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CFTC accuses crypto escrow firm head of $7M fraud

“Girl with white mask holding Bitcoin” by Marco Verch is licensed under CC BY 2.0 at https://www.flickr.com/photos/[email protected]/28071766088

Tue, 01 Oct 2019, 13:47 pm UTC

The U.S. Commodity Futures Trading Commission (CFTC) has sued Jon Barry Thompson for fraud, alleging that he “knowingly or recklessly [made] false representations to customers in connection with the purported purchase of bitcoin worth over $7 million.”

The 48-year-old Thompson was the principal of Volantis, which includes a cryptocurrency escrow company called Volantis Escrow Platform LLC and related firm Volantis Market Making LLC. He was reportedly arrested in July in Easton and faced two counts each of commodities fraud and wire fraud. He has been free on a $500,000 bond.

As per the complaint released on Monday, the CFTC claimed that Thompson deceived two firms to send about $7 million to fund bitcoin purchases that never happened. He reportedly made false representations that he or the company he was affiliated with had Bitcoin in hand and that the clients’ money will be secured.

However, Thompson failed to deliver the bitcoins to his clients, and he “sent virtually all of the money to third parties without first receiving any bitcoin in return.”

Thompson also reportedly lied about the location of the bitcoins he was supposed to buy on their behalf, why the transactions were not completed, and the status of the customers’ money.

Fraudulent schemes, like that alleged in this case, undermine the integrity of new and innovative markets and cheat innocent people out of their hard-earned money,” CFTC Director of Enforcement James McDonald said.

Rooting out misconduct involving crypto assets is essential to furthering the responsible development of this nascent space. The CFTC will continue to work to hold fraudsters accountable, and where appropriate, operate in parallel with our criminal law enforcement colleagues.”

The regulator is allegedly looking “restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged,” as part of its charges against Thompson.

Just recently, the U.S. law enforcement also arrested Steven Nerayoff, an early supporter of the ethereum blockchain and Alchemist associate Michael Hlady for extortion. Both individuals were charged for reportedly threatening to destroy an undisclosed Seattle-based startup if the company fails to meet their monetary demands.

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