futures Trading Commission (CFTC) in its investigation of a scam combining crypto currencies and binary options.

In its Complaint, filed with the New York Eastern District Court on January 18, 2018, the CFTC charges Defendant Dillon Michael Dean (“Dean”) and his company The Entrepreneurs Headquarters Limited (“TEH”) (together, “Defendants”) of violating numerous clauses of the the Commodity Exchange Act and the Commission Regulations. During the Relevant Period, TEH also failed to register with the Commission as a commodity pool operator (“CPO”), and Dean failed to register with the Commission as an associated person (“AP”) of a CPO.

Although TEH is an England and Wales company, it transacted business in the United States, and certain transactions, acts, practices, and courses of business alleged in the Complaint occurred, are occurring, or are about to occur in this District (New York Eastern – ed.).

The CFTC alleges that from approximately April 2017 through the present the Defendants engaged in a fraudulent scheme to solicit at least $1.1 million worth of Bitcoin from more than 600 members of the public to participate in a pooled investment vehicle for trading commodity interests.

The Defendants misappropriated their customers’ funds (including by using them to pay other customers, in the manner of a Ponzi scheme), and then lied to customers about their account balances in order to conceal Defendants’ misappropriation.

The defendants only accepted investor deposits in Bitcoin. They instructed customers to set up personal account pages at the TEH website (referred to by Defendants and customers as their “back office”) and follow the instructions there to transfer Bitcoin to TEH from the customers’ own cryptocurrency wallets. Soon after a substantial sum was gathered from the investors, messages about a purported site hack started coming. On August 17th, Dean posted a message to the Facebook Group, stating:

“All the data has been lost because of the hacker.”

The excuses for refusing withdrawals are eye-popping. For instance, on December 9, 2017, Dean posted a message on the “Official” Facebook Group, stating:

“Withdraws; SLOWWW blockchain…btc was losing it there for a while lol I am waiting on a few large transactions to be moved over into our BTC wallet for the mass payment for everyone’s withdraws.”

During recent weeks, when customers asked the company for the return of their funds, their requests were ignored. Dean has stopped responding to emails and other communications from customers who have previously asked for the return of their funds.

The fraudsters have stopped making payments to customers of TEH, and have misappropriated over $1 million total in principal investments by customers.

Meanwhile, Dean and other representatives of TEH have launched another “trading venture” called Real Trade Profits (“RTP”), which solicits new customers in a manner very similar to TEH—seeking investments in Bitcoin for a pooled investment, professing expertise and consistent results in binary options trading.

The CFTC is seeking, inter alia, a civil monetary penalty and restraining orders.

Read this next

Digital Assets

Crypto.com secures preliminary approval to operate in Canada

Crypto.com, one of the longest-established crypto platforms, has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ with the Ontario Securities Commission (OSC) in Canada.

Retail FX

CySEC hits IC Markets One with regulatory warning

The Cyprus Securities and Exchange Commission has once again stepped up its fight against unauthorized brokers.

Uncategorized

XTAGE now offers bitcoin and ether trading to 3.6M Brazilian investors

Brazilian financial services giant XP has officially launched its crypto trading platform XTAGE, which was built on major American stock exchange Nasdaq’s trading technology.

Institutional FX

FX volume drops 7pct at CLS Group in July 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in July.

Digital Assets

Web3 startup PIP integrates with Binance ecosystem

Web3 payment provider PIP has announced integration with the Binance ecosystem, which allows the firm to vastly develop and propose needed products and improvements that are worthy of competing with others chains.

Industry News

Celsius $750m insurance claims are fraud, says lawyer seeking EU crypto superfund

“It is an intentional deception in aid of a billion-dollar securities offering.”

Institutional FX

DGCX brokers authorized to provide derivatives trading and clearing services

The DFM is looking to provide multiple asset classes such as; equities, ETFs, equities’ futures, crude oil futures, etc. to meet the growing demand from its diversified base of local and international investors.

Digital Assets

EQONEX leaves “crowded crypto exchange space” amid crypto winter

“The recent extreme market volatility and declining trading volumes have added to the headwinds being felt by exchange operators. We take a realistic view that our exchange will not move the needle for us financially over the near-to-medium term.”

Digital Assets

FTX and Paradigm partner for spreads trading: lower risk, lower fees

“This structured spread trading product is the first that will enable crypto investors to utilize cash and carry trades through FTX and Paradigm.”

<