US court orders UK man behind Control-Finance scam to pay $572M

Getting your Trinity Audio player ready...

A federal court in the United States has ordered a U.K. man to pay $572 million in restitution and civil monetary penalties in connecting with the defrauding of over 1,000 investors in 2017. Benjamin Reynolds, the founder of Control-Finance, is accused of misleading investors to believe he would invest their BTC, which authorities said he pocketed.

The U.S. Commodity Futures Trading Commission (CFTC) confirmed in a statement that the Southern District of New York had entered a default judgment against Reynolds. The court found that the Manchester, England native “operated a fraudulent scheme to solicit bitcoin from members of the public and misappropriated customers’ bitcoin.”

The court ruled that Reynolds must pay $143 million in restitution to the customers he defrauded. He must also pay $429 million in civil monetary penalty. The order also permanently enjoins him from engaging in conduct that violates CFTC regulations or trading in any CFTC-regulated markets.

As CoinGeek reported, the CFTC accused Reynolds of masterminding a multi-million dollar digital currency scam via his company Control-Finance. Authorities said the man lured in at least 1,000 investors, over 100 of whom were U.S. citizens to invest in its bogus BTC products. The CFTC said Reynolds made away with 22,858 BTC which at the time was worth $147 million. This stash is currently worth $1.3 billion.

Investigators said Reynolds initially operated Control-Finance like a Ponzi scheme, paying off existing investors with money he collected from the new investors. The model, however, proved unsustainable as new clients dried up, which resulted in Reynolds closing shop and vanishing with his investors’ funds, according to authorities.

After he fled, the CFTC began tracking him to serve him, to no avail. It hired U.K solicitors to serve Reynold at the address he had listed on his site but he no longer lived there. Attempts to serve him via email and phone also failed.

The watchdog filed for a default judgment in August 2020 after securing a Certificate of Default and a Notice of Voluntary Dismissal against Reynolds.

While the default judgment marks a victory for the CFTC, there’s no guarantee that the victims will get refunded, the watchdog cautioned. “The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable,” it stated.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and 
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.