Shutterstock.comJudge Orders $2.5M in Penalties, Restitution Against Crypto CEO, Company
In the U.S. Commodity Futures Trading Commission's first anti-fraud enforcement action involving bitcoin, a federal judge in New York has ordered bitcoin-denominated hedge fund CEO Nicholas Gelfman and his company, Gelfman Blueprint Inc., to pay over $2.5 million in fines and restitution for operating a Ponzi scheme.
October 19, 2018 at 01:38 PM
2 minute read
In the U.S. Commodity Futures Trading Commission's first anti-fraud enforcement action involving bitcoin, a federal judge in New York has ordered bitcoin-denominated hedge fund CEO Nicholas Gelfman and his company, Gelfman Blueprint Inc. (GBI), to pay over $2.5 million in fines and restitution for operating a Ponzi scheme in which he claimed he could yield high returns, the CFTC announced Thursday.
U.S. District Judge P. Kevin Castel of the Southern District of New York ordered GBI to pay $554,734.48 in restitution and $1.8 million in civil penalties. Castel ordered Gelfman himself to pay $492,064.53 in restitution and $177,501 in civil penalties.
In addition to restitution and penalties, Castel imposed an injunction on Gelfman that permanently bars him from trading. The order also states that Gelfman will “cooperate fully and expeditiously” with the CFTC and its division of enforcement in “this action, and in any current or future commission investigation or action related thereto.”
Gelfman, who represented himself in the matter, said he was unable to comment.
The CFTC noted in the news release that victims may not see their money back “because the wrongdoers may not have sufficient funds or assets.”
“This case marks yet another victory for the commission in the virtual currency enforcement arena. As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable. I'm grateful to the members of enforcement's Virtual Currency Task Force for their tireless work on these matters,” the CFTC's director of enforcement James McDonald said in the press release.
In September 2017, the CFTC filed suit against Gelfman and his company claiming they operated a Ponzi scheme by soliciting approximately $600,000 from 80 customers from about 2014 through about January 2016. The customers' funds were to be placed in a pooled commodity fund, which “purportedly employed a high-frequency, algorithmic trading strategy executed by defendants' computer trading program called 'Jigsaw.'” But the payouts to customers were actually made using the funds from other customers. The order further states that Gelfman staged a cyberattack of his company, which was supposed to have caused a loss of all customer funds.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All
Digging Deep to Mitigate Risk in Lithium Mine Venture Wins GM Legal Department of the Year Award
5 minute read
Elaine Darr Brings Transformation and Value to DHL's Business
PepsiCo's Legal Team Champions Diversity, Wellness, and Mentorship to Shape a Thriving Corporate Culture
Trending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250
