Judge Backs FTC Asset Freeze in Crypto Fraud Case

U.S. Magistrate Lurana Snow has recommended that a preliminary injunction be enforced against four alleged scammers.

AccessTimeIconMar 28, 2018 at 9:20 p.m. UTC
Updated Sep 13, 2021 at 7:45 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

The Federal Trade Commission (FTC) is seeking to permanently freeze the assets of four men accused of running cryptocurrency referral scams.

The U.S. regulator also asked a federal court in Florida to order the defendants to stop working together or creating new business entities. Further, they would have to provide a list of their assets to the FTC if the proposed injunction is enforced.

, the FTC sued the four individuals in the Florida court earlier this month, accusing them of promoting fraudulent referral investment schemes. At the time, the agency said that "this case shows that scammers always find new ways to market old schemes."

U.S. Magistrate Judge Lurana Snow recommended that the court grant FTC's motion for a preliminary injunction in a court report dated March 23.

"Based on the argument of the plaintiff’s counsel and evidence presented, the Court is persuaded that Plaintiff is likely to succeed on the merits and that injunctive relief is in the public interest," Snow wrote. The motion still has to be approved by District Judge K. Michael Moore, however.

The motion followed a temporary restraining order, which Snow also supported, that provisionally froze the assets of My7Network and the Bitcoin Funding Team, as well as Thomas Dluca, Louis Gatto, Eric Pinkston and Scott Chandler.

According to the filing, Snow's report and recommendation followed a public hearing that the defendants did not attend.

The proposed injunction accuses the defendants of acting deceptively, stating:

"Based upon the [evidence] submitted by the FTC, there is good cause to believe that Defendants Dluca, Gatto, Pinkston, and Chandler have engaged in and are likely to engage in acts or practices that violate Section 5(a) of the FTC Act."

According to the filing, if Judge Moore grants the motion, the defendants will have two weeks from Snow's report to object. If they do not, they will be unable to appeal the ruling "except upon grounds of plain error if necessary in the interest of justice."

Because the temporary restraining order would expire before this two-week period ends, it has been extended until April 9 by Judge Moore, court filings show.

The original TRO was granted near the end of February, but its enforcement was not revealed until mid-March.

The full report and recommendation can be found below:

Court image via Felix Lipov / Shutterstock


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.