Two New York defendants were ordered to pay $4.25 million in penalties over an investment fraud involving ATM Coin cryptocurrency.
The U.S. Commodity Futures Trading Commission (CFTC) announced that the U.S. District Court of the Eastern District of New York had “entered an order of default” finding that Nathan Mullins and Blake Harrison Kantor, along with four entities, guilty of committing fraud and misappropriating funds. The four entities included Blue Bit Banc, Blue Bit Analytics, Mercury Cove, and G. Thomas Client Services.
The court originally entered the order of enforcement on the defendants on October 23. As part of the order, Mullins and Kantor are required to pay restitution in the amount of nearly $850,000 as well as penalties in the amount of $2.5 million against Kantor and the four corporate organizations. Mullins was required to pay a $300,000 penalty.
The action was in connection with the CFTC’s Division of Enforcement’s Virtual Currency Task Force, with the initial filing of the case dating back to April 16, 2018. The regulator charged the defendants with fraud, basing the allegations on a binary option scam that involved virtual currency that was dubbed as “ATM Coin.”
The defendants were charged with committing fraud and misappropriating the client funds through the investment in the ATM Coin cryptocurrency. This, according to the CFTC, was led by an action where Blue Bit Banc investments converted the currency into ATM Coin, which never amounted to any value. This came in opposition to the claim by the company that the digital currency would reap significant sums of money.
According to the regulators, the fraud charge came from action by where the Blue Bit Banc changed the data associated with their binary options investments. This was done using a computer software program, which customers were not informed about any time prior to or following their making an investment.
While the order is a victory for investors, it may be a hollow one. It is unclear as to whether the defendants have sufficient funds available to reimburse those who lost their investment. That may mean that they have nothing more than a promise to receive compensation but may never receive that restitution.
This situation is another warning for investors to do their homework before providing any money. In a statement, the CFTC warned, “The number of Internet-based trading platforms that offer the opportunity to purchase and trade binary options has surged in recent years. The increase in the number of these platforms has resulted in an increase in the number of complaints about fraudulent promotion schemes involving binary options trading platforms.”
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