CFTC Slaps Fraud Charges on Three Cryptocurrency Entrepreneurs and Companies

It is never good to see the U.S. Commodity Futures Trading Commission go after virtual currency operators. This is especially true when the charges revolve around defrauding customers. Even though interest in cryptocurrencies has soared recently, there are still a lot of people looking to steal your money. With the CFTC now getting involved, it will be interesting to see what type of regulation gets introduced in the future.

The CFTC Flexes its Muscles

No one should be allowed to defraud investors, no matter what industry they are involved in. As far as the world of cryptocurrency is concerned, we have seen a fair few companies and users scam others, leading to major financial losses. Now that the Commodities Futures Trading Commission has filed fraud charges against three virtual currency operators, things have taken another worrisome turn. Bringing the bad apples to justice is the only rightful course of action, though.

To put this into perspective, there is genuine concern over the risks that Bitcoin and other cryptocurrencies may pose to investors. Not only that, but this new form of money may turn out to be a threat to the global financial system as well. As a result, we’ve seen multiple efforts to regulate Bitcoin and similar currencies, although none of these measures have been overly successful as of yet. It is very difficult – if not impossible – to regulate something without a central authority or institution. That doesn’t mean people who perform fraud in the cryptocurrency world will not be brought to justice in the long run.

A New York resident named Patrick McDonnell and a company called CababgaTech have been in the CFTC’s crosshairs recently. It seems the company, which offers crypto trading and other services, stole money from its customers. So far, it is unclear how much money was involved, but it was more than sufficient to get the CFTC riled up. 

Secondly, there is the case of Colorado’s Dillon Michael Dean. This individual, as well as Entrepreneurs Headquarters LTD, a company registered in the UK, seemingly operated a cryptocurrency-related Ponzi scheme. Through this nefarious operation, they successfully collected US$1.1 million worth of Bitcoin from over 600 investors. Their claims of pooling these funds and using them to invest in other projects were false, which led to the investors losing their money. A third case has not been made public as of yet, but more information is expected to be revealed in the coming weeks.

It is evident that the CFTC does not take kindly to any individual or company looking to defraud investors, and it is good to see them pay attention to the cryptocurrency industry as well. Even though some enthusiasts may not like to admit it, there are a lot of scams and Ponzis out there. Avoiding these pitfalls has proven to be rather difficult so far, but it’s good to see government agencies crack down on these illicit offerings. Whether or not we will see more fraud charges over the coming months remains to be determined.

This is the first time the CFTC has decided to get involved in such an aggressive manner. Considering that the agency recently allowed the launch of Bitcoin futures, this sudden change seems rather unexpected. It is a welcome turn of events, though, as there is a growing need to crack down on illicit programs and Ponzi schemes. Many people also see this as a way for the CFTC to get back in the good graces of Wall Street, after hastily approving Bitcoin futures products without any industry feedback.