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Matthew Whitaker’s role as acting attorney general may be short-lived, and that’s not just Democrats talking. “I don’t know Matt Whitaker,” Trump said Friday before flying off to France—a noticeable change from his October statement on Fox News that Whitaker is “a great guy.” At the same time, Sen….
Federal Reserve official outlines plans to ease burden of bank stress tests prompted by financial crisisNovember 9, 2018 | dailybusinessnews
Wall Street banks will have to wait a bit longer for regulators appointed by President Trump to make the Federal Reserve’s stress tests less stressful. Their reward for being patient could be many more concessions than the industry anticipated.
Randal Quarles, the Fed’s vice chairman for supervision,…
Stanford pals hit the jackpot with Juul, but the e-cigarette’s popularity has drawn federal scrutinyNovember 4, 2018 | dailybusinessnews
Adam Bowen and James Monsees were pursuing master’s degrees in product design at Stanford when they decided to do something about their smoking addictions.
That was the beginning of what eventually would become Juul Labs Inc., now a $ 15-billion e-cigarette maker with a product so popular it’s used…
A U.S. federal court has fined a New York firm and its chief executive officer over $ 2.5 million in the first anti-fraud action involving bitcoin filed by the Commodity Futures Trading Commission. The Ponzi scheme involved a fake pooled investment strategy and a “fake computer ‘hack’ that supposedly caused the loss of nearly all customer funds,” the derivatives regulator detailed.
CFTC’s First Bitcoin Anti-Fraud Action
The U.S. Commodity Futures Trading Commission (CFTC) announced on Thursday that a New York federal court has ordered two defendants “to pay in total over $ 2.5 million in civil monetary penalties and restitution” in a bitcoin fraud case.
The orders against New York corporation Gelfman Blueprint Inc. (Gbi) and its CEO Nicholas Gelfman were entered by Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York. According to the commission, this case was “the first anti-fraud enforcement action involving bitcoin” filed by the CFTC.
The derivatives watchdog explained that “Gelfman was liable as a controlling person for Gbi’s violations” while “Gbi was liable as a principal for the violations of Gelfman and its other officers, agents, and employees.”
Noting that the complaint was originally filed against the defendants on Sept. 21, the CFTC wrote in Thursday’s announcement:
In addition to requiring Gbi and Gelfman, respectively, to pay $ 554,734.48 and $ 492,064.53 in restitution to customers and $ 1,854,000 and $ 177,501 in civil monetary penalties, the orders impose permanent trading and registration bans on Gbi and Gelfman.
The orders also “permanently enjoin them from further violations” of the CFTC Act and regulations. While the defendants are required to repay victims, the agency emphasized that the orders “may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.”
More Than 80 Customers Defrauded
From approximately 2014 to January 2016, “Gelfman and Gbi, by and through its officers and agents and employees, operated a bitcoin Ponzi scheme,” the CFTC wrote. “They fraudulently solicited more than $ 600,000 from at least 80 customers.”
The scheme promised to place customers’ funds “in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy executed by defendants’ computer trading program called ‘Jigsaw.’” The CFTC noted that the defendants posted on social media statements such as “We are a software development firm, currently offering customers access to a high-frequency BTC trading program called ‘Jigsaw’ (2% weekly BTC return).”
However, the commission asserted:
The strategy was fake, the purported performance reports were false, and — as in all Ponzi schemes — payouts of supposed profits to Gbi Customers in actuality consisted of other customers’ misappropriated funds.
Furthermore, in order to conceal “trading losses and misappropriation,” the defendants “made and provided false performance reports to pool participants.” Among the fake reports were statements showing positive bitcoin trading gains “when in truth defendants’ Jigsaw trading account records reveal only infrequent and unprofitable trading,” the CFTC described. The orders additionally detail:
Gelfman, in order to conceal the scheme’s trading losses and misappropriation, staged a fake computer ‘hack’ that supposedly caused the loss of nearly all customer funds.
What do you think of this CFTC’s enforcement action against Gbi and its CEO? Let us know in the comments section below.
Images courtesy of Shutterstock.
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Seems President Trump isn’t the only one who avoids paying taxes . Jared Kushner paid little to no taxes from 2009 to 2016 by exploiting a quirk of the tax code that benefits real-estate developers, the New York Times reports. A review of his private financial documents shows that Kushner—like…
Trump’s complaint that the Federal Reserve was ‘going loco’ on interest rates is just plain crazy, analysts sayOctober 12, 2018 | dailybusinessnews
The stock market tumbled Thursday for a second-straight session — a combined loss of nearly 1,400 points by the Dow Jones industrial average — and President Trump has been quick to finger the culprit:
The Federal Reserve, headed by his handpicked chairman, Jerome H. Powell.
“We have interest rates…
President Trump on Thursday blamed the Federal Reserve for the recent stock market downturn but said he would not dismiss his hand-picked chairman, Jerome H. Powell.
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Tekashi69’s Brooklyn home was swarmed and raided by federal agents Friday … a search we’re told turned up a gun. Law enforcement sources tell TMZ Tekashi was not home during the time of the raid. It’s currently unknown what prompted the search, or…
A U.S. federal judge has ruled that My Big Coin is a virtual currency meeting the definition of a commodity, which falls within the jurisdiction of the Commodity Futures Trading Commission (CFTC). This allows the regulator to pursue fraud charges involving the cryptocurrency.
Judge Rules My Big Coin Is a Commodity
In a lawsuit against My Big Coin Pay Inc. and its founder, the CFTC’s authority has been challenged by the defendants. The case could not move forward until the derivatives watchdog’s jurisdiction has been established.
On Wednesday, U.S. District Court Judge Rya Zobel in Boston sided with the CFTC and ruled that My Big Coin (MBC) is a commodity. Reuters reported that, according to the judge:
Virtual currencies meet the definition of a commodity and fall within the jurisdiction of the U.S. derivatives regulator, allowing the agency to pursue fraud allegations against My Big Coin Pay Inc.
In the case’s Memorandum of Decision filed on Wednesday, Zobel explained that the Commodity Exchange Act “defines ‘commodity’ generally and categorically, ‘not by type, grade, quality, brand, producer, manufacturer, or form’,” elaborating:
The amended complaint [by the CFTC] alleges that My Big Coin is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving bitcoin). That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a ‘commodity’ under the Act.
The document also references three other cases involving cryptocurrencies. In the case of CFTC v. Mcdonnell, “Virtual currencies can be regulated by CFTC as a commodity.” Virtual currencies are also “properly defined as commodities” in the Bfxna Inc. d/b/a Bitfinex case and the Coinflip case.
My Big Coin Case Continues
The CFTC filed charges against Randall Crater, Mark Gillespie, and My Big Coin Pay Inc. in January. The regulator alleged that “the defendants misappropriated $ 6 million from 28 customers they lured by naming their virtual currency [MBC] to sound like bitcoin and further claiming it was backed by gold,” Reuters detailed.
However, its jurisdiction over cryptocurrencies was challenged in June, as news.Bitcoin.com previously reported. Crater’s lawyer Katherine Cooper argued that MBC “does not have future contracts or other derivatives trading on it, it is not a commodity.” She moved to dismiss the case, claiming that the CFTC had no authority because MBC is neither a tangible good nor a service on which future contracts are being traded.
However, Zobel denied the motion on Wednesday, thereby allowing the CFTC to pursue fraud allegations against the defendants.
In response to the ruling, Cooper wrote in an email to Reuters:
We are disappointed in the result…Now that we are moving past the motion to dismiss phase of the case, we look forward to challenging the CFTC’s ability to prove many of the factual allegations in the complaint. Among those factual allegations are those which speak to the relatedness of bitcoin and My Big Coin and therefore the CFTC’s jurisdiction.
What do you think of the judge ruling that MBC is a commodity and the CFTC can now pursue fraud charges? Let us know in the comments section below.
Images courtesy of Shutterstock and CFTC.
Need to calculate your bitcoin holdings? Check our tools section.
The post US Federal Judge Rules My Big Coin a Commodity, CFTC Can Pursue Charges appeared first on Bitcoin News.
Stock indexes around the world held steady on Wednesday as markets awaited a Federal Reserve decision on interest rates.
Economists are nearly certain that the Fed will raise short-term rates by a quarter of a percentage point, the third such increase this year. But investors are more interested…