CFTC Sues 5 Individuals for Bitcoin Trading Fraud

The Commodities Futures Trading Commission (CFTC) has filed a lawsuit against five individuals for engaging in fraudulent activities related to the promotion of bitcoin and crypto trading services, resulting in the exploitation of unsuspecting investors.

According to the CFTC, David Carmona, Juan Arellano Para, Moses Valdez, David Brend, and Marco A. Ruiz Ochoa solicited funds from customers under the pretense of assisting them with bitcoin and cryptocurrency trading. However, instead of using the funds as intended, they misappropriated the users’ funds.

Together, the defendants operated a business called Icomtech, which purported to be a crypto trading venture. The CFTC alleged that between 2018 and 2019, Icomtech made false claims that customers would receive daily returns ranging from 0.9% to 2.8% through crypto trading. The fraudulent scheme also promised to double customers’ investments within four to eight months.

The regulator accused Icomtech and the aforementioned defendants of not utilizing the funds for bitcoin or crypto trading and failing to fulfill their promises. The CFTC further stated that the agents of Icomtech solicited funds totaling “hundreds of thousands of dollars” from over 170 individuals in the United States and other countries, with a significant number of customers coming from Spanish-speaking communities.

In addition to the CFTC’s enforcement action, the U.S. Attorney’s Office for the Southern District of New York (SDNY) charged the five defendants with wire fraud in October 2022 in connection with the fraudulent operations of Icomtech.

CFTC not More Crypto-Friendly Than the SEC

Following the recent enforcement action, the CFTC has made headlines for its largest-ever bitcoin fraud case, which resulted in a $3.4 billion penalty fee. This case involved a South African CEO who operated an unregistered commodity pool, soliciting bitcoin from individuals and misappropriating customer funds.

In the midst of these developments, CFTC Commissioner Christy Goldsmith Romero expressed the challenges in monitoring the extensive fraud occurring within the cryptocurrency space. Romero stated that the agency’s portfolio currently includes crypto cases, accounting for approximately 20% of its workload. This includes ongoing lawsuits against major crypto exchange Binance and the bankrupt FTX.

Furthermore, the CFTC Commissioner clarified that the regulatory agency should not be perceived as a “friendlier regulator” toward the crypto sector when compared to the Securities and Exchange Commission (SEC). The SEC has recently adopted a more assertive approach towards the industry, emphasizing a stricter regulatory stance.