The Commodity Futures Trading Commission (CFTC) has accused 5 men of operating a Ponzi scheme. Reports by the complaint, they used the promise of digital assets they never essentially acquired to lure investors with promises of stellar profits. The defendants targeted their own Spanish-speaking community in what the CTFC is calling “affinity-based fraud.” In the CFTC’s view, the victims may have been highly vulnerable to pressures from people they were led to believe had much in common with them. Affinity fraud and other scams are on the rise.
The Commodity Futures Trading Commission (CFTC) has taken action against 5 men accused of defrauding greater than 170 investors. The victims were primarily Spanish-speaking and lost whole lot of sums of money because of the scam.
The CFTC’s Allegations
In a complaint filed in the United States District Court for the Central District of California, the CFTC describes a digital investment commodity trading business, luring victims with promises of profits, commissions, and referral bonus. The company, “Icomtech,” reputedly used marketing materials offering high-end holidays and cars, iPhones, and Rolexes to convince others to sign people up.
The respondents allegedly held out promises of a lucrative opportunity. Offering those who took part an opportunity to earn a 20 percent commission for each package sold and an extra 3 percent for packages sold by their direct affiliates.
Nonetheless, the organizers never essentially acquired any digital assets as agreed. Instead, the CFTC alleges that the 5 misappropriated the funds entrusted to them, operating an “old-school Ponzi scheme.”
The commission’s statement outlines how the fraud targeted a Spanish-speaking community in California. In the statement, CFTC Commissioner Kristin N. Johnson describes how crimes like this one are “distinctly problematic”:
“Affinity-based fraud schemes all-too-often seek to exploit the trust generated during a community. 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.”
Most tracked cryptocurrency crimes happen on-chain, either via hacks or fraud. Nonetheless, the defendants here seem to have only used digital assets as an enticement for profits.
The issue of crypto-related felony is chronic and severe. Chainalysis, which tracks felony, recorded a record year for criminals in 2022. Total digital currency value received by illicit addresses rose for the Second consecutive year, regardless of the market downturn.