CFTC Crackdown Targets Individual in $7 Million Bitcoin Scam

The Commodity Futures Trading Commission (CFTC) charged an individual from Pennsylvania for making fraudulent claims of investing in Bitcoin on behalf of two investors. As per the press release, the accused never had possession of said Bitcoin, so it was never actually delivered to investors, September 30, 2019.

Clamping Down on Fraud

Cryptocurrency brings a list of problems to retail investors, the biggest of which is the investment and storage process. The number of cases where a retail investor has been swindled by a person promising to invest in cryptocurrency on their behalf is surprisingly high.

In this case, the CFTC Division of Enforcement’s Virtual Currencies Task Force was made aware that an individual was taking investments for Bitcoin and promising investors delivery for a fee. It was revealed the money was stored negligently and the individual never invested the proceeds in Bitcoin.

So basically, there was no Bitcoin actually involved, but a fraudulent actor was able to lure in investors by marketing with Bitcoin.

CFTC Director of Enforcement, James McDonald, believes that these schemes undermine the integrity of new, innovative asset classes, and cheat people out of their hard-earned wealth. This couldn’t have been put any more coherently. Blaming the asset class makes no sense; blaming the scammer for being morally devious does.

The scheme had two investors who were convinced to contribute a cumulative $7 million to purchase Bitcoin back in 2018. When they were fed rampant lies and didn’t receive delivery of the coins, they complained to authorities regarding the same.

Nothing Stops Fraud

It seems like no matter what regulators try to do in this space, it is impossible to stop malicious actors from trying to embezzle money from individuals and companies.

As the technology is young and general public awareness hardly even exists, it is very easy to swindle these investors who have no knowledge of how these markets function.

It is important to create awareness for this, and a very common topic is the lack of educational resources in the space. The only way to stop so much fraud from happening is for people to become educated on the risks of any investment, and use that knowledge to ascertain what may or may not be a scam.