This Crypto Trading Scheme Results in Prison Terms, Million-Dollar Fines

Thursday, 12/12/2024 | 08:16 GMT by Damian Chmiel

Five individuals were fined over $5M for running a digital asset fraud scheme targeting 190 victims.

The Icomtech creators falsely promised high returns on Bitcoin trading but misappropriated customer funds

A federal court has ordered five individuals associated with Icomtech to pay more than $5 million in penalties for orchestrating a sophisticated digital asset fraud scheme that targeted nearly 200 investors worldwide.

Digital Asset Scheme Operators Hit With $5M Penalty, Prison Terms

The U.S. District Court for the Central District of California issued orders against the operators of Icomtech, who fraudulently solicited over $1 million from 190 investors between August 2018 and December 2019. The scheme promised investors unrealistic daily returns of up to 2.8% through Bitcoin and other digital asset trading.

Marco A. Ruiz Ochoa of New Hampshire, along with David Carmona, Juan Arellano Parra, Moses Valdez, and David Brend, faces substantial monetary penalties and permanent trading bans. The court's decision requires them to jointly pay over $1 million in restitution to defrauded customers, with each defendant additionally facing individual $1 million civil monetary penalties.

The enforcement action has resulted in significant criminal consequences. Carmona received a 10-year prison sentence and must forfeit over $329,450, while Ochoa faces five years in prison and agreed to forfeit $914,000. Brend's conviction led to a 10-year prison term and a $40,000 fine. Criminal proceedings against Arellano and Valdez remain ongoing.

“Ochoa admits, that Ochoa engaged in the fraud scheme with the other defendants. and requires him to pay jointly and severally with the other defendants over $1 million in restitution to defrauded customers,” CFTC commented in the official statement. “The consent order also imposes a permanent injunction and permanent trading, solicitation, and registration bans against Ochoa.”

The scheme's operations involved promising to double investors' money within eight months through cryptocurrency trading. However, investigators found no evidence of actual trading activities, revealing instead a pattern of misappropriation of customer funds.

The court's orders permanently ban the defendants from registering with the CFTC and trading in CFTC-regulated markets. These civil penalties complement parallel criminal actions pursued by the U.S. Attorney's Office for the Southern District of New York in 2022.

Moreover, Icomtech was also sued by the Securities and Exchange Commission (SEC) two years ago.

CFTC Cracks Down on Fraudulent Schemes

This week, the CFTC announced two other significant cases of alleged fraud. In one of them, the U.S. District Court for the Western District of North Carolina issued a summary judgment and permanent injunction against Storm Bryant, Elijah Bryant III, and three associated LLCs—CapitalStorm LLC, GenerationBlack LLC, and Ncome LLC.

The court found that from 2018 to 2021, the defendants operated a fraudulent foreign currency scheme, misappropriating over $1.9 million in client funds and violating CFTC registration requirements.

In the second case, Francier Obando Pinillo, a pastor from Washington state, faces civil charges for allegedly orchestrating a $5.9 million cryptocurrency fraud. According to the CFTC, Pinillo used his position of trust to target Spanish-speaking congregants, promising returns of up to 34.9% through an automated crypto trading platform .

The scheme reportedly involved over 1,500 victims through his companies Solanofi, Solano Partners Ltd, and Solano Capital Investments.