Crypto Hedge Fund Court Ordered to Pay $2.5 Million in CFTC Bitcoin Ponzi Case
The Commodity Futures Trading Commission has prevailed in a case against a New York resident and his company for their involvement in a bitcoin ponzi scheme. The scheme took place between 2014 and 2016 and involved Gelfman Blueprint Inc. and its CEO Nicholas Gelfman. Gelfman and his company were able to successfully solicit $600,000 from 80 customers by claiming that those who provided funds would be able to earn money through the company’s proprietary trading algorithm.
Instead of investing the funds in the platform, Gelfman used the funds to repay past clients, thereby perpetuating a scheme. The CFTC then filed an anti-fraud enforcement action against Gelfman and his company. This week, a federal court ruled in favor of the CFTC and ordered Gelfman and the company to pay $2.5 million in penalties and restitution. James McDonald, the director of the CFTC stated that
“this case marks yet another victory in the virtual currency enforcement arena.”
He further added,
“As this strong of cases shows, the CFTC is determined to identify bad actors and hold them accountable. I’m grateful to the members of the Enforcement’s Virtual Currency Task Force for their tireless work on these matters.”
The court also specifically ordered GBI to pay $555,000 and Gelfman to pay $492,000 in restitution to clients. They were also ordered to pay $1.85 million and $177,000 in penalties, respectively. The Court further imposed indefinite trading and registration bans on them. The CFTC notes that even though the Court ordered restitution, it is unlikely that GBI and Gelfman will be able to pay the funds because they do not have sufficient liquidity to do so.