US court orders digital asset fraudster to pay $2.8M following CFTC tussle

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The Commodity Futures Trading Commission (CFTC) has scored a significant win in court against Jeremy Spence, a digital asset trader charged with misrepresentation and obtaining false pretense.

The District Court for the Southern District of New York ordered Spence to pay $2.8 million to the victims of his Ponzi scheme, marking the end of a lengthy legal battle. Early in the year, the commodities watchdog took Spence to court over his involvement in a Ponzi scheme including virtual currencies like BTC and ETH.

The CFTC’s court filing revealed that Spence ran his illegal operation between December 2017 and April 2019, costing investors losses of nearly $5 million. Spence pleaded guilty to the charges and was sentenced to 42 months in jail.

“Spence’s solicitations—which, as described below, were rife with fraud, lies, and deceit—were successful,” said the court order. “During the Relevant Period, Spence obtained virtual currencies such as Bitcoin and Ether worth more than approximately $5 million at the time from individual customers comprising approximately 175 user accounts.”

CFTC Commissioner Kristin Johnson praised the court’s decision to grant the restitution order, describing it as a result of the commission’s hard work in cracking down on bad actors in the space. Johnson warned the public to remain wary of new schemes designed to defraud them of their hard-earned funds.

“While Spence’s prison term will limit his ability to continue this scheme, other bad actors stand ready, willing, and able to take his place and prey on victims’ hopes and fears,” said Johnson. “Accordingly, I strongly encourage members of the public to stay informed about the potential scams and abuses in the digital assets markets.”

CFTC’s call to action

Johnson took the opportunity of the win against Spence in court to remind officials of the dangers lurking for investors in the digital assets industry. She cited the liquidity crisis and bankruptcy filings that reached their highest ebb in the last few days with the collapse of leading platforms in the industry.

She noted that the grim events should inspire regulators to “use their existing authority” to reduce the risks faced by consumers in the industry. Johnson urged the U.S. Congress to step up its efforts in crafting watertight legislation to regulate the sector.

“I am hopeful that Congress will identify a whole-of-government approach to ensure that we prevent schemes that rely on regulatory arbitrage or take advantage of the regulatory gap that currently limits our visibility into digital asset trading markets and stymies our ability to adopt rules necessary to effectuate our mission in these markets,” said Johnson.

Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets