Cryptocurrency related investment schemes and their promoters and companies are under the US Commodity Futures Trading Commission’s radar with the CFTC filing charges against several such schemes for allegedly defrauding customers and investors.
CFTC has files suits in US federal court in New York accusing CabbageTech and the Entrepreneurs Headquarters Limited of engaging in fraudulent practices to obtain cryptocurrencies from investors.
CabbageTech operated as Coin Drop Markets and purportedly offered real-time cryptocurrency trading advice. However, according to CFTC, its owner Patrick K. McDonnell failed to provide the promised trading advice to customers and stole funds that clients had entrusted to his management. According to the complaint, after receiving the funds, the defendants cut off communications with customers and erased their internet presence.
CFTC has alleged that Colorado resident Dillon Michael Dean, along with his UK-registered company The Entrepreneurs Headquarters Limited were operating a Ponzi scheme under which they solicited and misappropriated at least $1.1 million in bitcoin from more than 600 investors under the guise of establishing an investment pool.
The suits come as US regulators have been eyeing the cryptocurrency ecosystem with increased scrutiny.
On Friday, the CFTC and US Securities and Exchange Commission (SEC) issued a joint enforcement warning stating that they will continue to patrol the cryptoasset markets and “look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws.”