A New York resident who reportedly operated a Bitcoin trading company was fined $ 1.1 million to be sentenced for criminal charges in an enforcement action that the CFTC filed in January against a cryptocurrency-related fraud.
The court order, introduced by Judge Jack B. Weinstein of the US district court in the eastern district of New York, comes to the conclusion that CabbageTech, based in Staten Island, does business as Coin Drop Markets (CDM), and its director, Patrick McDonnell , running a fraudulent scheme whereby the cryptocurrencies Bitcoin and Litecoin were bought and traded.
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The CFTC claims that the accused, starting in January 2017 and up to and including July 2017, are conspiring to deceive investors by enticing them to send their money to CabbageTech in exchange for trade recommendations and purchases of digital coins led by McDonnell.
Almost all of the pool money was lost, according to the complaint that accuses the accused of fraud, embezzlement, registration violations and issuing false statements.
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In connection with the promotion of their pool, McDonnell made a series of materially false claims to interest investors who are interested in trading in digital coins. The claim was that participants in the pool could receive extraordinary investment returns, up to 300% in less than a week.
Instead of using the money from the investors in the trade, the fraudsters misappropriated all the funds of the participants, then removed the website and social media and stopped communicating with customers.
Separately on the same day, the CFTC accused a businessman from Colorado and his UK-registered company of breaking trade rules and cheating at least 600 customers over $ 1.1 million.
As also claimed, he used the money from some new investors to repay other investors in a Ponzi way, so that they would invest or refer extra money, which would allow the plan to continue for a longer period of time.