The US Federal Trade Commission said on Friday that it has obtained a court order to freeze the assets and halt the activities of four individuals for allegedly operating a cryptocurrency Ponzi scheme.
Using YouTube videos, social media and conference calls, the defendants targeted investors with no experience or knowledge through chain referral schemes known as Bitcoin Funding Team and My7Network.
The FTC alleges that the fourth defendant, Scott Chandler, who ran his scam since February 2017, duped victims into investing in the crypto investment pool, which promised unrealistic returns.
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Chandler preyed on victims interested in virtual currency, promising them the opportunity to double their investment in 50 days, when in reality they were only buying into his deceptive money-making scheme. The result, according to prosecutors, is that investors generally lost most if not all of their invested funds.
Investors were also convinced to invest in ‘Bitcoin Funding Team’ based on the impressive performance of the cryptocurrency in 2017, which saw its price gain of nearly 1000% in value at its high point in January. They were to get back their entire principal after a few days and turn a payment of $100 into $80,000 in monthly income, yielding an effective monthly return of 8000%.
As in all Ponzi schemes, the purported performance reports were fake, and payouts of supposed profits actually consisted of other customers’ misappropriated funds.
Conspiracy and securities fraud charges, as well as charges of operating an unauthorised investment pool, will be unsealed in court against the four men, the US authorities said.
Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection, commented: “This case shows that scammers always find new ways to market old schemes, which is why the FTC will remain vigilant regardless of the platform – or currency used. The schemes the defendants promoted were designed to enrich those at the top at the expense of everyone else.”