The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against Defendants Dillon Michael Dean of Longmont, Colorado. Dean’s company, The Entrepreneurs Headquarters Limited, is apparently registered in the UK. The documentation filed in the UK indicates a sizable valuation of the company that was registered in April of 2017. The allegations charged by the CFTC include fraud associated with a plan to solicit Bitcoin from investors, misrepresentation of customers funds use, Ponzi-style payments and failing to registers with the CFTC as a Commodity Pool Operator (CPO) and Associated Person of a CPO, as required.
A quick trip to the website of the defendants shows a claim of paying out over $500,000 in the first 4 months.
This case was brought by the recently constituted CFTC Division of Enforcement Virtual Currency Task Force.
James McDonald, the CFTC’s Director of Enforcement, released a statement on the enforcement action;
“Increased public interest in Bitcoin and other virtual currencies has provided new opportunities for bad actors. As alleged in the Complaint, Defendants sought to take advantage of that public interest, offering retail customers the chance to use Bitcoin to invest in binary options, when in reality they were only buying into a Ponzi scheme. As this case shows, the CFTC will continue to take swift action to stop such fraudulent schemes and to hold fraudsters accountable for their misconduct.”
The Complaint alleges that April 2017 until this week, the Defendants have engaged in a fraudulent scheme, through which they solicited at least $1.1 million worth of Bitcoin from more than 600 members of the public.
Defendants allegedly promised to convert this Bitcoin into fiat currency to invest on the customers’ behalf in a pooled investment vehicle for trading commodity interests, including trading binary options on an online exchange designated as a contract market by the CFTC. Defendants made false claims of trading expertise and promises of high rates of return. The CFTC Complaint further alleges that, rather than convert customers’ Bitcoin to fiat currency to invest in binary options contracts, as promised, Defendants misappropriated their customers’ funds, including by using the funds to pay other customers, in the manner of a Ponzi scheme.
Defendants solicited customer deposits using, YouTube videos, Facebook posts, and their own website touting the skill of Dean. The CFTC states that any represenation of profits were fake and Defendants stopped making payments to their customers, having misappropriated over $1 million in customers’ funds.
Dean apparently launched another similar trading venture under the name “Real Trade Profits,” using a website to solicit customers to deposit Bitcoin for a pooled investment in binary options trading and promising high rates of return.
The CFTC seeks restitution to defrauded persons, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC Regulations, as charged.
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