The CFTC has filed a civil enforcement action against four people who were allegedly engaged in the operation of two crypto scams that cheated naïve investors out of $44M in Bitcoin.
Alleged Crypto Scams involving wire fraud and money laundering
The Commodity Futures Trading Commission (CFTC) has charged Florida resident Dwayne Golden, North Carolina resident Marquis Egerton, New York resident Gregory Aggesen, and Indian citizen Jatin Patel with fraud for their alleged involvement in a crypto scam.
In addition to the civil allegations, the three US defendants were accused in New York on criminal counts of wire fraud and money laundering.
CFTC Chairman Rostin Behnam told the Senate Agriculture Committee during his confirmation hearing last year that his agency was ready to become the “primary cop on the beat” for crypto regulation, and that the CFTC has “responsibly and aggressively been pursuing enforcement cases in the digital asset marketplace for a number of years.”
The CFTC’s allegations on Tuesday are just the latest in a long line of attempts by the agency to control the crypto business, which has sparked a turf war with the Securities and Exchange Commission (SEC), which has traditionally led the charge on crypto regulation in the United States.
According to a lawsuit filed on Tuesday, the four defendants and an unknown accomplice collaborated on two crypto scams between April and August 2017.
Golden, Patel, and Egerton are accused of running Ecoinplus (a.k.a. Empowercoin), a Ponzi scam that reportedly brought in over $23 million in Bitcoin (at the time of investment), approximately $10 million of which they “misappropriated” and retained for themselves.
Investors were promised that their money would be invested by “skilled traders” and that it would double in 50 to 90 days, with daily payouts of at least 2% to 5% of the investment. Golden, Patel, and Egerton, according to the CFTC, depended on additional incoming contributions to uphold these commitments while padding their own wallets.
Ecoinplus’ website was taken down in July 2017. Customers were not given a refund.
How the defendants established Jetcoin
However, the CFTC claims that before abandoning Ecoinplus, Golden and Patel acquired a new business partner in Aggeson, a New York entrepreneur, and an unknown accomplice. They established JetCoin after modelling the new site after Ecoinplus (while also making attempts to disassociate themselves from the Ecoinplus plan).
Aggeson, who describes himself as an “internet marketer” on Linkedin, reportedly enlisted the help of a team of “skilled multi-level marketing promoters” to attract new consumers to the scam.
The JetCoin website, like Ecoinplus, promised clients a “100% success rate!” as well as a doubling of their investment in 40 to 50 days and daily accretion of 4% to 5% of their deposits – all owing to the investing skills of “the brightest brains in the business.”
According to the CFTC, JetCoin had no other workers save Golden, Patel, and Aggeson.
The defendants reportedly received $21.7 million in bitcoin through the JetCoin fraud, with 36% of it going to them. The JetCoin website fell down in August 2017, and no refunds were given to clients.
According to the lawsuit, the JetCoin crew knew the system wouldn’t endure and was just created for “fast money” the entire time.
“No one believes in people who want to lounge around and get money without doing anything,” the unidentified accomplice reportedly told Aggeson.
“This entire stuff about going in and investing your money into something and getting money for nothing, that’s such a farce,” Aggeson remarked.
Restitution, disgorgement, civil fines, permanent registration and trading prohibitions are among the CFTC’s demands.
The defendants each face up to 20 years in jail if convicted on criminal charges.