Articles Tagged with cryptocurrency charges

IMG_0382-300x200An investigation by the Financial and Cyber Crime Group lead to allegations that five individuals had defrauded at least 100 investors through a complex cold-call cryptocurrency investment scheme. This case lead to the theft of over $1.83 million and began in 2017.

According to a recent report by Coindesk, the individuals behind the cryptocurrency scheme went to great lengths to appear legitimate. Victims of the scheme were contacted by a firm called Exmount Holdings Group, which employed a sales staff and offered a professional website. The sales team was responsible for cold-calling victims and convincing them to take part in a cryptocurrency investment.

After investing their funds, victims were able to visit the website and use personal login information to view their account and the status of their investment. Investors were led to believe that their funds were growing successfully and could be withdrawn after a trial period. However, once the trial period had ended, the victims were unable to withdraw their funds and contacting the team behind the firm was unsuccessful.

IMG_0296-300x200On July 15th, a drafted bill was leaked by a tech industry lawyer, Varun Sethi, which proposed the banning of all cryptocurrency with the exception of the “Digital Rupee”. This bill would not become official until it is debated in the 2019 Monsoon session of the Indian parliament, but demonstrates India’s resolve to end cryptocurrency related crimes.

The drafted bill is entitled, “Banning of Cryptocurrency & Regulation of Official Digital Currencies”, and defined cryptocurrencies as “any information or code or number or token not being part of any Official Digital Currency, generated through cryptographic means or otherwise, providing a digital representation of value.”

Meanwhile, the proposal states that a “Digital Rupee” is defined as a digitally issued tender from India’s Reserve Bank, which would be approved by the Central Government for use as a legal currency.

According to the Tokenist, the United States Commodity Futures Trading Commission (CFTC) has just filed a complaint against cryptocurrency company Control-Finance Limited and its CEO, Benjamin Reynold. The complaint alleges that the firm misappropriated $147M in Bitcoin.

According to the CFTC, Control-Finance and Reynolds were responsible for defrauding around 1,000 people out of around 22.8M BTC. The victims were requested to deposit their funds on the Control-Finance platform. The company promised returns on their investments. They essentially “guaranteed daily trading profits.” They also promoted themselves as veteran, expert cryptocurrency traders.

The CFTC says that Control-Finance was comparable to a ponzi scheme which operated from May 1, 2017 to Oct 31, 2017. The defendants afterwards closed their social media accounts and the company went dark, running away with around $150M.

cryptocurrency Despite its cons, cryptocurrency has introduced powerful technologies to the market, including blockchain protocols which essentially act as an advanced ledger for cryptocurrency exchanges. However, this technology is now being utilized for the protection of numerous industries, including the healthcare industry by preventing counterfeit pharmaceuticals from entering the market.

A paper published by Portland University researchers outlined how blockchain technology could be used as an anti-counterfeiting system for numerous industries. But, understanding how this technology can be applied to various markets means taking a closer look at its use in cryptocurrency.

Essentially, cryptocurrency platforms utilize blockchain technology to store and track the incoming and outgoing transactions that they facilitate. These transactions are stored across numerous computers that are linked by a peer-to-peer network. The history of transactions stored on the blockchain is extensive, and allow those in control to view a detailed account of exactly what is going on with each transaction.

The Securities and Exchange Commission has obtained a court order freezing more than $27 million in trading proceeds from allegedly illegal distributions and sales of restricted shares of Longfin Corp. stock involving the company, its CEO, and three other affiliated individuals. According to the SEC’s complaint, Longfin’s founding CEO and controlling shareholder, Venkata Meenavalli, caused the company to issue more than two million unregistered, restricted shares to Altahawi, who was the corporate secretary and a director of Longfin, and tens of thousands of restricted shares to two other affiliated individuals, Penumarthi and Tammineedi, who were allegedly acting as nominees for Meenavalli. The subsequent sales of those restricted shares violated federal securities laws that restrict trading in unregistered shares distributed to company affiliates.

The Complaint alleges that shortly after Longfin began trading on NASDAQ and announced the acquisition of a purported cryptocurrency business, its stock price rose dramatically and its market capitalization exceeded $3 billion. The SEC alleges that Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi then illegally sold large blocks of their restricted Longfin shares to the public while the stock price was highly elevated. Through their sales, Altahawi, Penumarthi, and Tammineedi collectively reaped more than $27 million in profits.

“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” said Robert Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.  “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.” The SEC’s complaint, which was filed under seal on April 4, charges Longfin, Meenavalli, Altahawi, Penumarthi, and Tammineedi with violating Section 5 of the Securities Act of 1933. The complaint seeks injunctive relief, disgorgement of ill-gotten gains, and penalties, among other relief.