In addition to naming the organization, the commission also included Brian Early of New Orleans, Rene Larralde of Melbourne, Florida, Alisha Ann Kingrey of Franklin, Arkansas and Juan Pablo Valcarce of West Melbourne for their role in a purported trading scheme involving the company.
The action, which was brought in U.S. District Court for the Middle District of Florida, alleges “fraudulent solicitation from clients to purportedly trade in cryptocurrencies and precious metals” by the foursome.
“The CFTC continues to root out individuals who defraud customers in the cryptocurrency and precious metals markets,” said Director of Enforcement Ian McGinley. “Though the products fraudsters purport to trade and their methods of attracting victims—in this case through social media—may have changed, the old adage ‘if something sounds too good to be true, it probably is’ remains as valid as ever.”
As part of the ongoing litigation, the CFTC will seek restitution, civil penalties, disgorgement for any ill-gotten earnings, trading and registration bans and “a permanent injunction against further violations of the Commodity Exchange Act.”
As such, earlier this month, U.S. District Court Judge Wendy Berger signed off on an ex parte restraining order to freeze the defendants’ assets, preserve records and appoint a temporary receiver.
"The #FBI warns of an increase in cryptocurrency recovery schemes, which exploit victims who lost cryptocurrency to fraud, scams, and theft. Read more: https://ic3.gov/Media/Y2023/PSA230811…"
Per the CFTC announcement, the case began in October of 2020 when the defendants allegedly began soliciting participants to invest with Fundsz in order to gain access to weekly returns as high as 3% through its use of a “proprietary algorithm” used to trade digital assets and precious metals.
The group is also accused of misleading investors to believe injections into Fundsz would support “clean water, humanitarian, health, education and disaster relief efforts.”
“This pitch was successful, as the defendants claim to have more than 14,000 participants. But in reality … Fundsz does not trade customer funds at all, and any customer gains are illusory, as the defendants simply make up fictional weekly returns to report to customers,” the complaint alleges.
"Sam Bankman-Fried, disgraced founder of the FTX cryptocurrency exchange and a Democrat super donor, has had his bail revoked by a judge ahead of his trial on fraud charges, over concerns that the crypto baron has engaged in witness tampering. https://www.breitbart.com/ tech/2023/08/11/disgraced-ftx-boss-and-democrat-super-donor-sam-bankman-fried-jailed-ahead-of-trial-over-witness-tampering-allegations/"
While cryptocurrency-related scams continue to occupy the attention of law enforcement, lawmakers and regulators, fraud trackers at Chainalysis indicated 2023 has actually seen a notable drop in crypto-related crime.
Per data from the firm, inflows through the end of June to “known illicit entities,” excluding those facing special measures or sanction, are down 65% year-over-year. Similarly, inflows to “risky entities” like mixers dropped 42%.
“Of course, transaction volumes are down across the board, but declines are much less severe for legitimate services, which have seen just a 28% drop in inflows. In other words, there’s been a market pullback, but illicit crypto transaction volume is falling much more than legitimate crypto transaction volume,” according to the organization.