2018 has already been a rocky road for Bitcoin. Now, three virtual currency operators in the US have been charged with fraud by the United States Commodity Futures Trading Commission (CFTC). The three in question are CabbageTech, Entrepreneurs Headquarters Ltd., and another that remains unnamed. They have all been charged with engaging in fraud, misappropriation of funds, and misrepresentation, causing significant financial harm to investors.
It is alleged that CabbageTech, who have been doing business as Coin Drop Markets have been making false promises to investors â they supposedly promised Bitcoin trading advice to investors, as well as Bitcoin purchasing and trading on investorsâ behalf. A statement from CFTC says;
âThe Defendants have preyed on customers interested in Bitcoin and Litecoin, promising them the opportunity to get the inside scoop on the next new thing and to benefit from the trading acumen of a supposed expertâ¦In reality, as alleged, customers only bought into the Defendantsâ fraudulent scheme.â
Entrepreneurs Headquarters Ltd., supposedly solicited Bitcoin from investors, with the promise that their money would be pooled and traded. Instead, it has been alleged that the company actually took more than $1.1million in Bitcoin from over 600 investors. It was reported that they used this money to pay other investors; similar to a high tech Ponzi scheme. The CFTC said;
âPotential pool participants were solicited to invest with Defendants by false claims of trading expertise and promises of high rates of return. The Complaint further alleges that, rather than convert customersâ Bitcoin rate to fiat currency to invest in binary options contracts, as promised, Defendants misappropriated their customersâ funds, including by using the funds to pay other customers, in the manner of a Ponzi scheme.â
The CFTC initially authorised Bitcoin futures trading in mid December last year, and these are the first cases of fraudulent activity.
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