According to the official statement issued by the CFTC, the defendants incurred fraud crimes during the commercialization of their token and manipulated data in favor of their company in a binary operations scheme.

The Commodity Futures Trading Commission of the United States, CFTC, filed legal charges against another cryptocurrency investment scheme that accuses fraud and misappropriation of funds.

According to a statement published by the CFTC, the company’s operators, Blake Kantor and Nathan Mullins, will have to assume the payment of USD $2.5 million and USD $300 thousand respectively, in addition to delivering the illegal profits derived from the commercial activities carried out .

The lawsuit filed by the CFTC also includes the companies Blue Bit Banc, Blue Bit Analytics, Mercury Cove and G. Thomas Client Services. The first precedent took place in April 2018, when the agency pointed to Kantor and its partners for fraud in a binary operations model, as well as for the commercialization of the ATM Coin cryptocurrency.

Scam Details

In relation to the binary operations model, where the user raises commercial hypotheses about whether the price of an asset will increase or decrease over a certain period of time, the defendants apparently used a certain type of software to alter the results, benefiting at all times the Blue Bit Banc company.

For its part, in relation to the ATM Coin currency, the CFTC assured that the administrators persuaded investors to deposit their capital to access the token that had no value whatsoever, incurring a fraudulent offer to trade securities.

Kantor and Mullins asked customers to deposit money in the accounts of a tax haven, which made it difficult for agencies to track the assets of scammed people.

For the time being, the defendants must make the corresponding payment to repay the capital invested to the victims. However, this could be subject to further legal sanctions in case the investigations find other punishable facts.

CFTC response

The measures taken by the CFTC against the aforementioned defendants and other fraudulent model operating companies are framed in the regulators’ fight against illegal activities perpetuated with cryptocurrencies.

In mid-September, the US Securities and Exchange Commission (SEC) filed a lawsuit against the ICOBox startup for facilitating commercial operations for token development companies that did not have the respective regulatory permits.

On previous occasions, the SEC carried out similar actions against other companies dedicated to the commercialization of ICO campaigns, considering that there were violations against the respective regulations. It also highlights the case of EtherDelta, which also offered companies to market ERC-20 tokens.

In this way, both the SEC and the CFTC exert pressure to prevent commercial campaigns and fraudulent offers from generating inconvenience to investors attracted by the potential of digital currencies.

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