Bitcoin Ponzi Schemer Must Pay $2.5 Million, Federal Court Rules

  • Bitcoin Ponzi Schemer Must Pay $2.5 Million, Federal Court Rules

Bitcoin Ponzi Schemer Must Pay $2.5 Million, Federal Court Rules

(GBI), a NY investment firm for committing fraudulent activities.

The details were released through the press release where CTFC alleged GBI's CEO Nicholas Gelfman for taking part in fraud schemes and manipulating the unsuspecting customers.

According to local media, the fund organized a Ponzi scheme, that is, a fraudulent scheme, according to which customers are promised high returns and minimal risk.

According to the information on the company's website, in 2015, the fund had 85 customers.

When the public suspected that the company must have had profit in the recent time, reports were drawn up but with a different conclusion.

The court order finds that Gelfman Blueprint, Inc.

The CFTC's Director of Enforcement, James McDonald welcomed the court decision claiming it as "another victory" in the "virtual currency enforcement arena". Yesterday's press release also revealed, "that Gelfman, to hide the scheme's trading losses and misappropriation, staged a fake computer "hack" that supposedly caused the loss of almost all customer funds".

"However, the Complaint said that "the strategy was fake, the purported performance reports were false, and - as in all Ponzi schemes - payouts of supposed profits to GBI Customers in actuality consisted of other customers" misappropriated funds". Furthermore, he added, "As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable".

It comes as no surprise to see the Financial Action Task Force in Paris declaring that it will be requiring member countries to license or regulate cryptocurrency exchanges, including providers of currency "wallets".

According to the reports from CCN, the legal proceeding started in 2017, but the penalties were confirmed this week. (GBI), charging them with fraud, misappropriation, and issuing false account statements in connection with solicited investments in bitcoin.

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 needed only to persuade investors to invest in the fund.

Penalties include GBI being ordered to pay over $550,000 back to customers, and Gelfman himself paying about $492,000 to customers.

Apart from the monetary penalties, the court also banned permanently GBI and Gelfman from trading.

Gelfman was said to have also staged a computer hack that supposedly resulted in the loss of funds.