Regulatory Series on Cryptocurrencies: US-CFTC Slams Pennsylvanian Individual For Fraudulent Bitcoin Scheme

In a CFTC’s complaint alleging that, in or about 2018, Pennsylvania-based individual Jon Barry Thompson induced two customers to send roughly $7 million to fund the purchase of bitcoin with misrepresentations that he or the company had the bitcoin in hand and the customers’ money would be safeguarded.

Upon the receipt of the clients’ money, the complaint charges, Thompson sent virtually all of the money to third parties without first receiving any bitcoin in return.  It is further alleged that after taking the customers’ money and failing to provide any bitcoin in return, Thompson lied to the customers about the location of the bitcoin, the reasons the transaction was not completed, and the status of the customers’ money.

Cryptocurrencies operations have constantly been under the meticulous scanner of the renowned global regulators, such as, US SEC, CFTC and UK’s Financial Conduct Authority (FCA) etc. 

One hand, there’s healthy flow of data, like various crypto-firms are obtaining license also from the CFTC for bitcoin futures trading mechanism, like, Bakkt, LedgerX and ErisX, on the flip side, the probing pertaining to the cryptocurrency scams have been growing constantly from the recent past.

For now, the U.S. Commodity Futures Trading Commission (CFTC) charged Jon Barry Thompson with intentionally making false representations to customers (two victim companies) in connection with the purported purchase of bitcoin worth over $7 million.”

The alleged is put under the scanner as the CFTC  accused Thompson’s misrepresentations of having affiliation, possession or control of the bitcoin that was to be delivered to the customers. 

“The complaint alleges that bitcoin was never delivered to the customers and customer funds were not safeguarded as promised. This case is brought in connection with the CFTC Division of Enforcement Virtual Currencies Task Force,” According to the CFTC’s press release.

“Fraudulent schemes, like that alleged in this case, undermine the integrity of new and innovative markets and cheat innocent people out of their hard-earned money,” said CFTC Director of Enforcement James McDonald. “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.”