Gelfman Blueprint fined $2.5 million for Bitcoin fraud

Lloyd Doyle
October 22, 2018

They were suspected of hiding their losses resulting from the trading and promising sizeable returns to their customers and promising them about the over-generous benefits in return of trading bitcoin.

A NY resident who purportedly operated a Bitcoin ponzi scheme that solicited at least $600,000 from 80 investors was hit with a $2.5 million fine to settle criminal charges in an enforcement action filed by the CFTC against the cryptocurrency-related fraud.

James Mcdonald, CTFC director of Enforcement, said in the press release, "This case marks yet another victory for the Commission in the virtual currency enforcement arena".

Yesterday, the CFTC said "the Order for Final Judgment by Default (Default Order), and the Consent Order for Final Judgment (Consent Order) (collectively, the Orders), entered respectively on October 2, 2018 and October 16, 2018, by Judge P. Kevin Castel of the U.S. District Court for the Southern District of NY, resolve the charges of the CFTC Complaint against GBI and Gelfman filed on September 21, 2017".

The Commission's Virtual Currency Task Force led the investigation against GBI and Gelfman. (GBI) and its CEO Nicholas Gelfman to pay over $2.5 million for operating a fraudulent Ponzi scheme, according to an official announcement published October 18. Instead, the company falsified its performance records, and used new customers' funds to make payouts while the scheme was in effect.

According to the reports from CCN, the legal proceeding started in 2017, but the penalties were confirmed this week. The customers' funds were supposed to be placed in a pooled commodity fund using a high-frequency, algorithmic trading strategy called "Jigsaw", which turned out to be fake. (GBI), charging them with "fraud, misappropriation, and issuing false account statements in connection with solicited investments in Bitcoin, a virtual currency".

Between 2014 and 2016, Gelfman and his firm orchestrated a Bitcoin Ponzi scheme which defrauded more than 80 customers of over $600,000. The company suspected planned on profiting the customers through the losses of other customers' funds. After a while, GBI announced a fake hack that they claimed to have caused the loss of all the investors' fund. The court also imposed permanent trading and registration bans on the two. The agency promises to fight back at such schemes and will protect the public and customers by ensuring that the wrongdoers are held accountable.

Other reports by Iphone Fresh

Discuss This Article