CFTC Charges US Resident with $7M Bitcoin Fraud

The United States Commodity Futures Trading Commission (CFTC) charged a United States resident with a $7 million Bitcoin (BTC)-related fraud.

In an official news release published on Sept. 30, the regulator revealed that Jon Barry Thompson of Easton, Pennsylvania, is charged with “knowingly or recklessly making false representations to customers in connection with the purported purchase of Bitcoins worth over $7 million.”

“Knowingly or recklessly”

The official document alleges that — contrary to his claims — neither Thompson nor a company with which he was affiliated had possession or control over the Bitcoins that he pledged to deliver to two clients.

The agency claims that after receiving the clients’ funds, Thompson sent virtually all of the money to some third parties. The purported BTC was not delivered to the clients while their funds were not safeguarded as promised.

Thompson is further accused of having lied to the customers about the location of the Bitcoins, the reasons the transaction was not completed, and the status of their funds.

The case was brought before the court in connection with the CFTC’s Division of Enforcement Virtual Currencies Task Force. 

The agency seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against all further violations of the Commodity Exchange Act and the CFTC’s regulations.

Rooting out fraudsters is “essential” to further the development of cryptos

CFTC Director of Enforcement James McDonald issued a statement pertaining to the case, noting that:

“Rooting out misconduct involving crypto assets is essential to furthering the responsible development of this nascent space. The CFTC will continue to work to hold fraudsters accountable, and where appropriate, operate in parallel with our criminal law enforcement colleagues.”

As Cointelegraph reported, a recent controversy involving the CFTC was sparked by LedgerX’s claim that the agency’s former chairman, Christopher Giancarlo, obstructed the approval of its amended Derivatives Clearing Organization registration because of personal bias against LedgerX CEO Paul Chou.