According to a complaint submitted to an Ohio district court on Thursday, the U.S. Commodities Futures and Trading Commission (CFTC) has filed legal action against an Ohio resident it claims operated a $12 million bitcoin-related Ponzi scheme.
A cease-and-desist order has been filed in the Southern District of Ohio against Rathnakishore Giri and his two businesses, SR Private Equity LLC and NBD Eidetic Capital LLC. The CFTC further requests that Giri be ordered by the court to repay his defrauded investors.
In a statement released on Friday, CFTC Commissioner Kristin N. Johnson claimed that Giri exploited the current excitement for digital asset investment opportunities by operating a private equity investment fund with a focus on investing in them. He did this by luring unwitting investors to contribute more than $12 million in cash and bitcoins to his funds with the commitment of extraordinary returns without the risk of financial loss.
Giri is accused of engineering and perpetuating a scheme designed to dupe investors interested in digital assets.
The CFTC asserts that Giri broke rules and laws governing commodities that forbid the use of “deceptive techniques” and information manipulation. According to Johnson’s account, Giri used the money from investors to finance an opulent lifestyle that included using private aircraft, renting yachts, having an exotic vacation home, driving a fancy car, and wearing expensive clothing.
The complaint was submitted the day after the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) voted to advance a proposal that would widen the disclosure requirements for private funds and sizable hedge funds to include cryptocurrency holdings. The regulators are working together to make private funds’ operations and the assets they manage in the nation more transparent through the new guidelines.
Giri has been ordered by the CFTC to stop all activities connected to the fraud in addition to paying back any financial gains “directly or indirectly” attributable to the rule breach, including but not limited to salary, commissions, loans, fees, revenues, and any trading profits.
The CFTC “rigorously surveys markets and enforces regulations,” according to Johnson, but emerging financial products like digital assets “may generate new issues.”