US Govt requests to intervene in CFTC lawsuit targeting Bitcoin fraudster

Maria Nikolova

The Government asks the Court for an order authorizing intervention and staying civil proceedings until the conclusion of the parallel criminal case against Jon Barry Thompson.

The United States Government is seeking to intervene in the lawsuit brought by the Commodity Futures Trading Commission (CFTC) against Bitcoin fraudster Jon Barry Thompson.

On November 18, 2019, the Government filed a set of documents with the New York Southern District Court requesting an order authorizing intervention by the United States and staying civil proceedings until the conclusion of the parallel criminal case, United States v. Jon Barry Thompson, 19 Cr. 698.

The Government notes that the criminal case arises from the identical set of facts and circumstances that underlie the civil action. As a result, according to the Government, a full stay is especially appropriate because any exchange of discovery would be asymmetrical and would merely allow the defendant to circumvent the criminal discovery rules and improperly tailor his defense in the criminal case.

On July 25, 2019, a criminal complaint was unsealed, charging Thompson with two counts of commodities fraud and two counts of wire fraud. The charges related to two fraudulent schemes in which Thompson induced two victim companies to send millions of dollars to his companies, Volantis Escrow Platform LLC and Volantis Market Making LLC in connection with the sale of Bitcoin. On September 25, 2019, an indictment was returned, charging Thompson with the same counts, based on the same conduct alleged in the criminal complaint.

On September 25, 2019, the CFTC filed a complaint against Thompson alleging violations of the commodities laws related to the same schemes.

As alleged in the Criminal Complaint, the Indictment and the CFTC Complaint, Thompson claimed in promotional materials for Volantis that Volantis “minimize settlement default risk” in cryptocurrency transactions. Thompson claimed that because Volantis acted as a custodian of assets for “both sides of the transaction, there is no risk of default.”

In or about 2018, Thompson induced two customers to send roughly $7 million to fund the purchase of bitcoin after making false representations that he or the company had the bitcoin in hand and the customers’ money would be safeguarded. After receiving the customers’ money, Thompson sent virtually all of the money to third parties without first receiving any bitcoin in return. It is further alleged that after taking the customers’ money and failing to provide any bitcoin in return, Thompson lied to the customers about the location of the bitcoin, the reasons the transaction was not completed, and the status of the customers’ money.

The CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.

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