CFTC Sues 5 Individuals for Bitcoin Trading Services Fraud

The Commodities Futures Trading Commission (CFTC) has sued five individuals for falsely promoting bitcoin and crypto trading services, thereby swindling unsuspecting investors.

The defendants in the case, according to the CFTC, mainly targeted Spanish-speaking users.

Majority of Victims Were From Spanish-speaking Communities

The CFTC alleged that five people — David Carmona, Juan Arellano Para, Moses Valdez, David Brend, and Marco A. Ruiz Ochoa — solicited funds from customers to help them trade bitcoin and other cryptocurrencies but ended up misappropriating users’ funds.

The defendants jointly ran a business called Icomtech, which was supposedly a crypto trading venture. According to the CFTC, between 2018 and 2019, Icomtech stated that customers would receive 0.9% and 2.8% in daily returns from crypto trading. The fraudulent scheme also promised to double customers’ investments between four and eight months.

However, the regulator alleged that Icomtech, along with the defendants mentioned, did not use the funds received for bitcoin or crypto trading, nor did the scheme deliver on the aforementioned promises.

Also, the CFTC stated that the Icomtech agents solicited funds worth “hundreds of thousands of dollars” from over 170 people in the United States and other countries. Furthermore, most of the customers came from Spanish-speaking communities.

In addition to the CFTC enforcement action, the U.S. Attorney’s Office for the Southern District of New York (SDNY) also charged the five defendants for wire fraud in October 2022 in connection with the Icomtech fraudulent venture.

CFTC not More Crypto-Friendly Than the SEC

The latest enforcement action comes shortly after the CFTC recorded its highest bitcoin fraud case involving a $3.4 billion penalty fee. The case involved a South African CEO who ran an unregistered commodity pool to solicit bitcoin from people and also embezzled customers’ funds.

Meanwhile, CFTC Commissioner Christy Goldsmith Romero recently said it was impossible to monitor all the fraud going on in the cryptocurrency space, as it was a lot. According to Romero, 20% of the agency’s portfolio comprised crypto cases, including the lawsuits against crypto giant Binance and the bankrupt FTX.

The CFTC Commissioner also stated that the regulatory agency should not be seen as a “friendlier regulator” towards the crypto sector, compared to the Securities and Exchange Commission (SEC), which has adopted a more aggressive approach towards the industry in recent times.