Court slaps Colorado illegal crypto pool operator with $1.9M fine

Getting your Trinity Audio player ready...

A New York court has found Dillon Michael Dean, a Colorado-based cryptocurrency pool operator, of fraud charges. Dean’s company, UK-registered The Entrepreneurs Headquarters Limited (TEH) has been the subject of an early 2018 lawsuit by the U.S. Commodity Futures Trading Commission (CFTC).

Last July 9, Judge Sandra J. Feuerstein of the U.S. District Court for the Eastern District of New York ruled that TEH and Dean “engaged in a fraudulent scheme to solicit [BTC] from members of the public.” The defendants were also charged with misrepresentation, after they allegedly told customers that their funds would be pooled and invested in products like binary options. Instead, the court said Dean and his company “misappropriated pool participants’ funds,” noting that TEH and Dean failed to register with the CFTC as a commodity pool operator (CPO) and associated person of a CPO.

The defendants solicited almost $500,000 worth of BTC from around 127 customers between April 2017 and January 2018, according to the ruling. Dean and his company promised their clients that they will convert the crypto to fiat currency, which, in turn, will be invested in a pooled investment vehicle for trade commodity interests, such as binary trading options on a CFTC-designated online exchange.

Investigators said Dean, who made false claims of trading expertise, promised his clients high rates of return. But instead of delivering on their promise, the defendants “misappropriated their customers’ funds,” resulting in at least 120 customers losing some $432,184.79 in investments.

Dean, TEH’s sole principal, falsely claimed on the company’s website, YouTube videos and Facebook posts that he’s someone with “strong skills” in options trading, and that his company was generating high rates of return via trading commodity options, according to Feuerstein.

The court has ordered Dean and TEH to pay $432,184.79 in restitution to customers, plus $1,497,792.12 as a civil monetary penalty. The defendants were also permanently banned from trading and registering in the United States.