The United States Commodity Futures Trading Commission (CFTC) has directed deceitful Bitcoin Trader Benjamin Reynolds to pay up $572 million in penalty and restitution for the crime he committed in 2017.
While the bulk of the penalty is a $429 Million Fine, he will pay an additional $142 million as restitution to victims.
Duping Investors Of More than 20,000 Bitcoin
Reynolds was alleged to have solicited more than 20,000 BTC from his victims between May and October 2017. This was valued at about $143 million at the time.
According to a statement released by CFTC, Reynolds set up a fake company called Control-Finance, where he targeted and scammed over 1000 people, 170 of which were U.S citizens.
Using a website, various social media profiles, and email communications, Reynolds baited them with the false promise that he would trade their funds on online crypto markets and return a profit to them.
He also enticed his clients to invite family and friends to the platform through promises of “affiliate” bonuses as he promised to pay outsized referral profits and rewards.
However, Reynolds did none of that.
He didn’t trade Bitcoin for his clients, didn’t earn profits, or pay them the referral rewards or bonuses. He had earlier given the victims the impression that they would get all their earnings and Bitcoin deposits returned by late October 2017.
The U.S regulator also stated that the fraudulent scheme relied on creating unique single-use wallet addresses to receive customers’ funds. Once the receipt is confirmed, he routes them to other, pooled wallet addresses held by virtual currency payment processors and exchanges in North America, Europe, and Asia.
CFTC authorities allege that Reynold executed these uneconomical and confusing blockchain transactions solely to conceal misappropriation.
CFTC is yet to locate Reynolds since it uncovered illicit enterprises in June 2019. Reynolds disappeared and went into hiding ever since his crimes caught up with him.
As such, the CFTC asked the New York court to settle the case in his absence.
Bitcoin Scams On The Rise
Cybercrime seems to have taken a new turn since the advent of cryptocurrency as it is constantly being used to scam people. Although regulators have repeatedly warned users against crypto scams, swindlers continue to lure people.
Last year saw an increase in bitcoin scams. In March, over 30 YouTube accounts were hacked to promote a Bill Gates-themed Ponzi cryptocurrency scam.
The hackers used Bill Gates’s old videos to encourage users to participate in a fake giveaway.
On Twitter, High-profile accounts belonging to celebs including Joe Biden, Bill Gates, and Elon Musk were also hacked to promote a crypto scam.