A federal court has ordered Abner Alejandro Tinoco and his company Kikit & Mess Investments, LLC to pay over $31 million in penalties for orchestrating a fraudulent foreign currency and cryptocurrency investment scheme, the Commodity Futures Trading Commission (CFTC) announced last week.
CFTC Wins $31 Million Judgment in Texas Crypto Fraud Case
Senior Judge David C. Guaderrama of the US District Court for the Western District of Texas issued the order on July 9, requiring Tinoco and Kikit & Mess to jointly pay $6.2 million in restitution to 199 defrauded victims, $6.3 million in disgorgement, and an $18.8 million civil monetary penalty.
The court had previously entered a consent order in March 2022 permanently banning Tinoco and his firm from trading in CFTC-regulated markets and registering with the agency. That order found the defendants had fraudulently solicited over $7.2 million from clients starting in September 2020, operating what the CFTC described as akin to a Ponzi scheme.
“The order found the defendants did not invest their clients’ funds as represented and instead used them to pay Tinoco’s personal expenses including the travel costs for chartering a private jet, the purchase of a luxury mansion and other real estate,” the CFTC statement said.
In a parallel criminal case, Tinoco pleaded guilty to five counts of wire fraud and was sentenced in February to 84 months in prison. He is currently serving his sentence at a federal correctional facility in Arizona.
The CFTC urges the public to exercise caution and verify registration status before investing funds with individuals or companies. Suspected violations can be reported to the CFTC's Division of Enforcement online tip system.
The Endless Saga of Financial Pyramids
The cryptocurrency and Forex markets continue to be prime hunting grounds for fraudsters seeking to deceive retail investors and savers. Earlier this month, Finance Magnates reported on a similar case where investors lost $83.7 million. Sam Ikkurty and associated companies were ordered to pay $121 million for allegedly running a pyramid scheme that promised 15% annual returns on Bitcoin investments.
In mid-May, the Commodity Futures Trading Commission (CFTC) reached a settlement with FalconX, a crypto prime brokerage firm. The company was fined $1.8 million for failing to register as a futures commission merchant (FCM) and was ordered to stop providing services to U.S. residents.
Concurrently, the market watchdog issued a strong caution to students and young job seekers about the risks of inadvertently becoming “money mules” in cryptocurrency-related schemes.
March saw US federal prosecutors bringing charges against the cryptocurrency exchange KuCoin and two of its founders for alleged violations of anti-money laundering (AML) laws. The indictment claims that KuCoin operated within the United States without proper registration and lacked an adequate AML program.
