Business 1 October 2018

Dennis Wafula

CFTC goes after crypto fraudsters accused of impersonating regulators

Two people are facing a slew of charges, including fraudulent solicitation, impersonation and forging official documents in the United States—all in an effort to steal cryptocurrency.

Last Friday, the Commodity Futures Trading Commission (CFTC) filed charges against Morgan Hunt, of Arlington, Texas, and Kim Hecroft, of Baltimaor, Maryland. The two were accused of engaging “in a fraudulent scheme to solicit Bitcoin [BTC] from members of the public, through false or misleading representations or ommissions, to invest in trading products” like binary options, diamonds or margined foreign currency contracts.

Hunt, who may be doing business as Diamonds Trading Investment House, and Hecroft, who operates First Options Trading, were also accused of forging account statements, impersonating a CFTC investigator and forging official CFTC documents.

According to the complaint filed at the U.S. District Court for the Northern District of Texas, Hunt and Hecroft used documents allegedly authorized by the General Counsel of the CFTC for their scheme. Using the documents, they managed to trick members of the public into paying a “tax obligation” to the CFTC if they want to withdraw funds from their crypto accounts.

At least two people were confirmed to have fallen victim to Hunt and Hecroft’s scam, which allegedly started in January 2017. According to the CFTC, the two used Facebook and emails to communicate with their clients. Hecroft allegedly tricked a customer into transferring more funds in BTC by letting the victim believe they were paying their taxes to the CFTC. Hunt, meanwhile, arranged for an accomplice to pose as a CFTC investigator in a phone conversation with his customer.

James McDonald, director of enforcement at the CFTC, clarified that the commission does not collect taxes on cryptocurrencies. He warned the public to be more vigilant against such incidents, saying, “The CFTC is on guard against fraudsters who try to take advantage of the CFTC’s reputation in order to cheat customers, and will take swift action against such misconduct.”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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