Three defendants who used “deceptive” marketing practices to pervade cryptocurrency “chain referral schemes” called “Bitcoin Funding Team” and “My7Network,” as well as a fourth man who also falsely promoted “Jetcoin,” have settled with the US Federal Trade Commission (FTC).
The men, Thomas Dluca, Louis Gatto, Eric Pinkston, and Scott Chandler, have been permanently banned from running or participating in any multi-level marketing program.
Dluca has been fined $453 932. Pinkston has been ordered to pay $431 035, suspended when he pays $29 491, unless, “he is later found to have misrepresented his finances…(whereby) he will be required to pay the full amount.” Chandler will pay $31 000.
According to the FTC, the men used YouTube videos, social media and conference calls to promise 800X returns on $100 USD submissions of bitcoins or litecoins.
The FTC says:
“Bitcoin Funding Team and My7Network participants could only generate revenue by recruiting new participants and convincing them to also pay cryptocurrency. For example, Bitcoin Funding Team participants were required to make an initial bitcoin payment to an earlier participant and pay a fee to Bitcoin Funding Team. With these payments, participants were eligible to recruit new members and receive payments from them. Promoters claimed participants could earn bigger rewards if they paid additional bitcoins.”
Promised returns never materialized, however:
“In reality, the FTC complaint alleges, the scheme failed to deliver on these claims and ceased operation within two months of launching.”
The settlement also precludes the men from:
“…(O)perating, participating in, or assisting others in promoting or operating any multi-level marketing program, pyramid, Ponzi, or chain referral scheme…or misrepresenting as part of a business venture or investment opportunity the amount of income that participants will receive or other aspects of the business venture or investment opportunity.”
The decision to fine the men and ban them from this type of fundraise was unanimous at the FTC, an agency mandated to protect and educate consumers and promote competition in the United States.
Content on the YouTube channel “Bitcoin Funding Team” has been taken down, although several videos are still in general circulation, including one that compares the “platform” to Kickstarter.