The Commodity Futures Trading Commission (CFTC) is going after an Ohio man who allegedly defrauded over 150 investors in a BTC investment scam.
In a complaint filed in the Southern District of Ohio, the regulator accused Rathnakishore Giri of soliciting over $12 million from investors under the promise that he would invest their money in digital assets. He also solicited at least 10 BTC, which at the time were worth at least $240,000.
In a scheme that the watchdog claims stretched as far back as March 2019, Giri allegedly solicited 150+ clients to invest in his two firms, NBD Eidetic and SR Private Equity. The New Albany, Ohio resident, presented himself to be an experienced digital asset trader, a claim that the regulator says is false.
He further claimed he could guarantee customers returns of between 5% and 10% per month and that they were guaranteed they couldn’t lose their money. Investors would be able to withdraw their funds whenever they desired, he further told them, yet another claim that was false.
Upon receipt of the customer funds, Giri commingled them with his own personal funds, as well as putting them in accounts controlled by his parents, Giri Subramani and Loka Pavani Giri, who were also named as relief defendants in the case.
Giri used some of the funds from the latter clients to pay interest to the earlier clients, akin to a Ponzi scheme. He then used the rest of the money to fund a lavish lifestyle that included luxurious vacations and shopping trips, and renting expensive yachts.
Giri’s actions violated the Commodity Exchange Act and the CFTC’s regulations. The watchdog is seeking civil monetary penalties and remedial ancillary relief, including disgorgement, restitution to defrauded customers, as well as pre-and post-judgment interest. It also wants Giri’s parents to disgorge funds they received from their son’s “illegal activities and in which they have no legitimate interest.”
Commenting on the case, CFTC commissioner Kristin N. Johnson pointed out that fraudsters will always seek to exploit investors’ interest in new technologies. “While there are many benefits to responsible innovation, customers must remain vigilant,” she stated.
The CFTC’s role in the digital assets industry has continued to evolve as it determines more ‘cryptocurrencies’ to be commodities. Through the recently introduced “Digital Commodities Consumer Protection Act of 2022,” the watchdog will be given even more power over the sector even as stakeholders called for tightening the text to offer more clarity.
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