Menu

Search

Menu

Search

Regulatory Series on Cryptocurrencies: US-CFTC Charges Florida-Based Individual & Companies For Forex & Digital Asset Scam

Cryptocurrency instruments, including payments & derivatives products have been under the meticulous scanner of the renowned global regulators, such as, US SEC, CFTC and UK’s Financial Conduct Authority (FCA).

In the latest news, the United States Commodity Futures Trading Commission (US-CFTC) has charged Florida-based financial adviser and his associated companies with fraudulent actions for allegedly misguiding investors in his algorithmically charged “Compcoin” token out of $1.6 million.

The Commodity Futures Trading Commission announced this on 16th January, as they filed a complaint in the U.S. District Court for the Middle District of Florida, charging defendants Alan Friedland of Florida and his Florida-based companies, Fintech Investment Group, Inc. (Fintech) and Compcoin LLC, with fraudulently soliciting more than $1.6 million from their customers in connection with a leveraged or margined off-exchange foreign currency (forex) scheme.

What exactly has happened: 

According to the complaint, starting in at least 2016 and proceeding through 2018, Friedland and his companies fraudulently solicited customers and prospective customers to purchase a digital asset known as Compcoin. The defendants falsely promised, among other things, that Compcoin would allow customers to gain access to Fintech’s proprietary forex trading algorithm known as ART, and falsely advertised that ART would deliver high rates of return.  

Moreover, in marketing Compcoin, the defendants also falsely represented, among other things, the use and function of Compcoin and that ART “was ready for release on the open market.” In fact, as alleged in the complaint, the defendants knew that no customer could lawfully utilize ART until Fintech obtained approval from the National Futures Association (NFA), which never occurred. Thus, according to the complaint, the purchasers of Compcoin never gained access to ART as promised, and were left with a valueless asset. 

“The CFTC remains committed to protecting market participants from fraudulent schemes, including novel forms of fraud like the one alleged here, where defendants allegedly solicited customers to purchase a digital asset in order to gain access to Fintech’s purported forex trading algorithm,” said CFTC Director of Enforcement James McDonald.

This scheme successfully brought in $1.6 million, the CFTC claimed, and even managed to get Compcoin listed momentarily on digital asset exchanges during its sale from 2016 through 2018. However, the success was short lived. 

To get rid of such fraudulent actions in the days to come, we think that the prime focus of the regulatory bodies has to be given to introduce the investment suitability for which they may probe enterprises and projects to the maximum extend in order to ensure risk-free or flawless business operations and also ensure proper control points that could safeguard users. The increased level of monitoring is most likely to eliminate scams and fraudulent projects.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.