The Commodity Futures Trading Commission (CFTC) has taken legal action against Technical Trading Team, LLC (TTT), along with its Chief Executive Officer, Edwin Carrion, and Chief Operating Officer, Jason Rodriguez.
Multiple Charges Leveled against Defendants in CFTC Complaint
The CFTC has filed a civil complaint in the US District Court for the Eastern District of New York. The complaint accuses them of orchestrating a fraudulent foreign currency (forex) commodity pool scheme that allegedly defrauded investors of over $5 million.
The complaint levels multiple charges against TTT, Carrion, and Rodriguez, including fraud in connection with retail forex transactions and fraud in connection with being a commodity pool operator (CPO) and associated persons (AP) of a CPO. The defendants are accused of failing to register as a CPO and as APs of a CPO.
According to the CFTC, the defendants are alleged to have made false and misleading statements regarding their investment track record and the safety of investing in the TTT pool. They assured participants that they could recoup losses using artificial intelligence-based (AI) trading algorithms, after suffering losses exceeding $3 million through leveraged retail forex trading.
The CFTC's complaint seeks a range of remedies. These include a civil monetary penalty, full restitution to defrauded pool participants, disgorgement of ill-gotten gains, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act (CEA) and the CFTC regulations as charged.
“As alleged, the defendants made false and misleading statements and promises about the safety and profitability of becoming a pool participant in the TTT commodity pool,” said the Director of Enforcement, Ian McGinley.
“As a result of entrusting their money to TTT in light of these false promises, pool participants lost millions of dollars. Today’s filing once again demonstrates how the CFTC will hold fraudsters in our markets accountable for their wrongdoing, whether utilizing traditional technical trading techniques or emerging technologies, such as artificial intelligence or machine learning."
Promises of Lucrative Returns and Investment Safety
The alleged scheme is said to have operated from approximately January 2020 to the present. During that period, Carrion and Rodriguez solicited individuals who were not eligible contract participants to invest in the TTT commodity pool, which traded retail forex on margin.
Investors were promised annual interest rates ranging from 18% to 24% paid monthly for a one-year period, along with the return of their principal investments at maturity.
To attract investors, Carrion and Rodriguez purportedly exaggerated their forex trading track record. They falsely promised to maintain a reserve fund equal to participants' contributions, guaranteed limited risk exposure, and misrepresented the collateral assets available to secure participants' contributions. The CFTC contends that all these representations were false or misleading.
The complaint alleges that the defendants solicited approximately $5 million from 27 pool participants. Subsequently, they lost over $3.13 million in leveraged forex trading, misappropriated funds for personal use, and utilized new participants' investments to pay interest to existing participants.
In an attempt to conceal their fraudulent activities, the defendants claimed they would recover losses and repay loans by implementing an AI-powered trading bot.
The complaint asserts that TTT operated as a CPO without the required registration, and Carrion and Rodriguez acted as associated persons of a CPO without proper registration. The defendants are also accused of making false statements to a registered foreign exchange dealer concerning the source of TTT's funds and the nature of its business activities.
The CFTC has cautioned victims that restitution orders may not guarantee the recovery of lost funds due to the wrongdoers' potential lack of sufficient funds or assets. The agency reaffirmed its commitment to protecting customers and holding those responsible accountable.
Investigations and legal proceedings in this case are ongoing as the CFTC continues its efforts to uncover the full extent of the alleged misconduct and protect the interests of affected investors.
