CFTC charges US Bitcoin Fraud for $7 million

CFTC charges the head of a Bitcoin escrow service with a $7 million Bitcoin fraud and faces decades behind bars if found guilty.

October 1, 2019, | AtoZ Markets – The Commodity Futures Trading Commission (CFTC) has charged Pennsylvania-based resident, Jon Barry Thompson for allegedly defrauding would-be customers of $7 million Bitcoin, according to a statement from the CFTC.

CFTC alleges $7 million Bitcoin fraud perpetrated by Jon Barry Thompson

The complaint, filed in a Southern New York District Court, accuses Thompson of making “false representations to customers,” misleading investors into thinking that he, or a company he was associated with, were in possession of bitcoins that were available for purchase in 2018.

Barry allegedly defrauded two companies, requesting them to send him a total of $7 million in exchange for the bitcoins, according to the CFTC. The funds, however, were not safeguarded and were quickly sent to outside third parties, the Commission claims. Not only did the customers not receive their bitcoins, but Barry allegedly lied to them repeatedly about the status of the transactions and the location of the coins in question. The case was filed by the CFTC Division of Enforcement Virtual Currencies Task Force.

Rooting out fraudsters is “essential” to further the development of cryptos

“Fraudulent schemes, like that alleged in this case, undermine the integrity of new and innovative markets and cheat innocent people out of their hard-earned money,” said CFTC Director of Enforcement James McDonald. “Rooting out misconduct involving crypto assets is essential to furthering the responsible development of this nascent space.”

According to the CFTC, the regulator is seeking civil monetary penalties, disgorgement, and restitution from Thompson. It is also looking into banning him permanently from crypto trading and respective exchanges.

According to McDonald:

“The CFTC will continue to work to hold fraudsters accountable, and where appropriate, operate in parallel with our criminal law enforcement colleagues.”

While it’s usually the SEC making headlines for its crusade against alleged crypto fraudsters, the CFTC has been involved in its own fair share of enforcement actions in the industry.

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