The Commodity Futures Trading Commission (CFTC) has been successfully working on identifying crypto perpetrators, with a case it recently brought resulting in a hefty fine for the offender.
The CFTC announced July 23, that the defendant in its latest lawsuit, a company called The Entrepreneurs Headquarters (TEH), will have to pay over $1.9 million in civil monetary penalties and restitution.
The CFTC sued TEH after finding the company had engaged in a fraudulent scheme to solicit Bitcoin from members of the public.
The customers of the company were misled by being said that their funds would invested in products such as binary options. The CFTC established the money had been misappropriated.
Moreover, TEH’s sole principal, Dillon Michael Dean, did not register his venture as a Commodity Pool Operator (CPO) with the CFTC nor himself as an Associated Person of a CPO, as the rules stipulate.
TEH was in the crypto market from April 2017 through January 18, 2018. During this time, Dean’s company solicited almost $500,000 worth of Bitcoin from at least 127 people.
The CFTC said in its statement:
“Defendants promised to convert this Bitcoin into fiat currency to invest on their customers’ behalf in a pooled investment vehicle for trading commodity interests, including trading binary options on an online exchange designated as a contract market by the CFTC.”
With “false claims of trading expertise and promises of high rates of return,” the defendants deceived people promising to invest the funds. However, once the perpetrators had the Bitcoins, they did not convert them to fiat currency to invest in binary options contracts.
Dean pulled off his scam scheme with simple website setups like YouTube videos, and Facebook posts.
In his posts and videos he claimed that customers’ funds would be pooled and invested in commodity options. He presented himself as professional with “strong skills” in options trading, and claimed that the company generated high rates of return through trading commodity options.
TEH was also accused of making up trading profits.