CFTC Charges Oregon and Illinois Resident in $44 Million Fraud
On Thursday, the Commodity Futures Trading Commission (CFTC) announced that it filed a civil enforcement action against an Oregon and Illinois resident, as well as a Florida company for fraudulently soliciting at least $44 million in digital asset investments.
The CFTC specifically named Sam Ikkurty a/k/a Sreenivas I Rao (OR), Ravishankar Avadhanam (IL), and Jafia LLC, a Florida-based company Ikkurty also owns in its action.
In the complaint, the defendants are charged with operating an illegal commodity pool and failing to register as a Commodity Pool Operator. Additionally, the complaint further charges three funds owned and operated by the defendants as “relief defendants” in possession of funds to which they have no legitimate interest – Ikkurty Capital LLC d/b/a Rose City Income Fund, Rose City Income Fund II LP (Rose City), and Seneca Ventures LLC.
According to the CFTC, the scheme dates back to as early as January 2021, where the defendants allegedly used YouTube videos and websites to obtain more than $44 million from over 170 participants “to purchase, hold, and trade digital assets, commodities, derivatives, swaps and commodity futures contracts.”
Rather than investing the pooled participant funds as represented, the complaint states that the defendants, instead, misappropriated those funds by distributing them to other participants – similar to a Ponzi scheme. The defendants are also believed to have transferred part of the funds to off-shore accounts under their control and for their benefit.
CFTC issues order to freeze assets
The commission has secured an ex parte order to freeze the assets under the control of the defendants and has appointed a temporary receiver to preserve records.
A hearing on the case will take place on May 25, 2022. The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including one to inform the public of possible risks associated with investing or speculating in virtual currencies or recently launched Bitcoin futures and options.
The CFTC hopes to refund all those victimized by the scheme. It is also seeking other punishments, including fines, and permanent bans.
U.S. agencies are looking deeper into enforcement
With this lawsuit, the CFTC has continued to show its stance in protecting consumers and investors from bad actors, joining other federal agencies in helping to better regulate the cryptocurrency space.
President Biden’s Executive Order has given US agencies more impetus to research the crypto industry in order to better protect US citizens. Indeed, the SEC has already promised to impose strict oversight measures over the crypto sector.
The Consumer Financial Protection Bureau (CFPB) has also announced that it intends on issuing the Consumer Financial Protection Circulars for the regulators to enforce federal consumer laws. The recent crypto market crash has also increased interest from lawmakers and regulators in the country.
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