In a U.S. Commodity Futures Trading Commission-led case, a court has fined another cryptocurrency investment scheme for fraud and misappropriating client funds.
According to a CFTC news release from Friday, the district court for the Eastern District of New York ordered a fine of $4.25 million against Blake Harrison Kantor and Nathan Mullins plus four firms including Blue Bit Banc, Blue Bit Analytics, Mercury Cove and G. Thomas Client Services.
The order included a civil monetary payment penalty against Kantor and the firms for $2.5 million, while Mullins received a penalty of $300,000. Kantor and Mullins were further ordered to hand over "ill-gotten gains" of $515,759 and $89,574, respectively.
The CFTC first filed the case against Kantor and his associates in April 2018 for fraud involving binary options – a financial product giving a fixed monetary outcome or none at all – and the cryptocurrency ATM Coin. Under the scheme, the defendants used in-house software to alter the outcome of binary options in favor of the firm, Blue Bit Banc.
Investor funds were also transferred into the “worthless” crypto, which Kantor and Mullins told investors was “worth substantial sums of money.”
The CFTC said the defendants further persuaded customers to deposit money in accounts in the island nation of St. Kitts and Nevis, increasing the difficulty of tracking such investments.
Although the defendants are ordered to pay restitution to victims, the CFTC noted they may not hold assets equal to the stated order.
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