“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

Jacobi Asset Management seeks FCA’s greenlight for Bitcoin-pegged ETF

Crypto asset manager Jacobi Asset Management has received a regulatory go-ahead for an exchange-traded fund that seeks to track the price of Bitcoin (BTC) while satisfying the laws in the UK.

Digital Assets

Tether, Bitfinex to pay $41 million fine to end CFTC probe into USDT reserves

The US Commodity Futures Trading Commission (CFTC) settled Friday a nearly two-year investigation into the finances and corporate practices of Tether and Bitfinex.

Retail FX

Cypriot license of Dualix & AGM Markets parent wholly suspended

After several months of pause, the Cypriot authorities is once again flexing their muscles and actively finding compliance irregularities.

Retail FX

CySEC Suspends ‘in whole’ CIF License of Maxiflex Ltd (EuropeFX)

The Cyprus Securities and Exchange Commission (CySEC) today said it has wholly suspended the Cyprus Investment Firm (CIF) License of FX retail brokerage firm Maxiflex Ltd (trading as EuropeFX).

Retail FX

Freetrade celebrates 1 million UK users as trading platform plans to roll out in Europe

Freetrade will soon be launching in Sweden as the trading platform begins to roll out across Europe in 2022.

Industry News

Neteller launches fiat-to-crypto withdrawals 8 months after Skrill

Its sister digital wallet, Skrill, has launched its fiat-to-crypto withdrawal service in February of this year.

Institutional FX

Mexico gets US fractional shares trading via GBM – Drivewealth partnership

Drivewealth is a pioneer in fractional investing and has much to do with the momentum for real-time fractional trading within the industry.

Industry News

Jarden Securities gets slap on wrist from NZ’s FMA for violations prior merger

The regulation allows derivatives issuers to deposit money into the trust account to safeguard against the risk of a shortfall, but the FMA found the OMF did it for business-related payments to third party providers.

Industry News

Plum gets $14 million in funding as it enters race for super app

Plum, a money management app launched in 2017, has announced that it has raised $14 million in its Series A funding round from a host of investors that include Ventura Capital, dmg ventures, Global brain, and others.