According to local media reports, a United States regulator has charged five individuals in a crypto scam case. The individuals have been accused of “fraudulently soliciting” money from more than 170 people in the name of Bitcoin and other crypto assets.
On Wednesday, the Commodity Futures Trading Commission (CFTC) filed a complaint against five individuals for frauding investors in the name of a company called Icomtech. The company reached out to people and convinced them of trading into cryptocurrencies like Bitcoin and other assets on their behalf.
In a statement released by the CFTC, it stated that it has filed a complaint in the US District Court for the Central District of California. The case has been lodged against individuals named David Carmona, Juan Arellano Parra, Moses Valdez, David Brend, and Marco A. Ruiz Ochoa, who all did business as Icomtech.
As per the CFTC’s investigation, the entity in question largely targeted Spanish-speaking individuals and persuaded them to believe their plans by promising them lucrative returns on investment. Further, they misappropriated these funds and used them to carry out their endeavors.
The CFTC said that from August 2018 through December 2019, the five and other Icomtech agents falsely represented that they would use the money to trade Bitcoin and other digital asset commodities for the customers. They promised that they would provide returns and would double customers’ money within months but that didn’t happen. As stated in CFTC’s complaint:
Instead, Defendants misappropriated customer funds to further promote the scheme, and, on information and belief, to pay for personal expenditures and to pay themselves commissions and bonuses. In fact, some Icomtech customers lost all of their funds.
Further, the regulator said that among the listed individuals, Carmona and Arellano are believed to be in federal custody. According to CFTC, sometimes, hundreds of people attended different Icomtech promotional events, which were held throughout California.
In a statement, Kristin Johnson, CFTC Commissioner, compared the alleged fraud to an “old-school Ponzi scheme.” She also showed her commitment to “raising alarms regarding fraud that targets vulnerable investors based on relationships, kinship, or other social network connections.” She added:
As I have noted previously, perpetrators target the identified communities because they are familiar with the fears and challenges that may deter investors from reporting or effectively communicating the details of the fraud to law enforcement or regulatory authorities.
Notably, in its complaint, the regulator also named Bitcoin, Ethereum, and USDC as “commodities.” The status of crypto assets has been under question for a long time in the US with the two primary regulators- CFTC and the Securities and Exchange Commission (SEC) claiming their respective jurisdiction.
While the SEC is continuing to charge crypto entities claiming the assets to be securities, the CFTC is asserting them to be commodities. Hence, the clarity regarding the regulations of crypto assets is a significant concern at the moment that the regulators must address as soon as possible.
Simultaneously, the growing frauds and scams have been a nightmare for investors and regulators. Notably, the trend of fake crypto companies targeting Spanish-speaking individuals is also becoming increasingly popular. In December, the SEC charged four individuals who were deceiving investors in the name of a fake crypto company called Forcount, which reportedly raised over $8.4 million by defrauding investors.