CFTC Busts $44 Million Ponzi Crypto Investment Scheme

The Commodity Futures Trading Commission (CFTC) has busted another fraudulent digital asset investment scheme. The agency has filed an enforcement action against two individuals and their entities for fraudulently soliciting at least $44 million.

According to Friday’s announcement, the individuals are Sam Ikkurty, Ravishankar Avadhanam and Ikkurty-owned Jafia LLC. In addition,the complaint charged three funds owned and operated by the primary defendants: Ikkurty Capital (Rose City Income Fund), Rose City Income Fund II LP and Seneca Ventures.

The primary charges against the defendants were for soliciting investors with false promises of income funds invested in digital assets and other instruments. Moreover, they are charged for operating in an illegal commodity pool as they failed to register with the market regulator.

The name of the three funds came as the defendants were in possession of them without any legitimate interest in them.

A Large Scale Digital Operation

According to the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term complaint, the defendants targeted investors since at least January 2021 through multiple channels. They ran a website, ran YouTube advertisements and a few other means.

They solicited at least $44 million from around 170 investors with the promises of purchasing, holding and trading digital assets, commodities, derivatives, swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term and commodity futures contracts. They even ran a Ponzi-styled operation by misappropriating participants' funds for others, without making any pooled investment.

Further, the defendants allegedly transferred 'millions of dollars' to an offshore entity and then moved them to a foreign cryptocurrency exchange. Additionally, the complaint highlighted that none of these funds were returned to the pool.

The CFTC is now seeking restitution to the defrauded investors and disgorgement of ill-gotten gains. Furthermore, it wants civil monetary penalties and permanent trading and registration bans, along with permanent injunctions.

The US court already ordered that the assets of the defendants be frozen, along with instructions to preserve records and the appointment of a temporary receiver.