UK Man to Pay Over $570 Million For Running Fraudulent Bitcoin Trading Scheme

UK Man to Pay Over $570 Million For Running Fraudulent Bitcoin Trading Scheme

Malaysia Duo Charged Over Bitcoin Investment Fraud

A  UK man, Benjamin Reynolds has been charged $571 million by the Commodities Futures Trading Commission (CFTC) for scamming US Clients and receiving over 22,000 BTC in 2017.

On March 26, the CFTC said in an official statement that the Federal Court had ordered Reynolds to pay a fine of $429 million and $143 million in restitution in a ruling made on March 2.

The alleged Manchester-based man is accused of soliciting bitcoin (worth $143 million at the time) from US Citizens and other countries, by promising to trade it on their behalf on the crypto market and increase their profits.

“Reynolds used a public website, various social media accounts and email communications to solicit at least 22,190.542 bitcoin valued at approximately $143 million at the time, from more than 1,000 customers worldwide, including at least 169 individuals residing in the US.”

CFTC Says Reynolds Is MIA

According to the CFTC, Reynolds set up a company, Control-Finance, and lied to its customers the firm had employed several people to trade their bitcoin in virtual currency markets and generate significant profits for them.

“He also constructed an elaborate affiliate marketing network that relied on fraudulently promising to pay outsized referral profits, rewards, and bonuses to encourage customers to refer new customers to Control-Finance.”

However, Reynolds did not trade any of the bitcoin or pay any of the additional benefits but ended up defrauding close to 170 of his customers residing in the US. He perpetrated the crime for approximately six months between May 2018 and October 2017, after which he disappeared and hasn’t been traced yet.

“While Reynolds represented that he would return all bitcoin deposits to customers of Control-Finance, by late October 2017, he never did and instead retained the deposits for his own personal use. Customers lost most or all of their bitcoin deposits as a result of the scheme.”

Funds May Remain Unrecovered

The CFTC sued Reynolds in January 2019 but since he failed to respond to the lawsuit, the Southern District of New York declared that Reynolds had failed to appear.  As part of the final ruling, the Federal Court said that Reynolds is blacklisted from CFTC markets.

“The order also permanently enjoin Reynolds from engaging in conduct that violates the Commodity Exchange Act and CFTC regulations, registering with the CFTC and trading in any CFTC-regulated markets.”

If Reynolds managed to keep all his ill-acquired BTC, his estimated worth is around $1.2 billion at the price of $54,800 per BTC. The Commission also concluded by notifying investors that not all restitution orders are fulfilled, especially when the perpetrators stay hidden or do not have enough money to pay the fines.